Where are people actually getting 5%? I've been seeing that quoted left and right, but when I spot check a few banks I'm seeing 3.5% - 4% for online savings accounts or CDs. Is there a bunch of wishful thinking and creative rounding up going on, or am I looking in the wrong places?
How many are holding cash right now?
Re: How many are holding cash right now?
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Re: How many are holding cash right now?
I agree with the third statement about patience in investing. The first is personal, so no comment. The second statement does not make sense because I much rather secure some potential deals that address long-term risks than chase the high cash yield.
Last edited by secondopinion on Fri Apr 28, 2023 4:53 pm, edited 1 time in total.
Passive investing: not about making big bucks but making profits. Active investing: not about beating the market but meeting goals. Speculation: not about timing the market but taking profitable risks.
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Re: How many are holding cash right now?
https://www.doctorofcredit.com/high-int ... gs-to-get/Quirkz wrote: ↑Fri Apr 28, 2023 4:51 pm Where are people actually getting 5%? I've been seeing that quoted left and right, but when I spot check a few banks I'm seeing 3.5% - 4% for online savings accounts or CDs. Is there a bunch of wishful thinking and creative rounding up going on, or am I looking in the wrong places?
The problem is these institutions aren't household names. FDIC should cover you up to 250K though.
Re: How many are holding cash right now?
Marcus has 5.05% APY for 10 month CD. T-Bill 2 month or 3 month can get up to 5% range. You won't see those 5% rates again this time next year.Quirkz wrote: ↑Fri Apr 28, 2023 4:51 pmWhere are people actually getting 5%? I've been seeing that quoted left and right, but when I spot check a few banks I'm seeing 3.5% - 4% for online savings accounts or CDs. Is there a bunch of wishful thinking and creative rounding up going on, or am I looking in the wrong places?
Time is the ultimate currency.
Re: How many are holding cash right now?
Vanguard VUSXX money market is 4.67%. That's not 5%, but it's not bad - and it will go up some more if the Fed raises rates in May.Quirkz wrote: ↑Fri Apr 28, 2023 4:51 pmWhere are people actually getting 5%? I've been seeing that quoted left and right, but when I spot check a few banks I'm seeing 3.5% - 4% for online savings accounts or CDs. Is there a bunch of wishful thinking and creative rounding up going on, or am I looking in the wrong places?
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- AnnetteLouisan
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Re: How many are holding cash right now?
If you live in a state with high state and local taxes, you can get over 5 percent tax effective yield right now on certain t-bills that you can buy in treasury direct or through your brokerage (credit to the brilliant Boglehead tenkuky for this insight). If you look on Fidelity, for example, under News and Fixed Income and check the brokered CDs on offer you will see at least one or two 5 percents. Bankrate.com is a decent place to find CD rates as well.Quirkz wrote: ↑Fri Apr 28, 2023 4:51 pmWhere are people actually getting 5%? I've been seeing that quoted left and right, but when I spot check a few banks I'm seeing 3.5% - 4% for online savings accounts or CDs. Is there a bunch of wishful thinking and creative rounding up going on, or am I looking in the wrong places?
Last edited by AnnetteLouisan on Fri Apr 28, 2023 5:39 pm, edited 1 time in total.
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Re: How many are holding cash right now?
because I am withdrawing from a cash bucket which has no sequence risk and I am not tapping into my taxable portfolio except to spend the dividends which are under 2%. My WR refers to my taxable portfolio only as opposed to my total portfolio. I view my assets as multiple discrete portfolios as opposed to one big pool that I am withdrawing from - cash, taxable, tax deferred, other (roth/hsa/misc).Marseille07 wrote: ↑Fri Apr 28, 2023 12:54 pm Help me understand how holding cash lowers your SWR? Drawing cash should count toward your WR% as you're still withdrawing something.
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Re: How many are holding cash right now?
If I count first tier EF and I Bonds, it is about 5% ,
This about a max due to decreased spending during
the pandemic. This will soon go down as I retire and start
Roth conversions.
This about a max due to decreased spending during
the pandemic. This will soon go down as I retire and start
Roth conversions.
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Re: How many are holding cash right now?
