What are You Doing With Your Cash?

[jazz4cash]

So how is a guy suppose to find good bonds? They sure aren't on Schwab's offerings page.

I don’t know about schwab but Fidelity has some pretty good tools. You could sign up for guest access to check it out. I do think a lot of bonds do not show up unless you have CUSIP and I assumed it could be based on inventory or dealers that are in their network.

 

[W2R]

My actual cash is in my checking acct. No interest. I can't face the process of shuttling cash back and forth between interest bearing (not much) accounts and my checking acct. But my largest "cash" reserve is in my SVF (Stable Value Fund) within my 401(k). YMMV

+1

It's just sitting there doing nothing for me, in my checking acct and Vanguard MM accounts, and my TSP "G Fund" which I suppose is sort of like a SVF.

 

[PageTwo]

PS. Done right, the premium from selling cash-covered put options far exceeds the interest from fixed income, Stable Value and I bond included. The reason I keep money in Stable Value and I bond is to keep me from going overboard in writing puts and ending up with 100% stock AA when my prognostication of the market movement proved wrong.

But then you can go to the other side of the "wheel" and sell covered calls on those stocks. I have limited experience with this strategy but one early lesson I'm learning is that volatile stocks that yield good premiums for the puts, also have decent premiums for their calls. And, you have the shares which should recover at some point...

 

[Freedom56]

So how is a guy suppose to find good bonds? They sure aren't on Schwab's offerings page.

Start with this list:

https://fortune.com/fortune500/2021/search/?f500_profits=desc&profitable=true

We only care about profitable companies.

Use the FINRA site to search for bonds.

 

[daylatedollarshort]

I put my cash in stable value, TIPS I bought on the secondary market maturing in the next 2 years, and a short term Treasury ladder. We will start buying longer duration TIPS this year, and load up when real returns hit 1 - 2%. I might buy more stock if the S&P drops 40% or more.

My goal is to get the withdrawal rate on our portfolio to be less than the real return on the TIPS part, and then theoretically, our portfolio should at least keep its inflation adjusted value for as long as we live.

 

[arcyallen]

If I pay $105.00 for a callable bond and the issuer can exercise that call for $100.00 will I just lose that $5.00 per bond if they call them?

Yes and no. You'll never see a $100 bond callable today selling for $105, because nobody would buy it knowing they might instantly lose $5 on the transaction if it were called tomorrow. IF the bond was selling for $105, yes you'd lose it the $5. But it won't (or shouldn't be), so you won't.

Two of the advertised yields on a callable bond are Yield To Maturity (if you hold it until matures) and Yield To Worst (if the bond your paid a premium for is called). Example:
-You buy a $100 bond for $105 with a 10% coupon callable in one year. In a year they call it. On one hand you got your $10 from the interest. On the other, they gave you back $100 so you lost $5 in principle. The Yield to Maturity would likely have been close to 10%, but your Yield to Worst would have been 5%. Both of these rates should be advertised for a bond you're buying and it's important to know both.

If current rates are way lower than the rates at issue, than the issuer may very likely call their bonds asap and the re-issue them at the current lower rate. If the current rates are lower, they're less likely.

 

[lawman]

Yes and no. You'll never see a $100 bond callable today selling for $105, because nobody would buy it knowing they might instantly lose $5 on the transaction if it were called tomorrow. IF the bond was selling for $105, yes you'd lose it the $5. But it won't (or shouldn't be), so you won't.

Two of the advertised yields on a callable bond are Yield To Maturity (if you hold it until matures) and Yield To Worst (if the bond your paid a premium for is called). Example:
-You buy a $100 bond for $105 with a 10% coupon callable in one year. In a year they call it. On one hand you got your $10 from the interest. On the other, they gave you back $100 so you lost $5 in principle. The Yield to Maturity would likely have been close to 10%, but your Yield to Worst would have been 5%. Both of these rates should be advertised for a bond you're buying and it's important to know both.

If current rates are way lower than the rates at issue, than the issuer may very likely call their bonds asap and the re-issue them at the current lower rate. If the current rates are lower, they're less likely.

