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GFBeach posted:Is there any reason to invest in bond ETFs like BND or BNDX over money market funds (e.g. VMFXX, VUSXX) while the latter is giving higher yields? It depends on your view of interest rates (and how long you intend to invest). BND has an average maturity of nearly 9 years, the money markets no more than 13 months. If you, for example, think rates will generally decline across the curve, you'd rather be in BND.
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Jun 6, 2023 17:15
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GFBeach posted:Is there any reason to invest in bond ETFs like BND or BNDX over money market funds (e.g. VMFXX, VUSXX) while the latter is giving higher yields? BND will recover — it’s marked price will rise — if / when interest rates fall. This is in addition to the yield. (Note: BND could also fall further if interest rates rise more.) MMFs will not rise or fall. BND is more of an “investment” whereas MMFs are more like “Cash”. Historically, BND has outperformed cash and the reasons it has done so are still true. That said, yeah MMFs are yielding quite a bit, eh? In the short term all kinds of strange stuff can happen.
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Jun 6, 2023 17:39
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GordonComstock posted:I looked this up and the fine print for VMFXX seemed to indicate it’s not FDIC insured and as far as risk goes can lose money. Does that sound right? Personally, I consider MMFs to be "technically" risky but not practically risky (if that makes sense) -- that's my risk posture (I'm early 30s). Most of my cash is parked in FZDXX, with some random CDs / T-Bills sprinkled in as I get bored whilst pooping and see what random bank is offering 5.2% for 6 months or so.
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Jun 6, 2023 18:28
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Agronox posted:I am sorry to hear that. It can be very frustrating. Eh it’s whatever. I’ve prepped for years assuming I’ll get nothing. I’ll be comfortable with or without their help. I’m more worried about my siblings, honestly…
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Jun 6, 2023 19:21
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movax posted:Personally, I consider MMFs to be "technically" risky but not practically risky (if that makes sense) -- that's my risk posture (I'm early 30s). Most of my cash is parked in FZDXX, with some random CDs / T-Bills sprinkled in as I get bored whilst pooping and see what random bank is offering 5.2% for 6 months or so. Haha nice. The online generation reaches adulthood
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Jun 6, 2023 20:34
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HYSAs no longer the new hotness?
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Jun 6, 2023 20:49
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Pollyanna posted:HYSAs no longer the new hotness? I have submitted completely to Jack.
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Jun 6, 2023 22:13
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Agronox posted:It depends on your view of interest rates (and how long you intend to invest). BND has an average maturity of nearly 9 years, the money markets no more than 13 months. If you, for example, think rates will generally decline across the curve, you'd rather be in BND. DNK posted:BND will recover — it’s marked price will rise — if / when interest rates fall. This is in addition to the yield. (Note: BND could also fall further if interest rates rise more.) Sounds like the current situation with MMFs is something of an anomaly while I might be able to get higher yields in the short-term if I'm willing to manage it more actively, it's not a mistake to leave the money I've got on bonds where it is. Thanks for the feedback!
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Jun 6, 2023 22:33
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Pollyanna posted:HYSAs no longer the new hotness? Ally just emailed me today that they were hitting 4%, let’s not slow down just yet !
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Jun 7, 2023 01:47
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Are you guys aware of any products like T-Bills, which appreciate up to par value instead of paying out yield through dividends? I'm in a 0% capital gains country but I pay the US dividend tax - I'm really enjoying T-Bills but would like to know an alternative when the T-Bill rates go down.
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Jun 7, 2023 06:07
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Dont know about your country, but in the US income from T-bills is taxed as interest, not capital gains. More generically, a treasury bill is a type of zero coupon bond. You could also look into STRIPS.
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Jun 7, 2023 07:22
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Well that is pretty weird I've already held T-Bills until maturity and there was 0 withholding tax paid on it in IBKR. (E: could it be baked in the interest rate already?) orange sky fucked around with this message at 08:42 on Jun 7, 2023 |
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Jun 7, 2023 08:38
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orange sky posted:Well that is pretty weird I've already held T-Bills until maturity and there was 0 withholding tax paid on it in IBKR. Any tax questions are going to have to go to someone who knows whatever country you are in. I dont know I've ever paid witholding tax on any investment, but that didnt make them tax free.
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Jun 8, 2023 00:09
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haven't looked at T-bills too much lately cuz I have enough of them, but this isnt bad for this weekend's auction: (actual rate determined at auction)
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Jun 8, 2023 23:29
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Question about paying off a student loan that (unfortunately) it looks like I'll have to pay back. Loan: 170k, due to restart payments at some point this summer, with interest rate at 6.8% Possible funding sources: Cash: $100k Ibonds: $40k Brokerage account: >$170k My tentative plan is to liquidate my ibonds, take 50k from cash, and then redirect my monthly brokerage contribution to paying off the remainder of my loan in lieu of liquidating anything from my brokerage account. Does that sound reasonable?
