Looking for something with slightly higher yield/risk than online savings

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delrinson
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Looking for something with slightly higher yield/risk than online savings

Post by delrinson » Sat Jan 27, 2018 6:19 pm

My safest bucket is an online savings account at Ally.

I'd like to start filling another bucket to get a bit more yield with a bit more risk, yet still very safe. My broker is Ameritrade, so ideally I'd like it to be one of their commission ETFs so that I can add incrementally without worrying about 6.95 commissions. Otherwise I'd probably go with a Vanguard product.

I guess I lean toward SPSB, the State Street short term corporate bond ETF. Is that as good a choice as any? Low volatility, about 1.9% yield.

Jack FFR1846
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Re: Looking for something with slightly higher yield/risk than online savings

Post by Jack FFR1846 » Sat Jan 27, 2018 6:31 pm

Ablebanking 12 month 2% CD.

You're welcome.
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Atgard
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Re: Looking for something with slightly higher yield/risk than online savings

Post by Atgard » Sat Jan 27, 2018 6:38 pm

Yeah, if you're OK with 1.9% yield (with some level of risk with corporate bonds), there are many 1-5 year CDs paying 2.0–2.5%.

There are longer term or less safe bonds paying above that, which would probably be the next level on the risk/reward scale. So I would think 10 or 20 year bonds, or corporate bonds (I'm not expert enough at them to know what AA bonds vs. A vs. BBB etc. bonds pay, but the worse the rating, the higher the risk and higher return usually).

Hard to say what's best for you without knowing your time horizon, other investments, etc.

UpperNwGuy
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Re: Looking for something with slightly higher yield/risk than online savings

Post by UpperNwGuy » Sat Jan 27, 2018 7:19 pm

Vanguard has some great bond mutual funds.

OldSport
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Re: Looking for something with slightly higher yield/risk than online savings

Post by OldSport » Sat Jan 27, 2018 8:22 pm

Vanguard Short Term Investment Grade or Short Term Corporate Bond Index

Topic Author
delrinson
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Re: Looking for something with slightly higher yield/risk than online savings

Post by delrinson » Sat Jan 27, 2018 8:50 pm

As I say, I would do Vanguard but I want to avoid the commissions and I plan to do things incrementally...a little here, a little there.

Ameritrade, in their wisdom and beneficence, removed Vanguard ETFs from their commission-free roster.

But I could see doing a Vanguard ETF as a large chunk...just not incrementally because of the commissions.
Last edited by delrinson on Sat Jan 27, 2018 9:11 pm, edited 1 time in total.

lack_ey
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Re: Looking for something with slightly higher yield/risk than online savings

Post by lack_ey » Sat Jan 27, 2018 9:05 pm

Preferred ETFs to use, as commission free:
https://research.tdameritrade.com/grid/ ... onfree.asp


You might also want to look at SPDR Nuveen Barclays Short Term Municipal Bond ETF (SHM). The duration is higher than on the short-term corporate fund, but the credit quality is higher (all AA- and higher municipal bonds, so high quality). The SEC yield is 1.45% federal tax free compared to 2.37% on the corporate bond fund.

Maybe some of both, depending.

edit: to be clear I am talking about the SPDR short-term corporate bond fund (SPSB), the one mentioned in the OP
Last edited by lack_ey on Sat Jan 27, 2018 9:15 pm, edited 1 time in total.

livesoft
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Re: Looking for something with slightly higher yield/risk than online savings

Post by livesoft » Sat Jan 27, 2018 9:11 pm

SPSB is a TDAmeritrade no-commission short-term corporate bond ETF.

Here are a few notes on trade executions: viewtopic.php?p=3731789#p3731789

I would say expect some poor executions if you use SPSB.
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OldSport
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Re: Looking for something with slightly higher yield/risk than online savings

Post by OldSport » Sat Jan 27, 2018 9:22 pm

delrinson wrote:
Sat Jan 27, 2018 8:50 pm
As I say, I would do Vanguard but I want to avoid the commissions and I plan to do things incrementally...a little here, a little there.

Ameritrade, in their wisdom and beneficence, removed Vanguard ETFs from their commission-free roster.

But I could see doing a Vanguard ETF as a large chunk...just not incrementally because of the commissions.
Would you consider opening up a Vanguard account? It only takes a few minutes.

