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nnnotime posted:The I-Bonds are all over the news, now, due to the high inflation rates. Isn’t it just a (effective) zero interest loan? There’s no net increase once calculated for inflation, though you still pay on the “interest” you earn.
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Jul 3, 2022 20:56
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nnnotime posted:The I-Bonds are all over the news, now, due to the high inflation rates. You grossly overestimate the size of the IBond market, or underestimate the general US treasury market. In May ~$20 million worth of IBonds were sold. This is in comparison to the roughly $1.5 trillion worth of other treasuries issued that month. Corporations cannot buy them and there is a dollar limit so they can't be abused much.
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Jul 3, 2022 21:09
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Hi Thread! like many of you , I played the HMBradley game with my emergency fund a ways back. I also have an Ally account where I actually do my banking through. I'm ready to move that HMB money somewhere else. (I'll likely do I-bonds too) but is there any reason not to grab this SoFi promotion? https://www.sofi.com/banking/ Basically, - set up direct deposit on a checking account -make over $5k in DDs within 30 days of the first DD -get $300 within 14 days of the end of the 30 day period Most banks seem to require you to hold your money for a number of months before you secure the reward while this seems like a nice easy way to churn a quick reward? They actually have 1.5% rate on the account as long as you have any DD set up, which isn't terrible. Although since this promotion only requires a DD to be set up, I can simultaneously park the emergency fund somewhere else with another promotion, possibly. Any other good promotions anyone is currently playing?
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Jul 3, 2022 21:27
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Residency Evil posted:Wanted to try to revisit the topic of medium/intermediate term savings. How do you guys deal with saving for purchases that may have a 1-3 year timeframe, but aren't critical? The one I always think of is saving for a car. We have a fully funded emergency fund and an (almost) fully funded next car fund. We don't need a car right now, but will likely purchase a replacement in the next 2 years or so. Do we keep saving extra money in cash? Do stop saving cash and instead put more money in a brokerage account? Are we dumb for saving cash in the first place and should we shovel all of it in a brokerage account? Saving for a car seems like a very fluid thing. If we save less, maybe we buy a cheaper car (or take out a loan Brokerage account and either good financing or a margin loan (IBKR) when the time actually comes to buy (something slightly used with low total cost of ownership). Back of the envelope, cash is something like a 10% per year opportunity cost, and at what I imagine you'd be buying, that's like $10-20k over two years for liquidity that you don't actually need.
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Jul 3, 2022 21:29
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) If we save more, maybe we buy a more expensive car (
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Residency Evil posted:Wanted to try to revisit the topic of medium/intermediate term savings. How do you guys deal with saving for purchases that may have a 1-3 year timeframe, but aren't critical? The one I always think of is saving for a car. We have a fully funded emergency fund and an (almost) fully funded next car fund. We don't need a car right now, but will likely purchase a replacement in the next 2 years or so. Do we keep saving extra money in cash? Do stop saving cash and instead put more money in a brokerage account? Are we dumb for saving cash in the first place and should we shovel all of it in a brokerage account? Saving for a car seems like a very fluid thing. If we save less, maybe we buy a cheaper car (or take out a loan I feel like CDs are are purpose built for this.
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Jul 3, 2022 22:30
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KillHour posted:Buying cars with cash seems like a waste as long as super cheap loans exist. CubicalSucrose posted:Brokerage account and either good financing or a margin loan (IBKR) when the time actually comes to buy I've been looking at margin loans just out of curiosity. It seems like even IBKR's best rates are barely competitive with "good" credit unions (ie, the ones people talk about on car forums). Am I missing something? quote:(something slightly used with low total cost of ownership).  laxbro posted:I feel like CDs are are purpose built for this. Do you mean straight CDs or a CD ladder?
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Jul 3, 2022 23:51
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Residency Evil posted:I've been looking at margin loans just out of curiosity. It seems like even IBKR's best rates are barely competitive with "good" credit unions (ie, the ones people talk about on car forums). Am I missing something? Probably not missing anything. It has been like a year (and a lot has changed in that year) since I looked at the IBKR rates and I don't have too much context around the "good" credit unions. If they're comparable then you can pick your poison. One "benefit" of margin loans is the indefinite-ish term.