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Jun 9, 2023 16:00
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Residency Evil posted:Question about paying off a student loan that (unfortunately) it looks like I'll have to pay back. Why liquidate iBonds over using more cash? Alternate option, can you loss-harvest anything from your brokerage account at the moment?
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Jun 9, 2023 16:21
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CubicalSucrose posted:Why liquidate iBonds over using more cash? 1. That's a good question. My ibonds are all at a 0% fixed rate. It looks like ibonds are currently paying a 4.3% composite, but that includes a 0.9% fixed rate, while my cash is in a Vanguard MM account currently paying 5%. 2. I haven't looked. Possibly, but I have enough carryover losses from 2021/2022 to carry over for years. 
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Jun 9, 2023 17:26
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I-bonds are yielding a lot less than 6.8 so I would liquidate any with a low fixed rate. Then cash, maybe.
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Jun 9, 2023 17:27
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KYOON GRIFFEY JR posted:I-bonds are yielding a lot less than 6.8 so I would liquidate any with a low fixed rate. Then cash, maybe. Agree, but don't leave your cash below your emergency fund number.
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Jun 9, 2023 17:47
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Residency Evil posted:1. That's a good question. My ibonds are all at a 0% fixed rate. It looks like ibonds are currently paying a 4.3% composite, but that includes a 0.9% fixed rate, while my cash is in a Vanguard MM account currently paying 5%. Got it. Yeah your plan seems fine then. I might extract enough from the brokerage to kill off the loans immediately (or soon enough), but you're really in "no bad option" territory.
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Jun 9, 2023 17:51
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daslog posted:Agree, but don't leave your cash below your emergency fund number. For sure. TLH also a good idea if possible.
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Jun 9, 2023 17:56
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Residency Evil posted:1. That's a good question. My ibonds are all at a 0% fixed rate. It looks like ibonds are currently paying a 4.3% composite Re: liquidating I bonds, remember a couple things: 1) The rates on I bonds will change depending on when you bought them. Most of my 0% fixed I bonds are still currently earning 6.48%. 2) Any I bonds under 5 years will have a redemption penalty of 3 months interest. This is potentially a lot of money if you cash out $40k worth. If you are going to cash them out, ideally you would want to wait until 3 months after they switch to the lower 3.x% rate, so you give up less interest.
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Jun 9, 2023 18:15
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drk posted:Re: liquidating I bonds, remember a couple things: Yeah, I have to look in to when my bonds go below 6.5%. Is there an easy way to figure this out? In any case, 3 months of interest on 40k is about $650, versus 3 months of 6.8% interest on 40k... edit: vvvv Log in to treasury direct?
Residency Evil fucked around with this message at 18:25 on Jun 9, 2023 |
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Jun 9, 2023 18:23
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Residency Evil posted:Yeah, I have to look in to when my bonds go below 6.5%. Is there an easy way to figure this out? you have to go in treasurydirect unfortunately but it shows there
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Jun 9, 2023 18:23
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If you know the date you purchased it just use this http://www.eyebonds.info/ibonds/home10000.html
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Jun 9, 2023 18:32
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Mu Zeta posted:If you know the date you purchased it just use this i suspect since dr evil has 40k in it that it was bought in at least four tranches and i absolutely cannot remember when we have acquired ours, but that is a pretty cool site
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Jun 9, 2023 18:36
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Residency Evil posted:edit: vvvv Log in to treasury direct? they got rid of the dumb keyboard! 
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Jun 9, 2023 18:40
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Residency Evil posted:Question about paying off a student loan that (unfortunately) it looks like I'll have to pay back. Sure your money market fund might at the moment have higher returns than i-bonds, but those gains will be taxed as income at your top tax rate on next year's taxes. Which slows down the overall compounding return.
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Jun 9, 2023 18:51
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Residency Evil posted:Loan: 170k, due to restart payments at some point this summer, with interest rate at 6.8% Is any of that interest tax deductible to you? It'd affect the decision.
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Jun 9, 2023 19:11
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KYOON GRIFFEY JR posted:i suspect since dr evil has 40k in it that it was bought in at least four tranches and i absolutely cannot remember when we have acquired ours, but that is a pretty cool site Yup, you got it! Mu Zeta posted:If you know the date you purchased it just use this This is a cool site thank you! drk posted:they got rid of the dumb keyboard! Ok yeah this is better. Subvisual Haze posted:My thinking is money is best where it is most protected from taxes. Less taxes meaning greater compounding growth. Deferred taxes also allow you to time your selling to occur during years where your income might otherwise be lower, allowing for potentially lower marginal tax on the gains. Thus I think you should spend from cash first, then brokerage (sell your losers if possible for capital losses tax benefits), and probably leave i-bonds alone. I think ibonds and MM funds are both subject to regular earned federal income tax rates, correct? I do generally agree about protecting money from taxes for as long as possible, although my thinking was that moving forward, I probably wouldn't elect to buy ibonds at their current interest rate. Agronox posted:Is any of that interest tax deductible to you? It'd affect the decision. Unfortunately not.
