Where to park cash?

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SpaceCowboy
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Where to park cash?

Post by SpaceCowboy »

Where are people putting cash to earn even a little interest these days? Had a CD mature and will use proceeds over the year for expenses.
I’ve been using Toyota Income Driver Notes, but they dropped their rates again down to 1.15%. I realize its not FDIC insured.
patrick
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Re: Where to park cash?

Post by patrick »

You can get close to that, or much higher with some limits, in federally insured accounts:

* 7.12% on Series I US savings bonds for 6 months, then periodically adjusts based on recent inflation. $10,000 annual purchase limit, no redemption allowed for one year, defers federal taxes, avoids state taxes.
* 6.17% at Digital Credit Union. $1,000 limit.
* 6% at H-E-B Debit. $2,000 limit. Requires some activity every 90 days to avoid fees, a $1 ACH push is sufficient.
* 5% at Service Credit Union. $500 limit, you can also get 3% on an additional $3,000.
* 4.07% at Genisys Credit Union. $7,500 limit, requires 10 debit purchases of $5 or more each month.
* 3.3% at Evansville Teachers Federal Credit Union. $20,000 limit, requires 15 debit purchases (any amount) each month and an electronic deposit.
* 3% at One Finance. No limit, but funding the 3% account is limited to 10% payroll/benefits direct deposits, up to a maximum of $1,000 per month.
* 1% at T-Mobile Money. No limit or requirements.
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Wiggums
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Re: Where to park cash?

Post by Wiggums »

SpaceCowboy wrote: Tue Jan 18, 2022 4:35 pm Where are people putting cash to earn even a little interest these days? Had a CD mature and will use proceeds over the year for expenses.
I’ve been using Toyota Income Driver Notes, but they dropped their rates again down to 1.15%. I realize its not FDIC insured.
We accept the best rate that we can find without opening 5 more accounts. This is not a criticism of anyone who wants to maximize their return. We focus on total return. CDs are not worth much effort right now.
"I started with nothing and I still have most of it left."
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Stinky
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Re: Where to park cash?

Post by Stinky »

SpaceCowboy wrote: Tue Jan 18, 2022 4:35 pm Where are people putting cash to earn even a little interest these days? Had a CD mature and will use proceeds over the year for expenses.
I’ve been using Toyota Income Driver Notes, but they dropped their rates again down to 1.15%. I realize its not FDIC insured.
I don’t think that you’ll find a rate much better than Toyota for any significant amount of cash that you’ll spend down over a year.

I agree with Wiggums about not opening multiple accounts to earn higher rates of interest on pretty trivial balances. I like to keep my financial life simple. :D
Last edited by Stinky on Tue Jan 18, 2022 8:07 pm, edited 1 time in total.
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7eight9
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Re: Where to park cash?

Post by 7eight9 »

Many conservative investors, myself included, favor fixed annuities these days. They pay much better than bank accounts, money market funds, CD and other low-risk fixed income investments.

There was a good thread recently titled Purchasing MYGAs (multi year guaranteed annuities) - mega thread that might be worth a look.
viewtopic.php?f=1&t=334589

I believe the shortest MYGA on offer is 2 years so they probably aren't applicable for your situation.
Last edited by 7eight9 on Tue Jan 18, 2022 8:33 pm, edited 1 time in total.
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acejacksingh
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Re: Where to park cash?

Post by acejacksingh »

Hi this is asked all the time - I-bonds are the best way currently. Check out the wiki for answers. :sharebeer
Topic Author
SpaceCowboy
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Joined: Sun Aug 12, 2012 12:35 am

Re: Where to park cash?

Post by SpaceCowboy »

@patrick Don't have direct deposits, so I can't use those types of accounts. Their maximum deposits are just too low.
Also, this is basically a decent chunk of cash to fund a year's worth of living expenses. Plan to draw down once a month.
@7eight9 I switched to MYGAs to replace maturing CDs that I rollover, but have primarily used 5 year terms. Not feasible for this year's cash.
Will buy my limit of iBonds, like everyone else. That's pretty much a no-brainer in the current environment. Just wish TIPS had a similar 0% real rate floor.
exodusNH
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Re: Where to park cash?