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Jul 4, 2022 00:00
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ranbo das posted:In May ~$20 million worth of IBonds were sold. Because the one data source I found says April was almost $4 billion sold. And March was almost a billion. That seems like a big change, and I wonder if I’m reading it wrong. https://fiscaldata.treasury.gov/datasets/savings-bonds-securities/savings-bonds-securities
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Jul 4, 2022 01:36
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Residency Evil posted:Do you mean straight CDs or a CD ladder? I think it's a gamble on how much rates rise. Maybe run numbers comparing how buying one $60k 2-year CD compares to buying a $5k 1-year CD every month for the next 12 months. I like the ladder option because one year from now you'll have more flexibility with your cash but of course there's the (unlikely) risk that rates drop. T-bills are another option that provide great rates and even more flexibility because you can sell them on the secondary market (with interest rate risk I'd imagine). My dad was a CD fanatic growing up. Would buy a TV with no interest for 1 year and put the cash he would have used to buy the TV into a 1-year CD the day before he bought it. It always seemed like all financial decisions were driven by when a CD on his ladder was maturing. He retired in early 50s so I guess it worked for him.
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Jul 4, 2022 02:00
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nnnotime posted:The I-Bonds are all over the news, now, due to the high inflation rates.
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Jul 4, 2022 02:43
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Silly Burrito posted:Are there any new decent high yield savings accounts that this thread recommends? Just saw that my HMBradley account’s 1% has now been surpassed by my other credit union, so no real reason to stick with them. My Ally account is at 1.0% and why would I change? Another company offering 1.25%? Sorry, no, that's not going to get me to change.
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Jul 4, 2022 02:49
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Why not? I opened a Marcus account and it took like 3 minutes. Add one more minute to link my Ally account. Now I get 1.2% for a few minutes of work.
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Jul 4, 2022 02:51
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Mu Zeta posted:Why not? I opened a Marcus account and it took like 3 minutes. Add one more minute to link my Ally account. Now I get 1.2% for a few minutes of work. For anyone fine with the effort, there is nothing wrong with bank hopping , but the answer to the why not is the effort of switching. And tbh, with my emergency fund, even switching between FDIC accounts, that’s still more stress than I would like for my e fund.
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Jul 4, 2022 05:39
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I’ve kept my e fund at Marcus for years and never touched it, I figure I’m missing out on a few bucks! But I’ll probably continue to keep it there. Decent mobile app and interface, timely transfers, backing of a brick and mortar business does it for me. Though hey Bear Stearns and Lehman probably had some bitchin office space back in the day
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Jul 4, 2022 05:48
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WithoutTheFezOn posted:What about April? No that is fair, I knew the historical data and just looked at this month. Historically there's more like 100-200 million worth sold a month, so it is a big jump. But even at the increased rate they're being sold, it's still less than 1% of bond sales. $10b in six months sounds like a lot of IBonds, but we're printing trillions worth of other bonds in that time frame. Also yes, technically the US taxpayer is paying for the interest on these.
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Jul 4, 2022 09:03
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Just a heads up but if anyone is looking at CDs right now, you should also consider Treasurys... we're in the somewhat unusual situation where Uncle Sam is paying more than bank CDs. For instance, I'm seeing 1-year t-bills at around 2.75%, a good 60bps better than the best CD yield on Bankrate.
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Jul 4, 2022 14:06
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Agronox posted:Just a heads up but if anyone is looking at CDs right now, you should also consider Treasurys... we're in the somewhat unusual situation where Uncle Sam is paying more than bank CDs. Good point. Are there limits / rules on treasury bills ?
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Jul 4, 2022 14:19
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Duckman2008 posted:Good point. Are there limits / rules on treasury bills ? Not really. Probably the biggest friction point is finding them on your broker's UI if you haven't done it before. Or you can use everyone's favorite website TreasuryDirect.
