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jokes posted:I-bonds in an emergency fund isn't a great idea because you can't immediately access them for a year, and will incur a penalty to do so for a while after. SPAXX isn't FDIC insured. I'm not too worried about SPAXX not being FDIC insured, since it's investing in Government bonds.
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Aug 1, 2023 17:09
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| # ? May 16, 2024 16:49 |
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"Emergency fund" means a few different things. For someone with a few hundred thousand of liquid-ish assets, it's very very different from someone with like 10k total, most of it in a 401k or something. I have some money in a checking account to pay off my credit cards every month. I have a few years worth of I Bonds. I have a bunch of years of Roth IRA contributions. I have old HSA-qualifying receipts. I have some cash at home. And credit cards in a bunch of flavors in the proverbial sock drawer. "All of that" kinda counts as an "emergency fund" I guess (though I don't know what kind of emergency would require much of that)? The concept gets kinda awkward past a certain minimum level of financial stability (but before that it's SUPER important!).
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Aug 1, 2023 17:10
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Moving emergency funds to I-bonds isn't a great idea because of the 1 year lockout and 5 year penalty. Once you have money in I-bonds that's past that point, though, I think it's fine to draw down your savings by that amount since it's effectively liquid. I think this is what's happening when people describe an I-bond "ladder;" they're slowly adding extra money to I-bonds and then counting it as part of their emergency savings as it passes the penalty mark. At least, that's what I'm doing. Right now none of my I-bonds are 5 years old so I don't consider them as part of my emergency funds, and I maintain my full e-fund in fully liquid HYSA/money market. The I-bonds are in the "long term stable investment" category until then. Is it overly cautious? Probably. But I'd rather be certain I have my entire emergency fund available for emergencies than chase an extra 1% and lose it if I need to cash out.
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Aug 1, 2023 17:25
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As I understand it, FDIC insurance only really matters for deposits that are subject to fractional reserve lending from a bank, like your normal checking or savings accounts. Anything where there's an actual asset like a bond or a stock or shares in something that are being held for you custodially, you don't need insurance because even if the custodian goes bankrupt, the asset itself is still there and shouldn't be encumbered.
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Aug 1, 2023 17:28
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daslog posted:I'm not too worried about SPAXX not being FDIC insured, since it's investing in Government bonds. I wouldn't lean on that as much. Institutions have gone under trading treasuries-- the market value of a treasury can fluctuate wildly, even if it's free of default risk. Your emergency fund is generally supposed to be extremely liquid and as secure as humanly possible, and SPAXX is extremely secure but not as secure as a FDIC insured account somewhere. I also wouldn't worry about it not being FDIC insured, I'm just highlighting the (admittedly low) risk. jokes fucked around with this message at 17:40 on Aug 1, 2023 |
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Aug 1, 2023 17:37
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SpartanIvy posted:Would you mind sharing how you keep your emergency funds and more of your logic behind it? I'm curious why you wouldn't bank on I bonds for the majority of your emergency fund. I don't think there's a right or wrong answer, I'm just curious about your thinking. So they’re all past the year mark, but as someone posted you have to be aware of the year delay to access plus 3 month penalty within 5 years. Plus when you withdraw you’ll pay US tax (obviously inevitable at some point but still). Because there’s a yearly limit, it creates a mental stopgate of it feeling like taking money from a retirement fund. Once you withdraw you can’t re deposit and get the same exact rate and term. Again, I think they’re fine and I have some I Bonds, but I would def not treat it as a primary e fund. Bonus / extra yes, and for me hopefully it’s s part of my extra e fund I hopefully won’t ever need, but ever since Covid I have been boosting my e fund just to feel better, so it helps there. Tricky Ed posted:Moving emergency funds to I-bonds isn't a great idea because of the 1 year lockout and 5 year penalty. Once you have money in I-bonds that's past that point, though, I think it's fine to draw down your savings by that amount since it's effectively liquid. I’m not "laddering" in the same sense but this is a good explanation.