Great! thanks for the example..makes perfect sense..

 

[Car-Guy]

My first thought was to say"I'm spending it" before it become worthless... But on second thought I realize I'm doing a lot of buying and selling of stocks with my spare cash. Or swing trading. Of course many "here" would say that's a sure way to make it worthless, although I've done well so far this year.

 

[skyking1]

Spending it like it is going out of style. We have a CD maturing in August and the home project will burn that up and more. We might skip the I-bond purchase this year and toss that at the house too.
It is a weird space to be in. The current home money is earmarked for the new one. We want to rent when I need to be closer to do the finish work, but there is a chunk of cash needed in the interim.
I have absolutely no interest ( pun intended ) in getting a heloc or refinancing if it can be avoided.

 

[skipro33]

$92,000 in FIDELITY GOVERNMENT MONEY MARKET which pays nothing, it's just cash, and another $141,000 in my checking account, money that has accumulated from pension and social security I don't spend and continues to grow by about $3,000 a month. The plan was to spend down the checking with home projects, but I can't bear to spend triple the pre-covid cost for a deck, priced at $30,000 and now quoted at over $120,000, and a barn priced and quoted the same $30K and $120K. I'll just have to wait for the resession and find a carpenter who was let go by their general contractor and needs money. Happened in 2006 when I built my home and it'll happen again I am positive. If not, I plan to time the bottom of the market and buy equity funds; Fidelity 500 index and Fidelity total market index. I'm pretty sure the 'bottom' will bounce several times, testing its true depth, and give me plenty of opportunity to not miss it. I'm just as positive the market will make back most, if not all it's losses within a year of it's low as long as we don't get into some world war.

 

[ShokWaveRider]

Credit Union MM Checking. Basically the same return as Vanguard MM.

 

[TheWizard]

All cash beyond the $10k or so in my checking account gets invested in my taxable account at Vanguard, where my AA is 95% stocks and 5% cash.

So I actually have more than $10k in cash if you include that settlement fund, but I usually have a low-ball limit order or two in place on that settlement fund cash...

 

[TheWizard]

I also have money in TIAA Traditional in my 403(b).
But that's not "cash"...

 

[RobbieB]

Spending it on boats -

 

[aja8888]

This week it's cough drops and liquid cough medicine.

 

[Car-Guy]

This week it's cough drops and liquid cough medicine.

Hope you feel better.... I find Jack Daniels in moderation works well for my coughs... Black label of course with a twist of lemon.

 

[aja8888]

Hope you feel better.... I find Jack Daniels in moderation works well for my coughs... Black label of course with a twist of lemon.

Great idea! This cough is the remnants of the allergy season stuff which has finally left, except for the irritating cough.

 

[523HRR]

Synchrony Bank.
Current APY 0.65%.

 

[Koolau]

Spending it on boats -

Sounds good to me. Spend it while it still has some value left!

 

[skyking1]

I've pondered the house construction as an investment, and it will be the largest gain in net worth in our lives, in only a year. This cash is going to make serious money for us, and really because of my year of labor in building the house ourselves. The bigger I build the more we make.
Housing could tank and we would still make bank on it.

 

[Silver]

We use Bask Bank online savings. Currently at 1.25% APY.

 

[HMMY]

I have not sold any BND, but when CDs matured, I bought VTIP (Vanguard short-term inflation protected securities) and SHV (iShares short treasury bonds). I maxed out iBonds (current rate 9.62%). My cash is still sitting in cash to fund living expenses, but if the market takes a serious dip, I may buy more stocks with my cash, VTIP or SHV.

 

[tominboise]

I bought a used Corvette with some of ours. Figured it was better then watching it sit.

 

[skyking1]

Corvette in Boise in May?
Priceless. Have a great summer

 

[Koolau]

I bought a used Corvette with some of ours. Figured it was better then watching it sit.

Probably will appreciate better than cash! More fun too.

Oh, don't forget to mention in the Blow That Dough thread! A couple of the gear heads will be jealous.