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Jul 4, 2022 15:16
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Crosby B. Alfred posted:That doesn't sound like too much work. I'm trying to think how I'd organize things... 60/40 or 80/20? Getting caught up on this thread, this reminded me of something I've been wondering about : is there any reason to keep money in your checking account rather than a HYSA if you're not immediately about to use it for a payment and don't use your debit card for purchases? I used to keep at least $500 in my checking account at all times for emergencies, but I switched a while back to keeping $25 in there and haven't had any issues. I've also been paying for things like rent/credit card bills out of my checking account all my life because that's how I was taught, but it seems like most of those things have the option to pay directly from the savings account these days - ATM withdrawals included. I'm wondering if it would make sense to forget about the checking account entirely (outside of maybe certain large purchases) and just pay bills/rent directly from my savings account. I use Ally if it makes any difference.
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Jul 4, 2022 17:53
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Residency Evil posted:I've been looking at margin loans just out of curiosity. It seems like even IBKR's best rates are barely competitive with "good" credit unions (ie, the ones people talk about on car forums). Am I missing something? I don’t know anything about this but my first thought is tax avoidance.
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Jul 4, 2022 18:00
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Atahualpa posted:Getting caught up on this thread, this reminded me of something I've been wondering about : is there any reason to keep money in your checking account rather than a HYSA if you're not immediately about to use it for a payment and don't use your debit card for purchases? I used to keep at least $500 in my checking account at all times for emergencies, but I switched a while back to keeping $25 in there and haven't had any issues. I've also been paying for things like rent/credit card bills out of my checking account all my life because that's how I was taught, but it seems like most of those things have the option to pay directly from the savings account these days - ATM withdrawals included. I'm wondering if it would make sense to forget about the checking account entirely (outside of maybe certain large purchases) and just pay bills/rent directly from my savings account. I use Ally if it makes any difference. So leave what you want in your checking account. It's fast and easy to transfer money to it. I use mine as a clearing account basically and keep whatever I feel is a sensible amount in there and transfer more as necessary. But you really shouldn't be paying for things/people out of your saving account. That's not what it's for, and some banks are still enforcing Regulation D which limits you to 6 transactions per month. Think about your checking account like the public facing part of things. Money comes in from your paycheck, out for bills. You are just clearing transactions in there. Then put whatever you don't need for the month into savings, or pull out of savings if you're having an "expensive" month. Don't transact out of your savings account, and get them to make it inaccessible from your debit card. It limits the blast radius of potential damage that can happen from exploits.
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Jul 4, 2022 18:00
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Motronic posted:So leave what you want in your checking account. It's fast and easy to transfer money to it. I use mine as a clearing account basically and keep whatever I feel is a sensible amount in there and transfer more as necessary. Thanks, I had the feeling the answer was something like this (and I forgot about the 6 transaction per month limit! Not that I would exceed it anyway) but wasn't sure if it was still true these days or more like one of those things that was sound financial advice 30 years ago but hasn't been updated for a modern context.
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Jul 4, 2022 18:14
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Atahualpa posted:Thanks, I had the feeling the answer was something like this (and I forgot about the 6 transaction per month limit! Not that I would exceed it anyway) but wasn't sure if it was still true these days or more like one of those things that was sound financial advice 30 years ago but hasn't been updated for a modern context. I'd say it's even more important in a modern context. It's all to easy for account information to get out and have someone ACH money away, unintentionally (or intentionally) reverse an ACH (like form a paycheck), etc. Only give away the account number of your checking/clearing account and only keep enough money in it for what needs to be done in the near future to minimize the risk.