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Aug 1, 2023 17:43
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on the other hand presently I-Bonds are dog poo poo in terms of return compared to such things as 26 week T-Bills I'm debating about exiting a bunch of 0% fixed rate I-Bonds but probably gonna do it later on if the inflation based rate goes lower.
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Aug 1, 2023 17:47
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Muir posted:As I understand it, FDIC insurance only really matters for deposits that are subject to fractional reserve lending from a bank, like your normal checking or savings accounts. Anything where there's an actual asset like a bond or a stock or shares in something that are being held for you custodially, you don't need insurance because even if the custodian goes bankrupt, the asset itself is still there and shouldn't be encumbered. There is separate risk with brokerage accounts that is covered by SIPC insurance up to $500k. There is still risk of fraud and the like that gets handled by the SIPC, which is what happened with Bernie Madoff. In case of failure might all be a full recovery without need for insurance (I think this is what happened with Bear Stearns) but it might not be if they don't comply with all the rules and regulations, or if those rules get weakened in the future. edit to clarify for readers: it's specifically insurance on your broker failing so that you can recover the assets held for you. If you buy a bond or whatever and that fails it doesn't count. esquilax fucked around with this message at 18:08 on Aug 1, 2023 |
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Aug 1, 2023 17:56
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esquilax posted:There is separate risk with brokerage accounts that is covered by SIPC insurance up to $500k. There is still risk of fraud and the like that gets handled by the SIPC, which is what happened with Bernie Madoff. In case of failure might all be a full recovery without need for insurance (I think this is what happened with Bear Stearns) but it might not be if they don't comply with all the rules and regulations, or if those rules get weakened in the future. Right, if someone committed fraud or literally lied and took your stocks without telling you, that's different. But if your brokerage just goes bankrupt, the stocks/bonds/money market fund shares they were holding in your name still exist and can just be held for you by a still-functional brokerage instead with no loss to you.
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Aug 1, 2023 18:10
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KYOON GRIFFEY JR posted:on the other hand presently I-Bonds are dog poo poo in terms of return compared to such things as 26 week T-Bills I am too lazy to take my I-Bonds out and get T-Bills.
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Aug 1, 2023 22:53
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Smashing Link posted:I am too lazy to take my I-Bonds out and get T-Bills. Yeah it’s this OP
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Aug 2, 2023 01:27
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FWIW I cashed out my November 2021 I Bonds and the process was simple.
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Aug 2, 2023 01:31
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KYOON GRIFFEY JR posted:on the other hand presently I-Bonds are dog poo poo in terms of return compared to such things as 26 week T-Bills Comparing the returns of a 26 week investment to the returns of a 30 year investment is not good long term investment advice. There are completely valid reasons to choose I Bonds today at a real return of >0% for 30 years versus 6 month tbills paying 5% nominal today plus unknown returns for the other 29.5 years.
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Aug 2, 2023 01:31
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I think in the end more diverse savings options are overall good. I have I Bonds now, they’re a bonus emergency fund and add to that. I’m not going out and getting a crazy amount more. But I would look at and consider T Bills next, etc. End of day, whatever works for each person, while jus tanking sure you keep enough of a liquid emergency fund.
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Aug 2, 2023 01:44
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SpartanIvy posted:Sort of I think? You can only buy $10K of I-bonds a year, so it will take 3 years to get my emergency funds completely into I-bonds. Once they're there though I will probably just let them sit for the full 30 years, unless I need them before then. At the 30 year mark I will be retired hopefully so I can just take the money out. TBH I think I wasn’t super awake and didn’t think hard enough about what I was posting, and I think maybe I was thinking of T-bills? Sorry
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Aug 2, 2023 02:49
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I keep about six months worth of emergency fund cash bc I’m the primary money maker and I have anxiety. I also maxed out I-bonds a couple years in a row so I suppose I could draw down my emergency cash by that amount.