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Jun 9, 2023 20:44
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Residency Evil posted:I think ibonds and MM funds are both subject to regular earned federal income tax rates, correct? Yes, but I bonds are tax deferred. If you only have a few hundred dollars of interest, the value of deferring is pretty trivial though. I bonds are also state tax exempt. Money markets might be partially, but almost none of them are fully exempt because of RRP usage right now. edit: if you do sell your I bonds, I would strongly consider buying into the new 0.9% ones with some of that dr money drk fucked around with this message at 20:53 on Jun 9, 2023 |
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Jun 9, 2023 20:50
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drk posted:Yes, but I bonds are tax deferred. If you only have a few hundred dollars of interest, the value of deferring is pretty trivial though. Yup agreed. The ibond versus cash thing seems pretty minor. Seems like my OOP should be: 1. Use cash/ibonds to pay off loan 2. Decide if I want to sell any losing lots from my brokerage account (not sure I want to do this since I have enough losses from the last few years to max out the $3k/year limit for years). 3. Decide if I want to sell any winning lots from my brokerage account 4. Use normal monthly cash flow to pay off my loan.
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Jun 9, 2023 20:56
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Residency Evil posted:I think ibonds and MM funds are both subject to regular earned federal income tax rates, correct? I do generally agree about protecting money from taxes for as long as possible, although my thinking was that moving forward, I probably wouldn't elect to buy ibonds at their current interest rate. I guess the future benefits of holding i-bonds mostly comes down to trying to predict future inflation. If inflation shoots up again, then the yield on all your i-bonds would shoot up in response. In that scenario it would be smart to not have sold your i-bonds previously. Will that actually happen? Impossible to know, but I like the idea of having a good hedge against inflation.
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Jun 9, 2023 21:44
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The potential future good-ness of I Bonds has to be weighed against the known current bad-ness of 6.8% loan interest. Having like ~6 months expenses in inflation adjusted bonds helps me sleep at night but I also don't have any major debts.
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Jun 9, 2023 22:13
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Oh yeah, I definitely understand wanting to pay off high interest student loans, I paid off mine early. I would be willing to cash my i-bonds if I needed to, I'd just personally exhaust the cash and then brokerage funds first.
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Jun 9, 2023 22:26
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drk posted:The potential future good-ness of I Bonds has to be weighed against the known current bad-ness of 6.8% loan interest. If you mean TIPS, sure, but ibonds are illiquid and don't provide for the easy ability of moving 6 months of expenses in. I'm not rushing to move money from my brokerage (or even my MMF) to buy more ibonds in the current environment. Residency Evil fucked around with this message at 22:41 on Jun 9, 2023 |
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Jun 9, 2023 22:33
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Series I bonds are liquid in a matter of days, you just have to accept forfeiting some interest. I don’t treat them as liquid e fund money but people do and I can understand why.
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Jun 9, 2023 23:18
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KYOON GRIFFEY JR posted:Series I bonds are liquid in a matter of days, you just have to accept forfeiting some interest. I don’t treat them as liquid e fund money but people do and I can understand why. Liquid was the wrong phrase, but I mean that you can't easily move in/out of ibonds, unlike TIPS.
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Jun 9, 2023 23:27
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I have both I bonds and TIPS in my emergency fund. I Bonds are not good for day to day expenses the way a checking or savings account is, but thats not what they are for and not what I meant. I wouldnt advocate I bonds for a short term cash / dont know what to do with allocation. If you were just chasing the high returns for a year or two instead of holding cash, nothing wrong with cashing them out to pay off debt later this year. Just realize that like IRA contributions, you only get so much per year and cant ever get back previous years' contributions.
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Jun 9, 2023 23:35
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drk posted:haven't looked at T-bills too much lately cuz I* have enough of them, but this isnt bad for this weekend's auction: I hadn't looked at CDs recently for similar reasons, but the top 3-month to 2-year CDs have been hovering around 5.30-5.40 for the last couple of days since I started checking them again. Pretty nice rates either way - especially if you can snag the call-protected ones at 5.40% I keep seeing some banks put up in small batches.  Mu Zeta posted:If you know the date you purchased it just use this Hm, interesting. So if I'm reading this correctly, if I sold this set of I bonds on September 1 then I would end up with $11,208? I've been using them plus some I bought the next month to supplement my emergency fund and originally planned to just hold them until at least the five-year mark unless I needed to dip into them, but looking at the numbers it seems like it would make a lot more sense to re-evaluate in September/October and possibly pick up some T-bills or CDs instead if rates on those remain close to where they are now. (This is all money in the "back end" of my emergency fund, so it's okay if I can't liquidate it for 6-12 months.)  Any downsides to doing this that I'm overlooking? Only one that comes to mind is that since you're limited in the amount of I-bonds you can easily purchase each year, it'd be better to already have money there than to try to get it back in at a later point if interest rates rose again and you wanted to take advantage.
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Jun 9, 2023 23:38
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