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You can liquidate T-Bills any time you want, they’re just subject to some interest rate risk.
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Sep 28, 2023 17:16
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Keep in mind that the point of the emergency fund is to be a reliable source of funds in an emergency. Higher yields are obtained by making tradeoffs on reliability, either by adding risk that your investment will lose value, or by making it harder to access your funds. That's why folks are telling you to stick with the HYSA. Investing in the stock market would be too risky for an emergency fund, and anything else would either not be available on short notice, or wouldn't give meaningfully better returns.
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Sep 28, 2023 17:29
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KYOON GRIFFEY JR posted:You can liquidate T-Bills any time you want, they’re just subject to some interest rate risk. Good point. I guess I was just thinking that you wouldn't want that risk in an E-fund. Plus it is a whole process.
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Sep 28, 2023 17:29
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From what I understand you can sell t-bills on the open market if you need the cash but you won’t get full value for them. E: beaten
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Sep 28, 2023 17:30
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nelson posted:From what I understand you can sell t-bills on the open market if you need the cash but you won’t get full value for them. correct. I wasn't being very clear and still think leaving it in a HYSA is best/easiest From TD: you can hold Treasury bills until they mature or sell them before they mature. To sell a bill you hold in TreasuryDirect or Legacy TreasuryDirect, first transfer the bill to a bank, broker, or dealer, then ask the bank, broker, or dealer to sell the bill for you.
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Sep 28, 2023 17:32
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Raisin (Formerly SaveBetter) has HYSAs at 5.26% at the moment.
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Sep 28, 2023 17:34
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spwrozek posted:correct. I wasn't being very clear and still think leaving it in a HYSA is best/easiest Oh okay. Maybe I should get a treasury direct account. Currently I do everything through Fidelity which means I don’t need to transfer money around (except Fidelity to Fidelity because I keep a separate Fidelity account just for taking my paycheck and paying bills).
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Sep 28, 2023 17:45
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nelson posted:From what I understand you can sell t-bills on the open market if you need the cash but you won’t get full value for them. You get full value, you just don't get face. T-bills are sold at a discount to face - so you buy a $1k 4 week T-Bill and you actually pay $990 or whatever. If you went to the open market in two weeks, assuming zero change in interest rates, you would be able to sell your T-Bill for $995. The risk comes in when interest rates change. If T-Bill yields are higher now than when you bought your T-Bill, you have to sell your T-Bill at a lower price to achieve market yield. That means in the example you might only sell yours for like $992. If the interest rate changes were really extreme, you might have to discount below your purchase price (although this is not particularly likely over short time horizons). spwrozek posted:Good point. I guess I was just thinking that you wouldn't want that risk in an E-fund. Plus it is a whole process. it is very much not a whole process, assuming you are holding your treasuries in a brokerage account: In schwab, I can click through to sell, select the security, and ask for a bid, then accept it. Very simple. If you're holding T-Bills in TreasuryDirect my first question is: why
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Sep 28, 2023 17:58
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nelson posted:Oh okay. Maybe I should get a treasury direct account. Currently I do everything through Fidelity which means I don’t need to transfer money around (except Fidelity to Fidelity because I keep a separate Fidelity account just for taking my paycheck and paying bills). do not do this unless you want to buy securities you can only buy through TreasuryDirect, which means Series I bonds. There is no point to using TreasuryDirect otherwise.
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Sep 28, 2023 18:02
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I just use TD. I guess I should do it on Vanguard next time.