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Jul 4, 2022 18:19
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Atahualpa posted:Getting caught up on this thread, this reminded me of something I've been wondering about : is there any reason to keep money in your checking account rather than a HYSA if you're not immediately about to use it for a payment and don't use your debit card for purchases? I used to keep at least $500 in my checking account at all times for emergencies, but I switched a while back to keeping $25 in there and haven't had any issues. I've also been paying for things like rent/credit card bills out of my checking account all my life because that's how I was taught, but it seems like most of those things have the option to pay directly from the savings account these days - ATM withdrawals included. I'm wondering if it would make sense to forget about the checking account entirely (outside of maybe certain large purchases) and just pay bills/rent directly from my savings account. I use Ally if it makes any difference. It is a bit personal on how much you keep but I basically don't want to think about if the money is there to pay my bills. So I keep around 2 months of bills in my main checking. The only time I have to think about it is if I have a really large purchase (like my $3500 shattered collarbone surgery). I have a 8 ish month e-fund at a different bank that can float me for a long while if something happened to my main checking. I have a second checking I have linked to my HOA that I keep just a couple months dues in. I have a third checking linked to Venmo with a few hundred in it. I don't think there is any emergency that I would need cash for and couldn't float via credit cards for a day or two.
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Jul 4, 2022 18:55
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WithoutTheFezOn posted:What about April? One little twist on this: in addition to the $10k/yr you can buy of I-Bonds directly with cash, each taxpayer can buy up to another $5k/yr using their tax refund. I suspect that juices the purchase numbers in April specifically.
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Jul 4, 2022 19:20
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Hello thread! My girlfriend sold her house and has like 100k she wants to invest. Maybe something in the 5-10 year range? Any suggestions would be great though, we're unsure where to start. I read the op but it seems a bit out of date.
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Jul 5, 2022 03:03
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Laopooh posted:Hello thread! My girlfriend sold her house and has like 100k she wants to invest. Maybe something in the 5-10 year range? Any suggestions would be great though, we're unsure where to start. I read the op but it seems a bit out of date. Your girlfriend needs to figure out what her current finances are and what her financial goals are. We can't give much advice without knowing at least something about both. For example, what does she want the money for in 5-10 years, and how much does she want to have by then? What are her retirement goals, is she already saving for retirement, is she saving enough? Age, career path, family, all kinds of things feed into the decision.
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Jul 5, 2022 05:34
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Agronox posted:Not really. Probably the biggest friction point is finding them on your broker's UI if you haven't done it before. Or you can use everyone's favorite website TreasuryDirect. Buying tbills through fidelity is pretty easy. Look up the CUSIP on treasury direct and then just search for it under Fidelity's fixed income tab. One year tbills are at 3.1% right now I believe so way better than CDs. You can also sell them early if needed since they trade on a secondary market if you need them early. You can also buy much shorter duration t-bills and set them to autoroll. You can also buy CDs off the secondary market very easily. I'm seeing that goldman sachs is selling a 18-month call protected CD at 2.950%. That is much higher than the 2-year CD they are advertising on Marcus.
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Jul 5, 2022 15:17
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so I've been shoveling a fair amount into my 401k the last few months trying to hit the 20,500 cap, which it looks like I will hit in I think early August. Two questions: 1. If I accidentally go over, what's the penalty, and why cant I be saving more to my 401k anyway? Seems stupid. 2. should I just add to our liquid reserve for the rest of the year, or what's the next step in the tree?
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Jul 5, 2022 18:59
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Your company's payroll system should automatically cut you off at the IRS limit. Double check with your finance people to confirm.
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Jul 5, 2022 19:01
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ex post facho posted:1. If I accidentally go over, what's the penalty, and why cant I be saving more to my 401k anyway? Seems stupid. If you can afford to max out your tax advantaged space, you are rich and should be paying more taxes.
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Jul 5, 2022 19:11
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Hitting the cap early can be really bad sometimes. You could be losing 6 months of company match.
