Author Topic: High-Yield Savings Account/Bonds  (Read 1157 times)

sam123

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High-Yield Savings Account/Bonds
« on: July 25, 2023, 01:50:30 PM »
Hello all!

We have some cash in the bank that I am looking to invest. We want to use the money to buy a house in 8-10 years (we move too frequently for our jobs right now to buy).  We have maxed out our tax-advantaged accounts, but I don't think they would work for this anyways.   I was thinking of putting at least some of it in high-yield saving accounts or bonds now that interest rates are rising in case the stock market is down when we want to buy the house.  However, I need to research it more.  I thought I would check here though and see if anyone had suggestions.

Thank you for your help!

nouseforausername

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Re: High-Yield Savings Account/Bonds
« Reply #1 on: July 27, 2023, 06:44:14 PM »
That's a long enough time horizon where normally folks might say to just park it in an S&P ETF. But, given that markets have run up recently, and interest rates are rising in the short term -- probably just buy up Treasuries directly, and get over 5% in the relative short term. I don't know if you're subject to state taxes, but Treasuries are state tax exempt of course. Then see what the markets do in the next couple years?

As far as I can remember, there's been only one losing decade (00-09) on the S&P in a very, very long time (if ever?). And, a high yield savings account (or Treasuries) will be adding earned income atop your existing income.

That's just an awfully long time to be betting you'll beat S&P returns.

Dibbels81

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Re: High-Yield Savings Account/Bonds
« Reply #2 on: July 30, 2023, 06:55:51 AM »
I'm keeping my short-term money in the Vanguard Settlement Fund, which is where your money automatically is placed when you transfer it over. It is a money market fund, I believe VMFXX, paying ~5.2% with monthly dividends. Easy peesy.

sam123

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Re: High-Yield Savings Account/Bonds
« Reply #3 on: August 03, 2023, 08:30:49 PM »
Thank you all for the tips!

Radagast

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Re: High-Yield Savings Account/Bonds
« Reply #4 on: August 04, 2023, 12:01:08 AM »
I never use anything with a lower after-tax yield than Vanguard High Yield Tax Exempt, except for money in a checking account for immediate use.