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Sep 28, 2023 18:05
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also if you got extra money you don't know what to do with, you can fund all your friends' surgeries and everybody would think you're very cool and that's priceless
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Oct 8, 2023 14:42
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precious
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Lazy_Liberal posted:also if you got extra money you don't know what to do with, you can fund all your friends' surgeries and everybody would think you're very cool and that's priceless Not sure what this is about but I find Lazy Liberal’s “free surgeries” policy intriguing and I would like to know more
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Oct 8, 2023 15:05
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Money people: (sorry if this has been covered elsewhere). Situation - I have decent credit, and my student loans will be gone in a year. I have been completely financially supporting my sister for 2+ years as she makes her way through the American disability process. (Neck fracture, She's partially paralyzed). Before this whole thing happened, she was a paycheck to paycheck, tons of medical debt, zero assets person. I am trying to figure out if there is some sort of no/low fee credit card I could get jointly with her. I have taken over most of her bills, but she needs a card for cabs, sundries. I transfer her money often, but it's stepping through Venmo right now. She was using 'Netspend' but her account keeps getting compromised. My quick look showed there are cards for teens, what I am really hoping for is something we could both log into, no extended limit, that someone with low financial savvy could use. Before I took over her bills, she was paying them by phone, refused online billing. Grandma credit card needed. Recommendations? Should I just talk to my banker, or is there a type of card/account to look for?
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Oct 15, 2023 17:07
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Is the goal that you are beginning to teach her some financial savvy? What I mean by that is do you want her to manage, monitor and pay it whether that be from your money or hers with you just as a supervisor/backup? Because if you just want to give her something that she can spend money on that you pay any credit card will do the trick. You'll just want to make sure that it has a fairly low spending limit and they don't automatically raise it, which is something that you can do with most cards just by talking to customer service. But if you're looking for like "Baby's first credit card" that will have to be something that someone else answers. There is a credit card thread here which tends to be about maximizing rewards (which is obviously not a primary concern here), but there are knowledgeable people there who may be able to help. Grumpwagon fucked around with this message at 17:22 on Oct 15, 2023 |
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Oct 15, 2023 17:19
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Arkhamina posted:Before this whole thing happened, she was a paycheck to paycheck, tons of medical debt, zero assets person. focusing on two key sentences here -- this person, in better times, had poor personal finances. and now keeps having security breaches of a financial account? there is no way I'd share a credit line with that person. if something goes awry it will tank you both and then you won't be able to support her further. the basics need to get fixed on their end, especially security issues ASAP. you're doing your best.
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Oct 15, 2023 17:28
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You may be looking for a secured credit card. Basically, you give them $x for a credit limit of $x. Can’t spend more than you’ve already paid them. https://www.nerdwallet.com/best/credit-cards/secured
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Oct 15, 2023 17:43
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It's not to teach her, she has actually done ok when forced to: it's mostly to get her functional for credit needs, but where I can easily see the balance. Fwiw, the NetSpend thing does seem fishy. She doesn't leave the house, no sketchy websites. She said she only had a single transaction before her new NetSpend card was compromised (Netflix). Looking at her computer, router, but it's weird. I am looking at a spendthrift trust in the future too, probably. (That said, boarding plane, no internet for responding for 7:hrs);
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Oct 15, 2023 17:47
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pmchem posted:there is no way I'd share a credit line with that person. if something goes awry it will tank you both and then you won't be able to support her further. the basics need to get fixed on their end, especially security issues ASAP. you're doing your best. Unless the sister has absolutely no credit whatsoever, I don't see why OP would need to open his own line of credit with her on it - she should be able to open a credit card in her name and let OP handle online banking / payments for her.
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Oct 15, 2023 18:19
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For what it’s worth, AMEX lets you set spending limits on your authorized users. They also get individual online accounts that let them see their own expenses but not yours/other users.
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Oct 15, 2023 19:08
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Coming into some money shortly, and wondering how to most effectively use it to pay down my mortgage. Our mortgage is split into three chunks which each come up for renewal every three years - one renews each year. I'm trying to work out if it's better to completely blow away one of them as a single payment and put the regular payments from that into the others, or pay off a third of each one, or something else entirely. In each case I'd be keeping the net fortnightly payment the same and just reallocating (if necessary) when any particular loan gets paid off. Is there a calculator or something that I can tinker with for this? At the moment the bank is paying more in interest on savings than we're being charged interest on one of the loans so I'd probably just stick any payment for that one in savings until that's no longer the case. In NZ not the US, so specifics may not apply. Unsure on penalties for breaking the fixed terms, I'm just looking to math some stuff out so I can start to plan what we're gonna do with it. code:Big Bad Beetleborg fucked around with this message at 02:43 on Oct 16, 2023 |
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Oct 16, 2023 02:24
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What are the interest rates?
