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IMO, best place to park cash...
Posted on 3/20/23 at 2:00 pm
Posted on 3/20/23 at 2:00 pm
is USFR - an ultra-short, floating rate treasury ETF.
I wasn't overly aware of the Treasury "floating rate note" (FRN) market until somewhat recently, but it solves a lot of problems.
It's liquid
Its duration is basically zero
Its yield is high and constantly re-sets
It avoids the classic "bond fund" problem of constantly rolling, and thus never expiring at maturity (like a physical bond), thus exposing investors to drawdowns.
Right now, it's about 4.75%. For you guys that are leery of bank deposits and/or simply aren't being paid enough by your banks, this is a good option.
Appendix: 100% of the assets are 2-year, FRNs. These reset weekly at the highest clearing yield of the 3-month t-bill auction, so you basically earn actual short-term, money market rates without any of the other headaches. Additionally, FRNs pay a "kicker" of several (~20) basis points to entice demand, so the ETF earns that additional yield also.
Expense ratio of the ETF is like 15bps.
I wasn't overly aware of the Treasury "floating rate note" (FRN) market until somewhat recently, but it solves a lot of problems.
It's liquid
Its duration is basically zero
Its yield is high and constantly re-sets
It avoids the classic "bond fund" problem of constantly rolling, and thus never expiring at maturity (like a physical bond), thus exposing investors to drawdowns.
Right now, it's about 4.75%. For you guys that are leery of bank deposits and/or simply aren't being paid enough by your banks, this is a good option.
Appendix: 100% of the assets are 2-year, FRNs. These reset weekly at the highest clearing yield of the 3-month t-bill auction, so you basically earn actual short-term, money market rates without any of the other headaches. Additionally, FRNs pay a "kicker" of several (~20) basis points to entice demand, so the ETF earns that additional yield also.
Expense ratio of the ETF is like 15bps.
This post was edited on 5/31/23 at 6:04 pm
14
Posted on 3/20/23 at 2:54 pm to Big Scrub TX
Why would you want a floating rate when rates are likely to start heading back down?
Posted on 3/20/23 at 2:58 pm to Shepherd88
quote:If you are confident in making a rate bet, then sure, take on some duration.
Why would you want a floating rate when rates are likely to start heading back down?
Although t-bills generally trade on top of fed funds, so you can kind of see any changes there coming from far down the tracks.
But in any event, I said cash. If you want to make an actual fixed income investment, then that's in a different bucket.
Posted on 3/20/23 at 3:02 pm to Big Scrub TX
There are multiple HY savings accounts available with 4% rates. No fees and can move whenever. Seems like the easiest IMO. Especially if you are under 250k.
Posted on 3/20/23 at 3:31 pm to Big Scrub TX
...or park it in a MM paying 4.3%.
Posted on 3/20/23 at 3:58 pm to TigerMan327
quote:How is that better than getting paid more in a liquid security? (Not sure what everyone's transaction fees are, but at my brokerage, I only have to pay for mutual fund trades, so ETFs are free).
There are multiple HY savings accounts available with 4% rates. No fees and can move whenever. Seems like the easiest IMO. Especially if you are under 250k.
Is moving money around in bank accounts (especially if you have to perpetually rate shop across institutions) actually easier than just buying and selling one ticker symbol? Doesn't strike me as so. I hate dealing with banks.
Posted on 3/20/23 at 3:58 pm to TDTOM
quote:How is that better and how do you find the ones that are always paying the most? USFR is essentially one-stop shopping.
or park it in a MM paying 4.3%.
Posted on 3/20/23 at 8:50 pm to Big Scrub TX
I'm about to do wife's (do i have to say "no pics" on MT?) and my max IRA and SEP IRA contributions.
I assume I can buy USFR in our TD Amtd IRAs. I tried to figure out what the mm rates were for cash positions at TD, but couldn't find it. I just want to stay in cash for new contributions right now. So this could be a good option. thx
I assume I can buy USFR in our TD Amtd IRAs. I tried to figure out what the mm rates were for cash positions at TD, but couldn't find it. I just want to stay in cash for new contributions right now. So this could be a good option. thx
Posted on 3/20/23 at 9:23 pm to Big Scrub TX
quote:
How is that better and how do you find the ones that are always paying the most? USFR is essentially one-stop shopping.
I've been using Fidelity SPRXX for months and will continue to keep my cash there until this shite shorts out. You can google search Fidelity SPRXX 7 day yield (4.33% currently). They also have SPAXX which is a government MM fund at 4.2% currently.
LINK
Posted on 3/20/23 at 10:07 pm to Thundercles
SWVXX
i use that at TDA.
i use the vanguard MM fund with other accounts
i use that at TDA.
i use the vanguard MM fund with other accounts
Posted on 3/21/23 at 12:05 pm to McLemore
quote:Yeah, it's just a normal ETF, so I think it should be super easy for you.
I assume I can buy USFR in our TD Amtd IRAs. I tried to figure out what the mm rates were for cash positions at TD, but couldn't find it. I just want to stay in cash for new contributions right now. So this could be a good option. thx
Posted on 3/22/23 at 12:36 am to TigerMan327
quote:
There are multiple HY savings accounts available with 4% rates. No fees and can move whenever. Seems like the easiest IMO. Especially if you are under 250k.
Recommended HYSA?
Posted on 4/3/23 at 1:47 pm to McLemore
3-month t-bills cleared at their cycle-high yield this morning - 4.78%. USFR adds another 20bps or so on top of that.
Posted on 4/5/23 at 12:40 am to Konkey Dong
quote:It's OK, but lower than USFR.
I use SGOV for mine
Posted on 4/10/23 at 12:22 pm to Big Scrub TX
Highest discount yield that cleared at the bills auction this AM was 4.98% - a 20bps pickup over last week - the biggest week over week gain I think we've seen. That means USFR should yield more than 5% for the coming week.
Posted on 4/11/23 at 11:39 am to Big Scrub TX
Should also be state tax exempt also, making yields look better if your state has one
Posted on 4/11/23 at 6:24 pm to Big Scrub TX
100% in agreement with your post as it’s exactly what I have done with my wealth.
I’m in the market still with disposable cash but it’s not doing well.
My metals of which I own tangible amounts are solid at this point in and out of the country but, with the new laws on the books in place now, both are not safe from seizures in catastrophic events by our government.
Just have to live with that.
I’m in the market still with disposable cash but it’s not doing well.
My metals of which I own tangible amounts are solid at this point in and out of the country but, with the new laws on the books in place now, both are not safe from seizures in catastrophic events by our government.
Just have to live with that.
Posted on 4/11/23 at 6:51 pm to Troutforbreakfast
quote:
with the new laws on the books in place now, both are not safe from seizures in catastrophic events by our government.
What new laws are on the books regarding seizure of assets? Just curious.
Posted on 4/11/23 at 6:56 pm to Jag_Warrior
The Obama laws concerning the offshore banking and assets which were upheld in the courts.
Canada was the last holdout.
Canada was the last holdout.
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