Stonebr
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Re: Looking for something with slightly higher yield/risk than online savings

Post by Stonebr » Sat Jan 27, 2018 9:30 pm

Treasury Direct. You can buy Tbills, Notes, Bonds, TIPS with zero expenses. Hold to maturity and roll over.
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Re: Looking for something with slightly higher yield/risk than online savings

Post by lazylarry » Sat Jan 27, 2018 11:01 pm

If you are not planning to touch the money, then a 5- yr CD is better than a corporate bond fund imho. Also I would throw in money markets as people find these useful too.
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mega317
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Re: Looking for something with slightly higher yield/risk than online savings

Post by mega317 » Sat Jan 27, 2018 11:17 pm

My guess is after taking into account taxes and the chance of loss in a bond fund, the benefit you'll get from doing this isn't worth the time taken to think about it. How much money are we talking about?
Stonebr wrote:
Sat Jan 27, 2018 9:30 pm
Treasury Direct. You can buy Tbills, Notes, Bonds, TIPS with zero expenses. Hold to maturity and roll over.
This is also decent advice if it satisfies some deep desire to Do Something.
https://www.bogleheads.org/forum/viewtopic.php?t=6212

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Re: Looking for something with slightly higher yield/risk than online savings

Post by sperry8 » Sun Jan 28, 2018 12:03 am

Jack FFR1846 wrote:
Sat Jan 27, 2018 6:31 pm
Ablebanking 12 month 2% CD.

You're welcome.
If you live near a Pure Point financial branch you can get 2.5% APY for a 24 mo CD. If not, other online banks are offering 2.3% - 2.35% APY for a 24 mo CD. Less risk than the bond fund you mentioned and more return.
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randomizer
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Re: Looking for something with slightly higher yield/risk than online savings

Post by randomizer » Sun Jan 28, 2018 12:05 am

If you're in a high tax bracket, some tax-exempt bonds might do the trick.
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Topic Author
delrinson
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Re: Looking for something with slightly higher yield/risk than online savings

Post by delrinson » Sun Jan 28, 2018 5:01 am

OldSport wrote:
Sat Jan 27, 2018 9:22 pm
delrinson wrote:
Sat Jan 27, 2018 8:50 pm
As I say, I would do Vanguard but I want to avoid the commissions and I plan to do things incrementally...a little here, a little there.

Ameritrade, in their wisdom and beneficence, removed Vanguard ETFs from their commission-free roster.

But I could see doing a Vanguard ETF as a large chunk...just not incrementally because of the commissions.
Would you consider opening up a Vanguard account? It only takes a few minutes.
Possibly. But currently it's nice having everything under one roof. I've been very pleased with Ameritrade....and they will give me free trades now and again, but I don't want to overdo it.

Topic Author
delrinson
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Re: Looking for something with slightly higher yield/risk than online savings

Post by delrinson » Sun Jan 28, 2018 5:05 am

mega317 wrote:
Sat Jan 27, 2018 11:17 pm
My guess is after taking into account taxes and the chance of loss in a bond fund, the benefit you'll get from doing this isn't worth the time taken to think about it. How much money are we talking about?
Stonebr wrote:
Sat Jan 27, 2018 9:30 pm
Treasury Direct. You can buy Tbills, Notes, Bonds, TIPS with zero expenses. Hold to maturity and roll over.
This is also decent advice if it satisfies some deep desire to Do Something.
I've got maybe $75,000 in Ally right now....was thinking putting maybe $40,000 of it over in SPSB. Would not anticipate touching it....but glad to have it there to rebalance into equities if needed (avoid three day lag from Ally.)

Topic Author
delrinson
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Re: Looking for something with slightly higher yield/risk than online savings

Post by delrinson » Sun Jan 28, 2018 5:23 am

I may do a large chunk ($20,000) of VCSH Vanguard short corporate bond ETF and then add to SPSB incrementally.

mega317
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Re: Looking for something with slightly higher yield/risk than online savings

Post by mega317 » Sun Jan 28, 2018 11:28 am

My point is just you could get an additional 1% yield (for 400 taxable dollars) but also could lose more than that in the NAV, as you would have done in the last 6 months.

400 dollars ain't nothing and it sounds like you don't care about that level of risk. It's just not worth it to me.
https://www.bogleheads.org/forum/viewtopic.php?t=6212

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