I understand what you're doing but I think it is recommended to consider all accounts as one portfolio and rebalance accordingly.stocknoob4111 wrote: ↑Fri Apr 28, 2023 5:34 pm because I am withdrawing from a cash bucket which has no sequence risk and I am not tapping into my taxable portfolio except to spend the dividends which are under 2%. My WR refers to my taxable portfolio only as opposed to my total portfolio. I view my assets as multiple discrete portfolios as opposed to one big pool that I am withdrawing from - cash, taxable, tax deferred, other (roth/hsa/misc).
If you have 1M where you have 500K stocks 500K cash, drawing 50K from the cash portion is still a 5% withdrawal overall. Disguising it as 0% WR just because you didn't slash equities doesn't make much sense to me. Your portfolio has suffered a similar consequence as drawing 5% proportionally, although I give you that it is not 100% the same thing.
Re: How many are holding cash right now?
I've been investing for 40+ years too and because of that definitely do look for short-term returns. And am less than thrilled when I don't see any that I can spend, which has been the case for a while now.
Re: How many are holding cash right now?
Munger on sitting on cash
https://finance.yahoo.com/news/billiona ... 23015.html
I believe ZIRP policy is gone for a long time and equities have competition from cash and fixed income for the first time in over a decade. The S&P500 is not the only game in town.
https://finance.yahoo.com/news/billiona ... 23015.html
I believe ZIRP policy is gone for a long time and equities have competition from cash and fixed income for the first time in over a decade. The S&P500 is not the only game in town.
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Re: How many are holding cash right now?
How they brokerage?AnnetteLouisan wrote: ↑Fri Apr 28, 2023 5:24 pmIf you live in a state with high state and local taxes, you can get over 5 percent tax effective yield right now on certain t-bills that you can buy in treasury direct or through your brokerage (credit to the brilliant Boglehead tenkuky for this insight). If you look on Fidelity, for example, under News and Fixed Income and check the brokered CDs on offer you will see at least one or two 5 percents. Bankrate.com is a decent place to find CD rates as well.Quirkz wrote: ↑Fri Apr 28, 2023 4:51 pmWhere are people actually getting 5%? I've been seeing that quoted left and right, but when I spot check a few banks I'm seeing 3.5% - 4% for online savings accounts or CDs. Is there a bunch of wishful thinking and creative rounding up going on, or am I looking in the wrong places?
“At some point you are trading time you will never get back for money you will never spend.“ |
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Re: How many are holding cash right now?
retired. no debts. enough income to (more than) maintain standard of living. hence...at 5%, I hold >50% cash. I also expect the highly anticipated recession to hit in within a year, and will redeploy if the equity market follows the economy.
Never wrong, unless my wife tells me that I am.
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Re: How many are holding cash right now?
US Treasury bills. For example, 6-month T-Bill is yielding 5.049% end of day today.Quirkz wrote: ↑Fri Apr 28, 2023 4:51 pmWhere are people actually getting 5%? I've been seeing that quoted left and right, but when I spot check a few banks I'm seeing 3.5% - 4% for online savings accounts or CDs. Is there a bunch of wishful thinking and creative rounding up going on, or am I looking in the wrong places?
https://www.marketwatch.com/investing/b ... trycode=bx
You can purchase directly at auction or on secondary market via Fidelity or other brokers.
Re: How many are holding cash right now?
This thread is now in the Investing - Theory, News & General forum (general discussion).
Re: How many are holding cash right now?
I’m not selling the ETFs I own already but new money I am sitting on is fine in 5% Tbills for a while, what is the rush when things are teetering on the brink of recession. Does anyone really believe this soft landing thesis? I’m very skeptical of it.
Re: How many are holding cash right now?
The longer I invest, the more I realize how true it is that no one really knows what’s going to happen. And to be honest, it’s been a pretty soft landing so far for index investors.
That said, I do think the risk/reward curve has changed a bit. Getting 10% on ibonds last year as the market teetered was great. Getting a very safe 5% in short term bonds doesn’t seem so bad either.
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Re: How many are holding cash right now?
I'll add to the agreement by saying that the original poster's qualification ("when 5% risk free is available") isn't even necessary. Cash has a value that goes beyond whatever yield you're getting at the moment.
Re: How many are holding cash right now?
I keep about $100k in cash. It's part of my IPS, not something that fluctuates with market conditions.