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Aug 2, 2023 02:56
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drk posted:Comparing the returns of a 26 week investment to the returns of a 30 year investment is not good long term investment advice. Sure but a lot of goons who bought I bonds are chasing short term yield. At one point they were great for that and they’re not anymore. If you’ve got I bonds filling a different role in your investment strategy that’s fine. Mine mostly serve as long term store of value and as bond ballast in my portfolio.
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Aug 2, 2023 03:21
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KYOON GRIFFEY JR posted:Sure but a lot of goons who bought I bonds are chasing short term yield. At one point they were great for that and they’re not anymore. Pretending that people bought ibonds for reasons other than the 10% return is something this thread seems to love and idgi.
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Aug 2, 2023 03:32
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I bought I-bonds the last couple years because they had like 7-10% yields, but also because I had no clue they even existed until people started freaking out about the yields. What I want from my emergency fund is to be safe funds I hopefully don't have to use but if I do it hasn't gotten eaten away by inflation or other risks and I don't have to keep topping it up to keep up with my expenses, the idea of a chunk of my e-fund returning above inflation for up to 30 years kicks rear end. Seems ideal, even.
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Aug 2, 2023 04:17
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I treat I-bonds more like a place to stash money that might or might not be needed for a car or expensive trip. So not an emergency fund, but not getting ravaged by inflation.
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Aug 2, 2023 04:21
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I bought my first I Bond in Nov 2021 and convinced as many people as I could to get them as well. I think it's been a good run but they aren't that attractive without the high yield. T Bills are more fun while also being no risk. But it's not like there's a huge difference so whatever you do it's better than leaving it in a savings account at BoA or Chase.
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Aug 2, 2023 04:31
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Residency Evil posted:Pretending that people bought ibonds for reasons other than the 10% return is something this thread seems to love and idgi. I've bought them every year since 2017. At the time they beat comparable CDs, even when taking into account the early termination penalty. You essentially got the inflation kicker for free. That's not the case now--you pay 200 bps or whatever for it--but depending on what you're trying to do that inflation protection might still be worth it.
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Aug 2, 2023 14:22
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Any recs on the best set it and forget it HYSA? I’m getting in the weeds and probably just need to choose one with a bank I’ve heard of.
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Aug 2, 2023 15:12
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Democratic Pirate posted:Any recs on the best set it and forget it HYSA? I’m getting in the weeds and probably just need to choose one with a bank I’ve heard of. Ally bank. Go go go.
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Aug 2, 2023 15:37
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I've also been happy with Ally.
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Aug 2, 2023 15:47
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Democratic Pirate posted:Any recs on the best set it and forget it HYSA? I’m getting in the weeds and probably just need to choose one with a bank I’ve heard of. I've been happy with AMEX but I already had a relationship with them because of my credit card so ease of use was a factor.
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Aug 2, 2023 16:01
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I like Marcus but it's really bare bones
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Aug 2, 2023 16:19
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Chad Sexington posted:I've been happy with AMEX but I already had a relationship with them because of my credit card so ease of use was a factor. This is me as well.
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Aug 2, 2023 16:23
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KYOON GRIFFEY JR posted:Sure but a lot of goons who bought I bonds are chasing short term yield. At one point they were great for that and they’re not anymore. I only went for I-bonds due to cash surplus in late 2021/early 2022. Should I be thinking of selling them now and taking the 3-month interest penalty or just leave them for the 5-year minimum and cash out then? Democratic Pirate posted:Any recs on the best set it and forget it HYSA? I’m getting in the weeds and probably just need to choose one with a bank I’ve heard of. Elements FCU does 4.25% APY if you're $10,000 or over. MJP fucked around with this message at 16:27 on Aug 2, 2023 |
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Aug 2, 2023 16:24
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If you already have your emergency fund then I would sell the I bonds and invest it according to your personal risk tolerance. Personally I'd throw it all into VTI
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Aug 2, 2023 16:29
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I've been happy with Discover as my bank. Helped that I already had an account for their IT rewards card. 4.3% APY at the moment. Good website, good app.
