Where can I get some yield on my cash?

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Buster65
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Where can I get some yield on my cash?

Post by Buster65 » Fri Dec 23, 2016 11:32 am

I am having a hard time finding any kind of money market account linked to my checking account that pays anything. The only thing I see is American Express pays 0.9%. Any suggestions?

enebyberg
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Re: Where can I get some yield on my cash?

Post by enebyberg » Fri Dec 23, 2016 11:35 am

Capital One 360 Money Market is 1%.

Gropes & Ray
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Re: Where can I get some yield on my cash?

Post by Gropes & Ray » Fri Dec 23, 2016 11:45 am

I have been considering I-bonds for some money that I know I won't need until August 2018. I bonds tie your money up for a year though.

orca91
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Re: Where can I get some yield on my cash?

Post by orca91 » Fri Dec 23, 2016 11:47 am

Just not much out there nowadays. Find something around 1% and call it good, IMO.

dbr
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Re: Where can I get some yield on my cash?

Post by dbr » Fri Dec 23, 2016 11:47 am

Mostly you can't. I bonds could be a helpful alternative for some purposes.

People are beating the bushes for what amounts to nothing, and those are just the breaks. Life can be a bowl or cherries or just the pits.

livesoft
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Re: Where can I get some yield on my cash?

Post by livesoft » Fri Dec 23, 2016 11:49 am

Does it have to be cash?

Even though bond funds dropped 4% in the past month or so, many bond funds have still returned about 2% for 2016. Add in a little market timing and you did even better.
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BashDash
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Re: Where can I get some yield on my cash?

Post by BashDash » Fri Dec 23, 2016 11:53 am

Just opened no penalty 11 month cd 1.25% with ally.

mac808
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Re: Where can I get some yield on my cash?

Post by mac808 » Fri Dec 23, 2016 11:59 am

I just transferred $ from Ally checking into the new 1.25% 11-month no EWP Ally CD. It took about 45 seconds. Painless.

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Ethelred
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Re: Where can I get some yield on my cash?

Post by Ethelred » Fri Dec 23, 2016 12:14 pm

There are lots of savings account options listed here paying 1% or slightly higher. Transfers in and out can be done online from a checking account elsewhere pretty quickly.
https://www.depositaccounts.com/savings/

We use GS Bank (formerly GECapital Bank), but there are plenty of other choices there.

dbr
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Re: Where can I get some yield on my cash?

Post by dbr » Fri Dec 23, 2016 12:26 pm

Ethelred wrote:There are lots of savings account options listed here paying 1% or slightly higher. Transfers in and out can be done online from a checking account elsewhere pretty quickly.
https://www.depositaccounts.com/savings/

We use GS Bank (formerly GECapital Bank), but there are plenty of other choices there.


None of the existing options qualify as "some" from any reasonable point of view.

"Some" might be defined as around a more typical real interest rate of 2%-3% and a nominal interest rate of 4%-6%. I will agree that the history of interest rates in the last hundred years or so is so wild it is difficult to say what is "normal," but there can hardly be an argument that current rates are extraordinarily low.

http://finance.yahoo.com/blogs/talking- ... 58843.html

Note the above interest rates are for 30 year bonds. Cash will be much less, even less than zero on occasion.

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Rob5TCP
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Re: Where can I get some yield on my cash?

Post by Rob5TCP » Fri Dec 23, 2016 12:28 pm

Ally Bank has an 11 month no penalty CD yielding 1.25%
You must close it to get the money out; so if you may need some of it
open 5 $5,000 CD's rather than 1 $25,000 CD.

https://www.ally.com/bank/no-penalty-cd/

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Sheepdog
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Re: Where can I get some yield on my cash?

Post by Sheepdog » Fri Dec 23, 2016 12:32 pm

VFSTX (VFSUX admiral) short term investment grade bond fund. I use that as "cash" including using checks for large purchases and to hold most of my 3 year in-retirement "safe cash" cushion. Yes it can lose a little, but it has had only 2 years with a loss in the last 33 years, and the worse 3 year return was 1.25%. It's total return this year is 2.66% YTD. It had a bond turnover of 75% this year which probably means the managers are purchasing higher interest bonds as the rates rise. For me, it is safe enough.
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Ethelred
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Re: Where can I get some yield on my cash?