Re: How many are holding cash right now?
I am currently holding a bit more cash than usual that I would normally invest, although it is only 1% of my portfolio.
* Have been slow to contribute to Roth IRAs (2) in 2023
* Indecisive how I want to deploy it at the moment (more BND or ?) Drifted from 60/40 to 70/30 during the most recent bout of volatility and considering whether the higher stock allocation is ok for me at age 50.
* CAPE is ~30 and a bit rich for me...rightly or wrongly. I don't sell anything, but doesn't make me in a hurry to make new investments.
Floating along at the moment...
* Have been slow to contribute to Roth IRAs (2) in 2023
* Indecisive how I want to deploy it at the moment (more BND or ?) Drifted from 60/40 to 70/30 during the most recent bout of volatility and considering whether the higher stock allocation is ok for me at age 50.
* CAPE is ~30 and a bit rich for me...rightly or wrongly. I don't sell anything, but doesn't make me in a hurry to make new investments.
Floating along at the moment...
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Re: How many are holding cash right now?
This is very similar to my current situation. I don’t think very much about the timing of of new all time highs, but my wife also doesn’t have a firm retirement date so I’m unable to plan with precision. So wherever the market comes back is fine.stocknoob4111 wrote: ↑Fri Apr 28, 2023 12:33 pm Holding 2 years of cash right now and will be at 3+ years when I retire mid next year... this allows me to defer withdrawals until 2025 and then keep my swr below 2% through 2030. I am hoping for a market recovery by 2030.
Being wrong compounds forever.
Re: How many are holding cash right now?
That’s what I thought in March, 2020. I put $500 in my metal lock box in my den. There is still $460 in there today. The zombies never showed up.cbox wrote: ↑Sat Apr 29, 2023 3:56 amI'll add to the agreement by saying that the original poster's qualification ("when 5% risk free is available") isn't even necessary. Cash has a value that goes beyond whatever yield you're getting at the moment.
Don't trust me, look it up. https://www.irs.gov/forms-instructions-and-publications
Re: How many are holding cash right now?
I'm currently sitting on a pile of cash. No, not dry powder waiting for some opportune time to guess, and likely fail, when to enter the market with it.
Had some good fortune last year and this year with corporate bonus, RSU's, and ESPP and threw almost all of it into autorolled T-Bills. Why? Because I'm retiring in June and this money is earmarked for some home improvements and I'm more comfortable losing a little bit of its value to inflation than a lot of its value to Mr. Market...
Cheers.
Had some good fortune last year and this year with corporate bonus, RSU's, and ESPP and threw almost all of it into autorolled T-Bills. Why? Because I'm retiring in June and this money is earmarked for some home improvements and I'm more comfortable losing a little bit of its value to inflation than a lot of its value to Mr. Market...
Cheers.
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Re: How many are holding cash right now?
Brokered CD's at Vanguard.Quirkz wrote: ↑Fri Apr 28, 2023 4:51 pm Where are people actually getting 5%? I've been seeing that quoted left and right, but when I spot check a few banks I'm seeing 3.5% - 4% for online savings accounts or CDs. Is there a bunch of wishful thinking and creative rounding up going on, or am I looking in the wrong places?
Code: Select all
Brokered CDs
1-3 months 4-6 months 7-9 months 10-12 months 13-18 months
5.05% 5.10% 5.10% 5.20% 5.10%
“Now shall I walk or shall I ride? |
'Ride,' Pleasure said; |
'Walk,' Joy replied.” |
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Re: How many are holding cash right now?
Agree, right now we’re holding a “sick” amount of cash. Vanguard Federal MMF, T-bills on Treasury Direct. But the IRA’s are still basically in VWIAX or similar. Other than that, a large “permanent” (until they time out) allocation to I bonds.AerialWombat wrote: ↑Thu Apr 27, 2023 8:28 pm My AA is 1/3 cash-equivalents, 1/3 equities, 1/3 real estate. HYSA and T-bills are the vast majority of my bond allocation; the rest is T-notes.
If cash is trash, then I’m a garbage man!
Re: How many are holding cash right now?
I'm 100% fixed but I don't consider that cash.Yesterdaysnews wrote: ↑Thu Apr 27, 2023 7:40 pm Anecdotally, reports are saying there is a record amount of money on the sideline in MMF.
