Money Market vs CD vs Bond fund vs .... Cash

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ps56k
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Money Market vs CD vs Bond fund vs .... Cash

Post by ps56k » Sun Sep 09, 2018 9:52 pm

I find myself with several cash accounts at - Chase, Schwab, Vanguard, Ally,
with some questions about consolidating, migration, and balancing...

I currently have these cash accounts -
Chase checking - .08% - $100k - main account used for paying bills, etc - about 2 yrs worth of spending - just in case -
Schwab - .22% - $100k - my cash proceeds from divs and selling some stocks
Vanguard - various stock & bond funds.... Total Bond, Muni Bond - each has over $100k -
Vanguard - Prime MM fund - .16% - $7k - VMMXX
Ally Bank - 1.00% - $100k - had several $25k CDs - all matured, now sitting in Ally MM account

So - with all this cash, I am struggling to decide where and how it should be re-allocated.
Don't NEED any of it... just cash flow thru the Chase checking account.

Do I pull more out of the low yield Chase acct, and shift it into ... my Vanguard Bond funds - or the Vanguard MM Fund ?
Do I pull the Schwab money out from the cash account, and ..... same as above
Do I keep the Ally MM fund - or swap back into CDs... or move to Vanguard MM Fund -
If CDs - what duration - with interest rates stepping up - the Ally Bank has 1yr @ 2.50%
Last edited by ps56k on Mon Sep 10, 2018 9:19 am, edited 1 time in total.

delamer
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Re: Money Market vs CD vs Bond fund vs .... Cash

Post by delamer » Sun Sep 09, 2018 10:01 pm

You say you don’t need the cash, but surely you must have some goal(s) for your money other than a large emergency fund?

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BL
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Re: Money Market vs CD vs Bond fund vs .... Cash

Post by BL » Sun Sep 09, 2018 10:06 pm

You could put part of the Chase cash into Vanguard money market funds and still have quick access, even check writing. Ally online bank would probably have higher rates than Chase with quick access and FDIC insurance.

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ClevrChico
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Re: Money Market vs CD vs Bond fund vs .... Cash

Post by ClevrChico » Sun Sep 09, 2018 10:25 pm

I keep money set aside any large expenses occurring in the next year in Vanguard Prime Money Market. It's not FDIC insured, but it's one less account to worry about since I already have a Vanguard account.

Any other money is invested in stocks/bonds per my set asset allocation. That is my emergency fund.

Alto Astral
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Re: Money Market vs CD vs Bond fund vs .... Cash

Post by Alto Astral » Sun Sep 09, 2018 11:23 pm

Look into putting some into I-Bonds: https://www.bogleheads.org/wiki/I_savings_bonds

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badbreath
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Re: Money Market vs CD vs Bond fund vs .... Cash

Post by badbreath » Mon Sep 10, 2018 12:17 am

What are the cash accounts for, how do they fit into your overall portfolio?

I hold cash so just am asking for the reason why so much cash.

I would put as much as you fell comfortable with in
Vanguard - various stock & bond funds.... Total Bond, Muni Bond
. But thats me.
“While money can’t buy happiness, it certainly lets you choose your own form of misery.” Groucho Marx

smectym
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Re: Money Market vs CD vs Bond fund vs .... Cash

Post by smectym » Mon Sep 10, 2018 1:01 am

All of the above—cash cash equivalents, near-cash (i.e. very short term bond funds) can play a role, and I’d add Treasury bills.

Leaving to one side the “one right answer excluding all others” to the question “How much of ones portfolio should be in cash,” the time is right now to be sure that whatever ones cash allocation, it’s earning maximum income. I too have stopped letting cash sit in Chase checking. Buying Treasury Bills and notes up to 2 years.

As long as the Fed keeps raising short term rates, in the spirit of “Don’t Fight the Fed,” you can’t go far wrong parking cash in a money market fund (“MMF”) primarily invested in short-term (like 90-day) T-Bills. Pure Treasury MMF’s are preferable to Prime, even if you sacrifice a few basis points in yield for the increment of additional safety. But investing in T-bills directly through Treasury Direct (“TD”)is also an attractive option. True, some say the TD site is clunky and non-user-friendly; but many others disagree.

Smectym

banhbao
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Re: Money Market vs CD vs Bond fund vs .... Cash

Post by banhbao » Mon Sep 10, 2018 8:12 pm

Since you don't need any of it (i.e. liquidity is not a concern), have you thought about building a CD ladder?

https://www.nerdwallet.com/blog/banking ... cd-ladder/

You can set this up your Vanguard account, and by selecting various banks it is all FDIC insured (as long as you don't have more than $250k in any one bank). Right now Vanguard is offering 2.4% for 1-yr and 3.0% for 3-yrs. It's a good way to build passive income.