Post by exodusNH »

SpaceCowboy wrote: Tue Jan 18, 2022 11:56 pm @patrick Don't have direct deposits, so I can't use those types of accounts. Their maximum deposits are just too low.
Also, this is basically a decent chunk of cash to fund a year's worth of living expenses. Plan to draw down once a month.
@7eight9 I switched to MYGAs to replace maturing CDs that I rollover, but have primarily used 5 year terms. Not feasible for this year's cash.
Will buy my limit of iBonds, like everyone else. That's pretty much a no-brainer in the current environment. Just wish TIPS had a similar 0% real rate floor.
If you're over 59.5, MYGAs are an option. (Or, if you will be by the time it matures. Alternatively, you can roll the maturing MYGA into a new one.)
Topic Author
SpaceCowboy
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Re: Where to park cash?

Post by SpaceCowboy »

exodusNH wrote: Tue Jan 18, 2022 11:58 pm
SpaceCowboy wrote: Tue Jan 18, 2022 11:56 pm @patrick Don't have direct deposits, so I can't use those types of accounts. Their maximum deposits are just too low.
Also, this is basically a decent chunk of cash to fund a year's worth of living expenses. Plan to draw down once a month.
@7eight9 I switched to MYGAs to replace maturing CDs that I rollover, but have primarily used 5 year terms. Not feasible for this year's cash.
Will buy my limit of iBonds, like everyone else. That's pretty much a no-brainer in the current environment. Just wish TIPS had a similar 0% real rate floor.
If you're over 59.5, MYGAs are an option. (Or, if you will be by the time it matures. Alternatively, you can roll the maturing MYGA into a new one.)
How are they an option for cash that's needed during the year? They have high early withdrawal penalties?
exodusNH
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Re: Where to park cash?

Post by exodusNH »

SpaceCowboy wrote: Wed Jan 19, 2022 12:04 am
exodusNH wrote: Tue Jan 18, 2022 11:58 pm
SpaceCowboy wrote: Tue Jan 18, 2022 11:56 pm @patrick Don't have direct deposits, so I can't use those types of accounts. Their maximum deposits are just too low.
Also, this is basically a decent chunk of cash to fund a year's worth of living expenses. Plan to draw down once a month.
@7eight9 I switched to MYGAs to replace maturing CDs that I rollover, but have primarily used 5 year terms. Not feasible for this year's cash.
Will buy my limit of iBonds, like everyone else. That's pretty much a no-brainer in the current environment. Just wish TIPS had a similar 0% real rate floor.
If you're over 59.5, MYGAs are an option. (Or, if you will be by the time it matures. Alternatively, you can roll the maturing MYGA into a new one.)
How are they an option for cash that's needed during the year? They have high early withdrawal penalties?
Sometimes you can withdraw a small percentage each year. It depends on the product. They are most definitely not suitable for regular withdrawals.
smectym
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Re: Where to park cash?

Post by smectym »

SpaceCowboy wrote: Tue Jan 18, 2022 11:56 pm @patrick Don't have direct deposits, so I can't use those types of accounts. Their maximum deposits are just too low.
Also, this is basically a decent chunk of cash to fund a year's worth of living expenses. Plan to draw down once a month.
@7eight9 I switched to MYGAs to replace maturing CDs that I rollover, but have primarily used 5 year terms. Not feasible for this year's cash.
Will buy my limit of iBonds, like everyone else. That's pretty much a no-brainer in the current environment. Just wish TIPS had a similar 0% real rate floor.
Space, if you really mean “cash,” as opposed to compromises such as a term or lock-up, or an element of risk, one approach is to simply shrug and invest in a money market fund such as Vanguard U.S. Treasury VUSSX, on the premise that by 2023 the fund may be yielding 2% or more, depending on the pace of Fed interest rate hikes. That’s what I would do if I really required a demand deposit investment today.
richard.h.gao
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Re: Where to park cash?

Post by richard.h.gao »

smectym wrote: Wed Jan 19, 2022 12:24 am Space, if you really mean “cash,” as opposed to compromises such as a term or lock-up, or an element of risk, one approach is to simply shrug and invest in a money market fund such as Vanguard U.S. Treasury VUSSX, on the premise that by 2023 the fund may be yielding 2% or more, depending on the pace of Fed interest rate hikes. That’s what I would do if I really required a demand deposit investment today.
VUSSX is already down 8% in the past year. A 2% yield isn't going to offset your losses.
wetgear
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Re: Where to park cash?

Post by wetgear »

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