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Oct 16, 2023 02:26
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Big Bad Beetleborg posted:Coming into some money shortly, and wondering how to most effectively use it to pay down my mortgage.
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Oct 16, 2023 05:38
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Ham Equity posted:When you say "renew," what do you mean, exactly? I think it's that the mortgage is made up of 3 separate ARM loans that readjust every 3 years each. To the OP, the optimal thing to do in terms of minimizing interest accrued is to always put the extra payments toward the highest percentage loan. This is called the avalanche method of debt repayment, as opposed to the snowball method where you pay down the smallest balance first -- this leads to easier loan management and quicker psychological progress as you see entire loans go away and don't have to think about them anymore, but it's suboptimal in terms of total interest paid (unless the highest interest loan also has the lowest balance, in which care avalanche and snowball are the same course of action) Since the balances are all about the same, there's zero reason to go snowball and only reason to apply extra money towards the highest interest balance. But how much to apply vs. invest is the next thing to figure out.
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Oct 16, 2023 15:57
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The other info you need is what the interest rates are on certificates of deposit right now. If you can get higher interest rates, you're better off buying one and just paying off the loan normally.
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Oct 16, 2023 16:04
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SpelledBackwards posted:I think it's that the mortgage is made up of 3 separate ARM loans that readjust every 3 years each. Except if they're adjustable rate mortgages where the interest rate is going to change, the "highest interest rate" might be (and is, in fact, likely to be) the one that's renewing as soon as two months from now that is, on its face, the lowest interest rate loan. Thus, really needing to know what "renewing" is.
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Oct 16, 2023 16:08
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They're all fixed rate - as opposed to floating - which we lock in for 3 years (give or take, depends on whether it looks like rates were gonna go up or down). By renew I just meant fixing it again, which usually happens around Sept/Oct when they default back to floating rates if not re-fixed. The 2024 one will be up to be re-fixed in just under a year's time, not 2 mo but the way things are going with our OCR and incoming govt is likely to be as high or higher.
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Oct 16, 2023 19:12
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As I understand it, your 2024 tranche of $54,000 currently at a rate of 3.24% will reset in 2024 (when exactly?) to a rate of [market]% for the next three years. Is that correct? If so, what's the current market rate? How does it compare to the rates for your two other tranches.
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Oct 16, 2023 19:19
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KYOON GRIFFEY JR posted:As I understand it, your 2024 tranche of $54,000 currently at a rate of 3.24% will reset in 2024 (when exactly?) to a rate of [market]% for the next three years. Is that correct? 2024 will revert to floating rate in Sep/Oct 2024 unless we renew/re-fix. Floating rate is currently 8.64%. 2026 one was just re-fixed a few weeks ago, current 36mo fix rate is 6.8%
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Oct 16, 2023 19:27
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Big Bad Beetleborg posted:2024 will revert to floating rate in Sep/Oct 2024 unless we renew/re-fix. Floating rate is currently 8.64%. So, without explicitly doing the math, if you think the interest rate is going to go up or stay the same, you're almost certainly best-off long-term paying the lowest-rate loan first. As far as the other two: how long you anticipate it taking to pay them down and what you think the interest rate will do in the meantime will determine which one is better. You have to make assumptions to figure out the math (what the interest rate changes will be every time they're up for renewal).
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Oct 16, 2023 20:05
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What's your risk-free rate of return (gov't bonds or CDs probably?) in NZ?
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Oct 16, 2023 22:35
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KYOON GRIFFEY JR posted:What's your risk-free rate of return (gov't bonds or CDs probably?) in NZ? Govt bonds sitting around 5.5%, CD (we call 'em term deposits here) 5.7-6.1% depending on term - I'm already with ASB which seems to have the highest rates at the moment https://www.interest.co.nz/saving/term-deposits-1-to-5-years
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Oct 16, 2023 23:36
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Well I’d probably grab ~3% guaranteed return until your current 3.24% tranche is up and then decide what to do based on available rates when it comes up. But I don’t like speculating about future rates. How do your mortgage payments work? Do you pay down the three tranches equally? I’m intrigued, we don’t have that structure in the US.