My portfolio is currently 16% in 5% T-bills currently.
Who is holding higher than normal cash right now?
What’s it going to take to see all that MMF sideline cash enter the market any time soon??
Cash to me is actual currency and my checking account...so say $3K.
Am I perfectly correct about my definition of cash? yes for me; maybe for you
I consider the rest to be investments or potential cash if wanted or needed.
Higher than normal cash? no
Sideline cash to enter the market? no
How long have you been doing this? as long as I can remember (probably at age 50 when I decided to stop borrowing...now 75)
Last edited by hudson on Sat Apr 29, 2023 8:52 am, edited 2 times in total.
Re: How many are holding cash right now?
Stock market bulls were always optimistic when they said there was "so much money on the sidelines" waiting to be deployed into equities, but now, with money market accounts paying over 4%, that argument isn't as strong. I currently have about 5% in cash, but another 40% of my portfolio in a treasury ladder that matures every 6 months, so as those bonds mature I could always hold that as cash if needed, or deploy toward other investments.
Re: How many are holding cash right now?
Including liquidity for monthly expenses, I hold about 2% in money market funds and the rest is equities. I’m 37
Crom laughs at your Four Winds
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Re: How many are holding cash right now?
Yes, cash has been rising. We are now over 11%. We intend to reduce that by raising our equity and bond targets.
It is hard to resist holding more in MMF's at the current rates. But that baloon will pop, so we'll focus on attending to "the problem" as interest rates go down.
It is hard to resist holding more in MMF's at the current rates. But that baloon will pop, so we'll focus on attending to "the problem" as interest rates go down.
Re: How many are holding cash right now?
We have more cash holdings now than usual by a significant margin.
Tim
Tim
- ruralavalon
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Re: How many are holding cash right now?
"The annual inflation rate for the United States was 5.0% for the 12 months ended March" link so 5% risk free means 00% real return.
A large investment with 00% real return makes no sense to me, except as a temporary expedient such as parking money for a home down payment.
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Re: How many are holding cash right now?
I'm about 12% cash now and sold a good bit of individual mega cap tech shares expecting a drop. So far I have not been correct.
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Re: How many are holding cash right now?
As of March 31, 2023 the S&P 500 has a 1-year return of -9.3%. "The annual inflation rate for the United States was 5.0% for the 12 months ended March" was 5%, so the non-risk free means -14.3% real return.ruralavalon wrote: ↑Sat Apr 29, 2023 8:34 am"The annual inflation rate for the United States was 5.0% for the 12 months ended March" link so 5% risk free means 00% real return.
A large investment with 00% real return makes no sense to me, except as a temporary expedient such as parking money for a home down payment.
I am illustrating this not because I don't agree with what you are trying to suggest, but because myopic loss aversion is a very strong sentiment. Short-term investing and long-term investing should not be looked at through the same lens.
I personally have a very large cash position for an outright home purchase in (hopefully) 18 months. So, I agree with your sentiment.
Last edited by goodenyou on Sat Apr 29, 2023 8:57 am, edited 2 times in total.
"Ignorance more frequently begets confidence than does knowledge" |
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Re: How many are holding cash right now?
The rate of inflation is historical. The rates generally referred to in yield data, regardless of duration are generally forward looking.ruralavalon wrote: ↑Sat Apr 29, 2023 8:34 am "The annual inflation rate for the United States was 5.0% for the 12 months ended March" link so 5% risk free means 00% real return.
Don't trust me, look it up. https://www.irs.gov/forms-instructions-and-publications
Re: How many are holding cash right now?
Don’t forget taxes. Interest income and non qualified dividends are taxed at top rate. To add insult to it, the spending is from money after taxes. Double whammy.ruralavalon wrote: ↑Sat Apr 29, 2023 8:34 am"The annual inflation rate for the United States was 5.0% for the 12 months ended March" link so 5% risk free means 00% real return.
A large investment with 00% real return makes no sense to me, except as a temporary expedient such as parking money for a home down payment.
Time is the ultimate currency.
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Re: How many are holding cash right now?