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ruralavalon
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Re: Money Market vs CD vs Bond fund vs .... Cash

Post by ruralavalon » Tue Sep 11, 2018 11:25 am

ps56k wrote:
Sun Sep 09, 2018 9:52 pm
I find myself with several cash accounts at - Chase, Schwab, Vanguard, Ally,
with some questions about consolidating, migration, and balancing...

I currently have these cash accounts -
Chase checking - .08% - $100k - main account used for paying bills, etc - about 2 yrs worth of spending - just in case -
Two years spending is a very large emergency fund.

You could keep a small fraction (a couple months worth of spending) in your checking account, and a larger portion in Vanguard Prime Money Market Fund (VMMXX) current SEC Yield = 2.08%. You can arrange check writing privileges on VMMXX.

ps56k wrote:Schwab - .22% - $100k - my cash proceeds from divs and selling some stocks
Vanguard - various stock & bond funds.... Total Bond, Muni Bond - each has over $100k -
Vanguard - Prime MM fund - .16% - $7k - VMMXX
Ally Bank - 1.00% - $100k - had several $25k CDs - all matured, now sitting in Ally MM account

So - with all this cash, I am struggling to decide where and how it should be re-allocated.
Don't NEED any of it... just cash flow thru the Chase checking account.

Do I pull more out of the low yield Chase acct, and shift it into ... my Vanguard Bond funds - or the Vanguard MM Fund ?
Do I pull the Schwab money out from the cash account, and ..... same as above
Do I keep the Ally MM fund - or swap back into CDs... or move to Vanguard MM Fund -
If CDs - what duration - with interest rates stepping up - the Ally Bank has 1yr @ 2.50%
What is your desired asset allocation for retirement/long-term investing?

I suggest investing the extra cash in a mix of low expense stock index and bond index funds, consistent with that desired asset allocation. You could use federally insured CDs instead of the bond index fund.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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ps56k
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Location: Chicago area

Re: Money Market vs CD vs Bond fund vs .... Cash

Post by ps56k » Tue Sep 11, 2018 11:55 pm

I think my game plan for the cash is....

Chase - will let it wind down a bit, but still keep about $50k
Schwab - will move a large portion (from ongoing stock divs & stocks sold) over to my Vanguard bond accounts...
Ally - coin toss - thinking about getting back to a CD ladder every qtr - 1yr @ 2.5% -
Vanguard - another coin toss - for where to place the incoming cash coming from the Schwab account
- Prime MM - 2% yield
- Muni fund - 2.5% yield
- Tot Bond - 3.1% yield
Thinking of just splitting by 1/3 - Prime MM and since the Muni and Tot Bond are almost a wash at current yield vs tax bracket levels.

mariezzz
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Re: Money Market vs CD vs Bond fund vs .... Cash

Post by mariezzz » Wed Sep 12, 2018 10:28 am

ps56k wrote:
Tue Sep 11, 2018 11:55 pm
I think my game plan for the cash is....

Chase - will let it wind down a bit, but still keep about $50k
Schwab - will move a large portion (from ongoing stock divs & stocks sold) over to my Vanguard bond accounts...
Ally - coin toss - thinking about getting back to a CD ladder every qtr - 1yr @ 2.5% -
Vanguard - another coin toss - for where to place the incoming cash coming from the Schwab account
- Prime MM - 2% yield
- Muni fund - 2.5% yield
- Tot Bond - 3.1% yield
Thinking of just splitting by 1/3 - Prime MM and since the Muni and Tot Bond are almost a wash at current yield vs tax bracket levels.
I keep all cash that I don't need for the upcoming month in VMMXX. A Roth IRA serves as my emergency fund - contributions can be withdrawn without penalty. It's quite easy to move money between that & your checking account, although there is about a 2 business day delay before funds get deposited (assuming you sell on a business day before market close). I'd never have even 10K in a checking account.

cdu7
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Re: Money Market vs CD vs Bond fund vs .... Cash

Post by cdu7 » Thu Sep 13, 2018 8:47 am

Consolidate everything in your Vanguard Prime MM, you don't need anywhere near the amount you have in your checking. I'd frankly bump that checking down to something that needs a very low minimum and just keep no more than 10k in there. You can always move money into it when needed.

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