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Aug 2, 2023 16:36
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Mu Zeta posted:If you already have your emergency fund then I would sell the I bonds and invest it according to your personal risk tolerance. Personally I'd throw it all into VTI Maybe this goes into a different thread, but one of the things I considered before "gently caress it, put it into I-series and worry about it in the future" was getting solar panels installed. I'm already doing fine with my investments - we put $2k a month into brokerage after all the other stuff, and VTI is among 'em - should I give another thought to solar? We own the house, we're going to stay in it forever, the roof was redone in 2014, etc. I realize we can expect to have falloffs and probably need to replace them in 25 years, but we have the roof square footage to either drastically reduce or negate our electric bills. On the flip side, we had quotes for anywhere from $24k-$32k back in 2021/22, I'd expect them to go up if I look now. I can afford putting less into our brokerage for a year or so to make up the difference in cash rather than go into debt for them. Bad long-term idea for I-bonds that currently value around $22k total?
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Aug 2, 2023 16:58
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Solar is a bad idea from any kind of investment stand point. It will never earn you money and it's a depreciating asset. If you want it because you are a solar enthusiast then that's a different argument, but from an economical sense it doesn't make any.* *There are fringe situations where it might make sense. But you need to run the numbers carefully and not assume any benefits from companies/governments you get today will exist in the future.
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Aug 2, 2023 17:06
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This might sound like a dumb question, but how do you actually retire early (before age 59)? I assume you just have some other nest egg you can use before you can finally start drawing from 401k?
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Aug 2, 2023 17:07
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poemdexter posted:This might sound like a dumb question, but how do you actually retire early (before age 59)? I assume you just have some other nest egg you can use before you can finally start drawing from 401k? There's a complicated exception called SEPP (Substantially Equal Periodic Payment) that locks you into an early withdrawal plan for your 401k without penalties.
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Aug 2, 2023 17:16
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poemdexter posted:This might sound like a dumb question, but how do you actually retire early (before age 59)? I assume you just have some other nest egg you can use before you can finally start drawing from 401k?
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Aug 2, 2023 17:21
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SpartanIvy posted:Solar is a bad idea from any kind of investment stand point. It will never earn you money and it's a depreciating asset. If you want it because you are a solar enthusiast then that's a different argument, but from an economical sense it doesn't make any.* This.
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Aug 2, 2023 17:27
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poemdexter posted:This might sound like a dumb question, but how do you actually retire early (before age 59)? I assume you just have some other nest egg you can use before you can finally start drawing from 401k?
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Aug 2, 2023 17:51
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poemdexter posted:This might sound like a dumb question, but how do you actually retire early (before age 59)? I assume you just have some other nest egg you can use before you can finally start drawing from 401k? Ideally you have some other passive income source that you can draw down while still ensuring you have enough to last the rest of your life once you actually CAN access retirement funds/pensions/etc. Hope you did your math right!
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Aug 2, 2023 17:52
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| # ? May 16, 2024 16:49 |
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This probably belongs elsewhere, but I don't see a "short term investment" thread and this seemed like the most relevant place for this sort of question. I have a chunk of cash that I will need fairly quick access to intermittently in the short term (minor home renovations, medical expenses, etc), so I want to dump it into a HYSA so I can get some returns on it without actually investing it, but I've never explored savings accounts outside of what my bank offers. I've checked out the nerd wallet suggestions, and even though I can get a slightly higher rate (~.1-.5%) elsewhere, is there any reason not to just go with Citi at ~4% (who I already have a credit card account with)? Alternatively, someone suggested a money market fund, but that is something I just have absolutely no idea how to navigate. If it makes any difference at all, this cash is all currently sitting in my Fidelity account.
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Aug 2, 2023 17:52
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