high yield savings alternative as ETF?

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
Post Reply
Topic Author
tryhappiness
Posts: 10
Joined: Sun Jul 26, 2020 11:01 am

high yield savings alternative as ETF?

Post by tryhappiness »

Hello,

I currently have an American Express Savings account that pays 0.65% in interest; I want to minimize the amount of bank accounts I have and basically have all this money in a single brokerage account (e.g Schwab). Unfortunately Schwab pays next to no interest. I heard I could buy a short term treasury ETF that would pay me a similar amount in interest and is almost as stable as the savings account.

Any suggestions? Thanks.
User avatar
JoMoney
Posts: 16260
Joined: Tue Jul 23, 2013 5:31 am

Re: high yield savings alternative as ETF?

Post by JoMoney »

Not an ETF (which I think is preferable for money I want to keep as near-term cash), but are any of these Schwab Money Market funds available to you?
https://www.schwabassetmanagement.com/p ... und-yields
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham
rgramma
Posts: 29
Joined: Tue Nov 06, 2018 9:49 pm

Re: high yield savings alternative as ETF?

Post by rgramma »

Funny you bring that up, as I just posted about upcoming cash deposit options at Vanguard a few minutes ago, and I, like you, am trying to undo myself of my AMEX savings account.

For ETFs is this space, I've heard other forum members recommend:
BIL - SPDR 1-3 Month T-Bill
SHV - iShares Short Treasury ETF

If you're willing to up on duration a little bit and have some corporate debt in the mix you can also consider
ICSH - iShares Ultra Short-Term Bond ETF

For me personally, it's not a route I would go because I shudder at the thought of having each cash withdrawal essentially be a sale of shares that would have capital gains and losses that would need to be tracked and reported, even through we're looking at shares that will only fluctuate by pennies.

As JoMoney just said, why not just buy one of the Schwab money market funds?
mega317
Posts: 5705
Joined: Tue Apr 19, 2016 10:55 am

Re: high yield savings alternative as ETF?

Post by mega317 »

SGOV and CLTL are similar to and less expensive than BIL and SHV.
User avatar
typical.investor
Posts: 5263
Joined: Mon Jun 11, 2018 3:17 am

Re: high yield savings alternative as ETF?

Post by typical.investor »

tryhappiness wrote: Fri May 27, 2022 9:43 pm Hello,

I currently have an American Express Savings account that pays 0.65% in interest; I want to minimize the amount of bank accounts I have and basically have all this money in a single brokerage account (e.g Schwab). Unfortunately Schwab pays next to no interest. I heard I could buy a short term treasury ETF that would pay me a similar amount in interest and is almost as stable as the savings account.

Any suggestions? Thanks.
Me too. I stopped using American Express Savings or Ally Bank and am at Schwab. I use VTIP (Vanguard Short Term Tips) for funds earmarked for spending. I may use SCHP which is Schwab's Intermediate durations TIPS but only for amounts which I won't be spending in the next couple years (don't have that much yet). Even with recent hikes and NAV loss, SCHP and VTIP come out ahead.

I am not real concerned with having to sell an ETF in terms of tax reporting. The bigger hassle is remembering to sell so it's settled so you can transfer the cash out to pay your credit card or whatever.

https://www.portfoliovisualizer.com/bac ... ion3_3=100
User avatar
jeffyscott
Posts: 13484
Joined: Tue Feb 27, 2007 8:12 am

Re: high yield savings alternative as ETF?

Post by jeffyscott »

rgramma wrote: Fri May 27, 2022 10:12 pmFor me personally, it's not a route I would go because I shudder at the thought of having each cash withdrawal essentially be a sale of shares that would have capital gains and losses that would need to be tracked and reported, even through we're looking at shares that will only fluctuate by pennies.
I don't use ETFs, but have replaced (for the most part) a savings account with a few T-bills that mature at times when I know that I may need some extra money in the next year (e.g. property tax time) and also a short term bond index fund that could be an additional source of funds. However, these are all held in an IRA. I also have CDs at 2-4 year maturities to serve potential cash needs in future years, with one maturing about every 6 months.

While I am eligible to withdraw from the IRA, I would use taxable assets first by selling from a stock mutual fund in taxable and then buying the same or similar in the IRA, using the proceeds from maturing T-bills, CDs, or sale of the short term bond fund (I could also sell T-bills, but would not sell the CDs as the spreads are large for those).
NYCaviator
Posts: 1963
Joined: Sat Apr 09, 2016 5:06 pm
Location: NYC

Re: high yield savings alternative as ETF?

Post by NYCaviator »

tryhappiness wrote: Fri May 27, 2022 9:43 pm Hello,

I currently have an American Express Savings account that pays 0.65% in interest; I want to minimize the amount of bank accounts I have and basically have all this money in a single brokerage account (e.g Schwab). Unfortunately Schwab pays next to no interest. I heard I could buy a short term treasury ETF that would pay me a similar amount in interest and is almost as stable as the savings account.

Any suggestions? Thanks.
What's your goal? Consolidation or yield?

If yield, stick with Amex or another online savings account. MMs/treasury ETFs just aren't going to match it, and you are trading away FDIC insurance. Insured savings accounts are about the safest thing out there.

If consolidation, maybe? I like having some cash completely separate from my other accounts, just in case. Yeah, if my account is hacked the bank will fix it, but it may take some time and be a pain.

Plus, now that amex FINALLY updated its website, you can see your savings accounts in the main screen with your credit cards, as well as in the app. That's super helpful because we have biz and personal cards with Amex, so its all right there. Before you had to go to a separate 1990s-esque website which was annoying.
Topic Author
tryhappiness
Posts: 10
Joined: Sun Jul 26, 2020 11:01 am

Re: high yield savings alternative as ETF?

Post by tryhappiness »

Thanks everyone for your responses, lots of helpful stuff in here. I've heard of money market accounts, but didn't understand them yet (will do some reading this weekend).
NYCaviator wrote: Sat May 28, 2022 8:02 amWhat's your goal? Consolidation or yield?
A mix of both. I am willing to give up a little bit of yield, e.g down from 0.65 to 0.4% in order to consolidate.

NYCaviator wrote: Sat May 28, 2022 8:02 amPlus, now that amex FINALLY updated its website, you can see your savings accounts in the main screen with your credit cards, as well as in the app. That's super helpful because we have biz and personal cards with Amex, so its all right there. Before you had to go to a separate 1990s-esque website which was annoying.
Hah, you're right :happy :D
toddthebod
Posts: 5735
Joined: Wed May 18, 2022 12:42 pm

Re: high yield savings alternative as ETF?

Post by toddthebod »

VGSH - Vanguard's Short-term Treasury ETF. Effective maturity - 2 years, 30-day SEC yield - 2.55%, some interest-rate risk (NAV dropped about 4% this year), but you won't lose your shirt.
STIP - BlackRock's Short-Term TIPS fund, Effective maturity - 2.7 years, real yield of -1%, did not lose any NAV this year.
SGOV - BlackRock's 0-3 month T-bill ETF, Effective maturity - 0.1 years, 30-day SEC yield 0.66%.

You could also just buy 3-month T-bills through Schwab that will return 0.31% over 3 months (a bit over 1.2% annualized). Settlement on June 1st, matures September 8th. Probably the best safe return you can get for that length of time, and you can roll it over into new T-bills at that time.
Post Reply