This is very important. Because of the rising interest rates, I have had a significant increase in interest income from MMF and Treasuries. So much so that a very large carry over tax credit from 2021 turned into owing a very large tax bill for 2022. Because of the recent dramatic increase in my cash position and the significant rise in interest rates, it was the first time I witnessed the huge erosion of returns by being subjected to the highest marginal taxation on earnings. But, the benefit was that my cash purchasing power was not subjected to the market adjustment of stocks and bonds. Illustrating the importance of tying duration to consumption.H-Town wrote: ↑Sat Apr 29, 2023 8:55 amDon’t forget taxes. Interest income and non qualified dividends are taxed at top rate. To add insult to it, the spending is from money after taxes. Double whammy.ruralavalon wrote: ↑Sat Apr 29, 2023 8:34 am"The annual inflation rate for the United States was 5.0% for the 12 months ended March" link so 5% risk free means 00% real return.
A large investment with 00% real return makes no sense to me, except as a temporary expedient such as parking money for a home down payment.
"Ignorance more frequently begets confidence than does knowledge" |
“At 50, everyone has the face he deserves”
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Re: How many are holding cash right now?
Of course. Not losing nominal value is a value often underestimated here. It means we don't have to bother with liability-matching as it is always matching.
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Re: How many are holding cash right now?
I think ZIRP is part of what we know, where the Fed cuts the FFR to make borrowing cheaper to increase liquidity. Right now they have to go the other way because we had too much liquidity.
Re: How many are holding cash right now?
I count my 12 month emergency fund as part of my portfolio. It comes out of the TIPS allocation. The amount of cash I hold stays the same but every year it makes up a smaller % of my portfolio.
Re: How many are holding cash right now?
That was last year's inflation, looking backwards. Inflation is lower now.ruralavalon wrote: ↑Sat Apr 29, 2023 8:34 am "The annual inflation rate for the United States was 5.0% for the 12 months ended March" link so 5% risk free means 00% real return.
A large investment with 00% real return makes no sense to me, except as a temporary expedient such as parking money for a home down payment.
Looking backwards at last year, the stock market lost 20% so does a large investment in the stock market make no sense to you?
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Re: How many are holding cash right now?
Drinking is fun. The hangover is not so fun. Beating alcoholism is even worse. We have become softer and softer as a nation and want to be shielded from anything that is uncomfortable. The problem with drowning your sorrows is that sorrows are great swimmers.
"Ignorance more frequently begets confidence than does knowledge" |
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Re: How many are holding cash right now?
You keep popping up whenever inflation prints lower then go away when inflation prints higher such as Jan 2023. I don't understand what you're trying to do here. Some posters hold a longer-term view than you, and please be respectful of such views.
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Re: How many are holding cash right now?
I’m holding quite a bit since we sold our house last year, moved to a new state and are renting while we wait for the right property. Cash is in a brokered CD ladder, fairly short term. When we find a property we will be back to maintaining 6 months of expenses in cash.
“Superhuman effort isn't worth a damn unless it achieves results.” ~Ernest Shackleton
Re: How many are holding cash right now?
I don't know what you mean about longer-term view unless you mean looking backwards. The current I-bond inflation rate is 3.4%. A 5% investment has a positive real return. 5% a year ago would not have a positive return. Why would you make your current investment decisions based on year-old data?Marseille07 wrote: ↑Sat Apr 29, 2023 10:31 amYou keep popping up whenever inflation prints lower then go away when inflation prints higher such as Jan 2023. I don't understand what you're trying to do here. Some posters hold a longer-term view than you, and please be respectful of such views.
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Re: How many are holding cash right now?
Celebrating positive real return is the short-term view I'm talking about.billaster wrote: ↑Sat Apr 29, 2023 10:50 am I don't know what you mean about longer-term view unless you mean looking backwards. The current I-bond inflation rate is 3.4%. A 5% investment has a positive real return. 5% a year ago would not have a positive return. Why would you make your current investment decisions based on year-old data?
Obviously inflation flared up at 9% while the Fed played catch-up. Real return was negative; now positive. But then eventually the Fed will stop hiking, and possibly lowering the rates and cash equivalents would once again become 0% real if not negative real, and this is par for the course.
Re: How many are holding cash right now?
I am not holding much cash. 5% isn’t so appealing with high inflation. And I’d rather be taxed at long-term cap gains and take a shot at reasonable capital appreciation.