Author Topic: Need Help With Cash Savings Placement  (Read 1393 times)

dbfire

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Need Help With Cash Savings Placement
« on: March 02, 2021, 04:28:32 AM »
Hi all, I know this is a common topic so apologies for starting a new thread. It's specific to this moment in time.

I am almost FIRE and I have emergency cash of about a year's worth of expenses in a Sallie Mae money market account (not fund). That interest rate started at 1.5% whenever I started it and is now down to 0.40%. I am starting to wonder if I can do better. I know very little about treasury bonds and I see people on the boards here talking about how those returns are up recently. I want access to this emergency fund with a few business days at all times.

100% of my other investments are in stocks (with Fidelity) and I am comfortable with that risk.

Do you think I should just the emergency cash alone and don't chase a better rate, or there is a place that makes sense based on where the low-risk returns are right now?

Thank you!

cool7hand

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Re: Need Help With Cash Savings Placement
« Reply #1 on: March 02, 2021, 05:17:57 AM »
This is a question that's hard for someone else to answer because your investing situation/goals/philosophy are the most important factors. For example, we have a stash in excess of 25x our yearly expenditures. We also use a low volatility portfolio called All Seasons (aka All Weather). So we don't maintain an emergency fund. Our emergency monies are invested.

If that's not a good fit for you, how about something like VMMXX?

dbfire

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Re: Need Help With Cash Savings Placement
« Reply #2 on: March 02, 2021, 07:18:42 AM »
This is a question that's hard for someone else to answer because your investing situation/goals/philosophy are the most important factors. For example, we have a stash in excess of 25x our yearly expenditures. We also use a low volatility portfolio called All Seasons (aka All Weather). So we don't maintain an emergency fund. Our emergency monies are invested.

If that's not a good fit for you, how about something like VMMXX?

Thanks @cool7hand, I guess I should be more specific. I don't want to "invest" this money in the sense that it will not be placed anywhere where any loss is acceptable. Which is why it's in a money market account and I brought up treasury bonds. So no stocks, bond funds, speculative stuff, etc. I figure the three options are keep it in the money market account, find a better money market account, or have someone here explain to be why/how treasuries are the better option right now. Thanks for pointing out the Vanguard money market fund, I'll see if Fidelity has a similar option although I'm still looking for the why behind the options.

dabighen

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Re: Need Help With Cash Savings Placement
« Reply #3 on: May 22, 2021, 09:32:01 AM »
All of our emergency fund is in I Bonds you can invest 10,000 per social security number but cant pull for one year so you meed to ladder appropriately but in my opinion it is the way to go to protect principal.

Another Reader

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Re: Need Help With Cash Savings Placement
« Reply #4 on: May 22, 2021, 10:25:41 AM »
You just aren't going to find decent rates on cash savings right now.  You can get 0.55 at Live Oak bank, or 0.50 at Marcus or Ally.  Depending on how much cash you have, you might want to split it up and then wait to see the inevitable increase in CD rates and ladder some of those.  A good place to follow rates is www.depositaccounts.com.

PDXTabs

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Re: Need Help With Cash Savings Placement
« Reply #5 on: May 23, 2021, 08:13:32 PM »
All of our emergency fund is in I Bonds you can invest 10,000 per social security number but cant pull for one year so you meed to ladder appropriately but in my opinion it is the way to go to protect principal.

I have some too, and right now they are paying 3.54%.

ChpBstrd

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JohnnyZ

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Re: Need Help With Cash Savings Placement
« Reply #7 on: May 27, 2021, 04:21:40 PM »
Maybe the answer is don't:
https://earlyretirementnow.com/2021/05/26/the-emergency-fund-is-still-useless/#more-63393

 Hmm, that's for people who are still working. Fired people absolutely need an emergency fund if they want to stay fired, and at the end of the article he even recommends keeping 20-25% in safer assets.

MustacheAndaHalf

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Re: Need Help With Cash Savings Placement
« Reply #8 on: May 28, 2021, 05:59:58 AM »
dbfire - What historical data convinces you that a 100% stock allocation is a good retirement portfolio?

The yield on your cash will not make or break your retirement - but a crash could.  You might want to read up on "sequence of returns risk".

 

Wow, a phone plan for fifteen bucks!