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Jul 5, 2022 19:12
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ex post facho posted:so I've been shoveling a fair amount into my 401k the last few months trying to hit the 20,500 cap, which it looks like I will hit in I think early August. Two questions: You can put money into an IRA. If you exceed the income limit for a roth IRA, you can do a traditional ira or do a backdoor roth. You can get tax advantaged savings using a high deductible health care plan and Health Savings Account (HSA). When you've exhausted all your tax-advantaged savings options, you can open a brokerage account and invest for retirement in a fully-taxed way, which is a good idea even if you don't get a tax break. Since you also have tax-advantaged space, if you are doing this you can put the assets in your taxed brokerage account which have the lowest taxable events (dividends for example) and keep stuff that generates dividends or other churn in your 401(k). daslog posted:Hitting the cap early can be really bad sometimes. You could be losing 6 months of company match. Right, this is possible depending on how your employer manages matching. Mine, for example, handles this well and I get the full match regardless of when I max out my contributions. Leperflesh fucked around with this message at 19:17 on Jul 5, 2022 |
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Jul 5, 2022 19:14
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Leperflesh posted:You can put money into an IRA. If you exceed the income limit for a roth IRA, you can do a traditional ira or do a backdoor roth. Depending on your plan design and explicit language your employer is probably doing it wrong. Generally at end of plan year the HR department or payroll should be doing a true up for contributions and matching, but ymmv. Some plans are written really badly though.
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Jul 5, 2022 19:41
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pseudanonymous posted:Depending on your plan design and explicit language your employer is probably doing it wrong. Generally at end of plan year the HR department or payroll should be doing a true up for contributions and matching, but ymmv. Some plans are written really badly though. This is what I was trying to get at earlier, but it can actually manifest itself in weird ways. Had a plan where bonuses were paid in December and timing worked out in a way that lots of people didn't get match on their last paycheck of the year because the deferrals from bonus pushed them over to the limit and there wasn't time to fix the last payroll run. The bottom line is that you should call your benefits department to see how they handle match when you max out contributions.
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Jul 5, 2022 19:50
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Leperflesh posted:Your girlfriend needs to figure out what her current finances are and what her financial goals are. We can't give much advice without knowing at least something about both. For example, what does she want the money for in 5-10 years, and how much does she want to have by then? What are her retirement goals, is she already saving for retirement, is she saving enough? Age, career path, family, all kinds of things feed into the decision. She said "I have maxed out employer sponsored 401ks and my goal would be to save up enough for a house (in the Bay Area) in 5-10 years, so maybe 30% return? Or enough to supplement my retirement income. I'm saving for it but not enough (according to my dad)" I think maybe something low-medium risk with medium payoff? (I rewrote this with more and more clarification like 10 times and kept finding new questions to ask until I realized how little I know about investing and left it as is lol)
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Jul 5, 2022 19:57
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KillHour posted:If you can afford to max out your tax advantaged space, you are rich and should be paying more taxes. Taxes empower the US Government so it's actually a moral imperative to dodge as many of them as possible, OP
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Jul 5, 2022 22:35
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GoGoGadgetChris posted:Taxes empower the US Government so it's actually a moral imperative to dodge as many of them as possible, OP Taxes should be low during my peak earning years and then high to fund robust social programs for my retirement TIA.
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Jul 6, 2022 00:33
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WithoutTheFezOn posted:What about April? Treasury Direct's site isn't letting me log in tonight, the rush for more bonds has caused a crash!
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Jul 6, 2022 02:23
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Laopooh posted:She said "I have maxed out employer sponsored 401ks and my goal would be to save up enough for a house (in the Bay Area) in 5-10 years, so maybe 30% return? Or enough to supplement my retirement income. I'm saving for it but not enough (according to my dad)" She should consider putting $6k a year into an IRA, for sure. She can do that in addition to a 401(k). Whether or not she is saving enough for retire!ent depends on how much she has already saved, her age, her planned age of retirement, and how much she plans to use annually in retirement. If she invests her $100k in an S&P500 index fund, she might get a 30% return (or more) after five or ten years, or she might not. Either way, ~$130k won't cover 20% down on a million dollar house, so she also needs to hope that house prices in the bay area plateau for five to ten years, even while the market rises. But saving for a house is a good plan anyway, and I wouldn't advise taking more risk than an all-stock index fund for that time horizon. She may want to consider only investing for a few years and as soon as she reaches her goal, going back to cash even if there's a couple more years before she wants to buy, to avoid the possibility that there's a recession or market crash that wipes out her gains right before her target buy date.
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Jul 6, 2022 07:57
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