Hello,
At Vanguard I just used a money market account for my EF. ML cash management is 0.01% yield. Alternative options are not great. Is there something else I should use instead?
Thanks!
https://olui2.fs.ml.com/Publish/Content ... eSheet.pdf
Emergency Fund @ Merrill Brokerage
Emergency Fund @ Merrill Brokerage
Doing nothing is doing something.
Re: Emergency Fund @ Merrill Brokerage
Depending on how quickly you might need the money, you could put it into short term high quality bond funds. It would take a few days for a sale to clear and give you access to cash. If you can put up with that level of delay, then the yields are still low but much higher than 0.01%.
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--Swedroe |
We assume that markets are efficient, that prices are right |
--Fama
Re: Emergency Fund @ Merrill Brokerage
Some ultra-short ETF are:
JPST - JPMorgan Ultra-Short Income
ICSH - iShares Ultra Short-Term Bond
BIL - SPDR Bloomberg Barclays 1-3 Month T-Bill
BIL holds only Treasury Bills and has actually dropped by about 0.08% during 2021.
By contrast JPST and ICSH hold a mix of credit bonds and dropped about 1.7% and 0.9% respectively during the March 2020 panic.
Vanguard has a very new Ultra-Short Bond fund (VUSB) if you want to stick with Vanguard products.
JPST - JPMorgan Ultra-Short Income
ICSH - iShares Ultra Short-Term Bond
BIL - SPDR Bloomberg Barclays 1-3 Month T-Bill
BIL holds only Treasury Bills and has actually dropped by about 0.08% during 2021.
By contrast JPST and ICSH hold a mix of credit bonds and dropped about 1.7% and 0.9% respectively during the March 2020 panic.
Vanguard has a very new Ultra-Short Bond fund (VUSB) if you want to stick with Vanguard products.
Re: Emergency Fund @ Merrill Brokerage
^^^^^^^^ This
I am assuming you are holding cash at Merrill for the Preferred Rewards program qualifications, otherwise there are better options elsewhere, many with FDIC insurance.
Merrill traditionally has had poor cash options and most here (forced to have cash at Merrill) have opted for the ultra short bond funds mentioned by Sycamore above.
A couple of others not mentioned are GSY and SHV.
Perhaps just put 105% of your emergency fund in one of these and be done with it.
Another approach would be to do something like this viewtopic.php?t=309472 and put it into something like the AOK etf. But you are taking on risk.
I am assuming you are holding cash at Merrill for the Preferred Rewards program qualifications, otherwise there are better options elsewhere, many with FDIC insurance.
Merrill traditionally has had poor cash options and most here (forced to have cash at Merrill) have opted for the ultra short bond funds mentioned by Sycamore above.
A couple of others not mentioned are GSY and SHV.
Perhaps just put 105% of your emergency fund in one of these and be done with it.
Another approach would be to do something like this viewtopic.php?t=309472 and put it into something like the AOK etf. But you are taking on risk.
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Re: Emergency Fund @ Merrill Brokerage
Vanguard just launched a short term ETF - VUSB - that might work.
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Re: Emergency Fund @ Merrill Brokerage
In normal times, Vanguard money market funds pay more than basically any other money market fund (at least that I've seen). Fidelity is a close second. ML really doesn't come close. Others have successfully changed the money market fund used at ML. In particular BIF has been a good choice, but still lags the competition. That said, the difference now is basically negligible, but it might be worth setting up at least for the future.
Though if you want more yield, you are going to need to take on more risk. These threads go through some of the risks with short bond funds (mentioned here) and alternative strategies for EF. Would read those and give them some thought.
viewtopic.php?p=5582877#p5582877
viewtopic.php?t=274556
viewtopic.php?t=309472 (note iShares AOK ETF is fairly similar in terms of composition to VASIX though has more stocks)
Personally I don't try to hold that much cash at Merrill and instead hold stocks there. If I need cash, I can transfer some from my HYSA or just sell some stocks at Merrill. Most of my cash needs are held in my pre-tax accounts using this strategy from the wiki. This gets me better yield than I can have in taxable and also defers taxes on that income.
Though if you want more yield, you are going to need to take on more risk. These threads go through some of the risks with short bond funds (mentioned here) and alternative strategies for EF. Would read those and give them some thought.
viewtopic.php?p=5582877#p5582877
viewtopic.php?t=274556
viewtopic.php?t=309472 (note iShares AOK ETF is fairly similar in terms of composition to VASIX though has more stocks)
Personally I don't try to hold that much cash at Merrill and instead hold stocks there. If I need cash, I can transfer some from my HYSA or just sell some stocks at Merrill. Most of my cash needs are held in my pre-tax accounts using this strategy from the wiki. This gets me better yield than I can have in taxable and also defers taxes on that income.
"Anyone who claims to understand quantum theory is either lying or crazy" -- Richard Feynman