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Oct 17, 2023 00:25
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KYOON GRIFFEY JR posted:Well I’d probably grab ~3% guaranteed return until your current 3.24% tranche is up and then decide what to do based on available rates when it comes up. But I don’t like speculating about future rates. But yeah, this is weird. Are there any tax advantages to these mortgages? In the US, mortgage interest is tax-deductible, which would factor in for you, here.
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Oct 17, 2023 01:19
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Nah no tax advantages to it here, unless you're investing in property as a money making venture (which is very much a thing with unique knock-on problems). It's basically a way of smoothing out volatility in interest changes. Means you end up paying a bit more if everything is low, but you have some on a low rate if the others skyrocket. We had a low OCR for a good while, but the Reserve Bank have more or less tried to engineer a recession to drive down inflation and everything is spiking - I'd be a good deal worse off if we'd had the whole lot at one rate. We set them up at the same time by splitting the total into three loans of equal size. One fixed for a year, one for for two, one for three, and then refixing each for three years when it came up for renewal (barring a couple when we had really low interest rates a few years back). The values remaining on each have diverged a little over time due to different rates and voluntary increases in repayments as we re-fixed them.
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Oct 17, 2023 03:12
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Ham Equity posted:Except if they're adjustable rate mortgages where the interest rate is going to change, the "highest interest rate" might be (and is, in fact, likely to be) the one that's renewing as soon as two months from now that is, on its face, the lowest interest rate loan. Sure, and it's reasonable to assume rates will stay high until then. It doesn't mean all the money has to be deployed within the next two months before the renewal, so my advice to attack the highest rate loan is valid at that time, too. They could put a portion now against what is currently the highest rated note, and then reevaluate again in two months at what's highest and attack that with the rest. Or just wait until the next renewal and let interest accrued as normal until then.
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Oct 17, 2023 15:07
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So, I have a friend who recognizes that he is never going to use the 529 his parents set up for him for educational stuff, and decided to withdraw all of it. He's in the 22% bracket, this is likely to push him up into the 24% bracket, plus the 10% penalty (it's roughly $20,000). He did this a couple of weeks ago, and while I know a bit about personal finances, I'm not great with 529s. 1) This looks an awful lot like a 401(k) from what I've read; if I have him open up a Vanguard 529, can he just roll it into there without needing to pay taxes or penalty, provided he does it before thirty days are up, like you're able to do with an IRA/401(k) distribution? 2) I see that you can roll it into a Roth IRA if you're past a 15-year limit (and I'm 90% sure he is); if you do that, can you pay the taxes from the 529 (i.e. if it's $1000 in taxes on $6,000, can he take out $7,000, pay the taxes, and have the $6,000 go towards the Roth, or would he get hit with the penalty on the $1,000 for the taxes)? If you roll it into a Roth, are those considered principal, or gains (he's saving up for a down payment, and if it's principle, he can use it for that)?
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Oct 21, 2023 07:03
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Is your friend owner of the 529 or just the beneficiary? That may have an impact. IIRC, the Roth rollover option is tax-free, so question 2 should be moot.
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Oct 21, 2023 23:14
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SlapActionJackson posted:Is your friend owner of the 529 or just the beneficiary? That may have an impact. Usually when rolling over from traditional tax-deferred accounts to Roth accounts, you have to pay taxes on what you take, don't you?
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Oct 21, 2023 23:17
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529s already have Roth-like tax treatment at the federal level (no tax break for the contribution, but potentially tax-free growth), so it makes sense that the 529 -> Roth rollover path is tax-free from the feds. State tax treatment may be different, he'll need to look that up.
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Oct 22, 2023 00:26
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SlapActionJackson posted:529s already have Roth-like tax treatment at the federal level (no tax break for the contribution, but potentially tax-free growth), so it makes sense that the 529 -> Roth rollover path is tax-free from the feds. State tax treatment may be different, he'll need to look that up. No income tax in Washington State, so I don't think we'd have to worry about it. From what I was reading, you do get hit with taxes and penalty when you withdraw for non-educational purposes...? So the difference between rolling it over and not is gonna be over 30%?
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Oct 22, 2023 02:31
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