However, I notice that, for example, Vanguard short-term treasury fund admiral shares (VFIRX) with a 2.2-year average duration currently pays a 0.18% SEC yield: https://personal.vanguard.com/us/funds/ ... =INT#tab=1
Meanwhile leading online savings accounts seem to be paying 0.70 to 1.00% (Barclay’s): http://www.nerdwallet.com/rates/
I feel like I’m missing something. My questions are:
- How is the bank investing those saving deposits to be able to pay 1.00% if short-term treasuries are paying in the 0.18% range?
- Why do conservative fixed-income investors like Mr. Swedroe prefer short-term government bonds over online savings accounts (if they in fact do)? I realize one can’t open an online savings account within a 401K, but the rate difference looks large enough to justify using taxable money.