Post by Ethelred » Fri Dec 23, 2016 12:37 pm

dbr wrote:None of the existing options qualify as "some" from any reasonable point of view.

"Some" might be defined as around a more typical real interest rate of 2%-3% and a nominal interest rate of 4%-6%. I will agree that the history of interest rates in the last hundred years or so is so wild it is difficult to say what is "normal," but there can hardly be an argument that current rates are extraordinarily low.

Note the above interest rates are for 30 year bonds. Cash will be much less, even less than zero on occasion.

Yes, interest rates are very poor for savers, probably negative in real terms. But the OP asked where to get yield on "cash". I'm assuming you're not recommending he or she stick it under the mattress. Do you know of any better options that don't give up liquidity (CDs) or take on risk (stock or bonds)?

orca91
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Re: Where can I get some yield on my cash?

Post by orca91 » Fri Dec 23, 2016 12:37 pm

Using the above as an example...

$25k at 1.25% for 11 months earns $286.31.

$25k at 1% for 11 months earns $229.07.

As always, to each their own. But, I'll stick to the simple online savings account at 1% and be fine with it. Roughly $55 over that time isn't life changing enough for me. :happy

Saphomd
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Re: Where can I get some yield on my cash?

Post by Saphomd » Fri Dec 23, 2016 12:42 pm

Buster65 wrote:I am having a hard time finding any kind of money market account linked to my checking account that pays anything. The only thing I see is American Express pays 0.9%. Any suggestions?



Don't assume that you will be better off in cash than bonds. Let me try to explain. If you don't need the cash for at least 5 years, then a bond fund is the way to go, even with today's bond market environment. When interest rates go up, a bond fund can lose value. However, with time, it will invest in newer bonds and eventually you come up ahead, probably way better than the 1% you will get with a savings or money market account.
Last edited by Saphomd on Fri Dec 23, 2016 12:43 pm, edited 1 time in total.

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arcticpineapplecorp.
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Re: Where can I get some yield on my cash?

Post by arcticpineapplecorp. » Fri Dec 23, 2016 12:43 pm

nominal yield or real yield? Cash isn't supposed to provide a real (after inflation) return, is it? So the fact that you're yielding next to nothing is correlated with low inflation. Would you be more happy to yield 14% interest on a money market account (as happened in the 80s)? You might say, "I'd love to get 14% on my cash." Not if inflation was 15% or 16%. See the math works the same regardless of whether interest rates are high or low. Your after inflation return (real return) will usually be negative (or low). Cash isn't supposed to make you money. That's what your investments are for. Take low risk, get low (after inflation) returns. So no matter where you put your cash (unless it's in a 5 year CD, but in that case you're locking in the current 5 year rate for 5 years), you should expect low returns.
Last edited by arcticpineapplecorp. on Fri Dec 23, 2016 12:58 pm, edited 1 time in total.
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dbr
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Re: Where can I get some yield on my cash?

Post by dbr » Fri Dec 23, 2016 12:49 pm

Ethelred wrote:
dbr wrote:None of the existing options qualify as "some" from any reasonable point of view.

"Some" might be defined as around a more typical real interest rate of 2%-3% and a nominal interest rate of 4%-6%. I will agree that the history of interest rates in the last hundred years or so is so wild it is difficult to say what is "normal," but there can hardly be an argument that current rates are extraordinarily low.

Note the above interest rates are for 30 year bonds. Cash will be much less, even less than zero on occasion.

Yes, interest rates are very poor for savers, probably negative in real terms. But the OP asked where to get yield on "cash". I'm assuming you're not recommending he or she stick it under the mattress. Do you know of any better options that don't give up liquidity (CDs) or take on risk (stock or bonds)?


Right, and the answer is there isn't any place so the recommendation is to put it anywhere that is safe and convenient. I do think the advantages of I bonds are often overlooked and at least offer a positive real rate now (I think), inflation protection, and tax deferral. I bonds are limited in the amount that can be deposited, are not liquid initially, and have a planning issue that when thirty years ends, interest is no longer paid and deferred taxes are due.

The other issue, asked by one poster, is why cash? It could be that a person should just have the money in stocks and bonds, but that depends on answering the question why cash in the first place. I have money in cash in money market funds and it doesn't bother me as the fraction of assets is too small to worry the issue.

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