What financial instution do you use for cash?

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Sasquatch
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What financial instution do you use for cash?

Post by Sasquatch » Thu Jan 10, 2019 2:15 pm

Hello to all,

I've been using the Bogleheads search feature and doing a lot of reading the past few days. We recently sold our last rental property. With the proceeds we paid off all our debt including our home and paid our 4th quarter estimated capital gains and depreciation recapture tax on the property sale. All the dust has settled, all the payments have cleared and we are left with $150k taxable that needs to have a home. The $150k is the only taxable we have.

We are H & W ages 52 & 50 respectively. Retired in 2018. Gross 72t withdrawl to meet budget needs to be $60k. First withdrawl will be in 2019. Budget includes ACA Bronze plan and State/Fed tax. My employer 401k plan did not allow partial rollovers in service to facilitate a Roth conversion ladder so it is what it is dispite the rigid requirements of a 72t.

I would like to keep 3-6 mo living expenses liquid on hand ($4k net monthly). Another $30-$40k available in the next 3-5 yrs. The balance I am unsure where to allocate. Perhaps VG Wellesley income or VG Balanced income? I would use the interest generated annually from taxable as part of my living expenses along with the 72t annual distribution I may pull a little bit of principal here and there for some domestic regional travel if we exceed the budgeted recreation amount. Pulling from taxable will help keep me under the ACA cliff. A HSA will also allow me to make income tweaks as well.

As mentioned above, every thing is paid for and our house was completely renovated last year inside and out. We also have modern cars / RV / toys. Kids are self sufficient out on thier own and past their college years.

I would like to keep everything at at maximum of 2 instutions+my locally held checking account if possible to keep it simple. Simplicity is more important to me than getting that extra 20bp on a CD or whatever by shopping and moving money around.

In my reading Ally, Discover, Capital One, and Purepoint seemed to be mentioned the most. Also Vanguard for MM Fund and Brokered CDs with the option of income generating mutual funds. 72t will be held at Vanguard and will be over $1M

Thoughts would be appreciated.
Last edited by Sasquatch on Fri Jan 11, 2019 2:20 pm, edited 1 time in total.

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Sasquatch
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Re: What financial instution do you use for cash?

Post by Sasquatch » Fri Jan 11, 2019 1:44 pm

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englishgirl
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Re: What financial instution do you use for cash?

Post by englishgirl » Fri Jan 11, 2019 2:10 pm

My thoughts are: you clearly know more than me, and all that information about 72t withdrawals is intimidating. So, yeah. But, given that I like simplicity as well, I'll take a crack at this. I use Capital One. I have some money in their 360 money market fund (minimum $10k) which is currently earning 2%. I've also got some stashed in a CD that I opened last month at a rate of 2.7% for one year. They are at 3.1% for a 3 year CD but in a rising rate environment (maybe??) I wasn't sure I wanted to tie my money up for that long. I use their checking account and like getting a small amount of interest on that. I have used them for a number of years and no complaints really. Except for some reason I can't see the CD in mint but that's a minor gripe and probably not their fault. They seem like they are always somewhere near the top interest rates available although usually not THE highest, but the upside is that I don't have to move money and chase rates.

I also have some cash in I-bonds, which I find preferable for slightly longer term money.
Sarah

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Sasquatch
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Re: What financial instution do you use for cash?

Post by Sasquatch » Fri Jan 11, 2019 2:12 pm

englishgirl,

Thank you very much for your reply! :happy

I really don't have any experience in the "cash" arena. I primarily focused my learning on 401k while I was working so every shred of info is really helpful to me. The small novel I wrote was mainly to provide context for which the money was to be used.
Last edited by Sasquatch on Fri Jan 11, 2019 2:16 pm, edited 1 time in total.

RickBoglehead
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Re: What financial instution do you use for cash?

Post by RickBoglehead » Fri Jan 11, 2019 2:14 pm

Ally gets posted often.

Here's what I do, which is right for me, and may not be right for you:

- $100 at brick and mortar bank for cash deposits, notary work, medallion signature, getting rid of change
- Ally for checking and savings, holding roughly 2 months of expenses, do 3 - 4 (could be 1) transfer a month to cover bills. Also has ATM access and reimbursement if needed.
- Vanguard Prime Money Market for remaining 4 months of expenses.

Note - sometimes I tweak thinks, like when Ally offered up to $1,000 bonus in late October, turning the yield to something like 6.64%. That period expires in 5 days, and if they don't have a good yield after that the funds will held back to Vanguard, and probably brokered CDs.

wolf359
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Re: What financial instution do you use for cash?

Post by wolf359 » Fri Jan 11, 2019 2:16 pm

I'm not sure what there is to say.

You already have a Vanguard account. Keep all your investments at Vanguard for simplicity sake. You may want to structure your question in the form of the portfolio advice format. This will identify your goals, income requirements, and assets.

As for the cash side of the house, pick an online bank for the emergency fund. Park the cash there. 4-6 months is about $24,000. I like Ally, but you can use any FDIC institution for safety.

For local cash, use your local credit union or whatever you're already using.

As for actual investments, you have multiple choices. It depends on your goals.

- You could pick a conservative lifestyle fund at 40/60 or 50/50.

- You could build a 3-fund portfolio and set the asset allocation at 60/40 or 50/50. The bonds will throw off cash.

- You can explore Managed Payouts to generate income.

- You can pick one of the Vanguard actively managed funds.

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Summit111
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Re: What financial instution do you use for cash?

Post by Summit111 » Fri Jan 11, 2019 2:20 pm

We use Capital One 360 for our “Quick Cash Emergency Fund.” Pays 2.0% and is transferred easily to our checking accounts and Vanguard if needed...

Summit

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Clever_Username
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Re: What financial instution do you use for cash?

Post by Clever_Username » Fri Jan 11, 2019 2:35 pm

Our situations are very different so I don't think this is likely to be helpful. In case it is, though: I use Bank of America. I keep about 1.5 months' cash in there, mostly so I always can pay bills, keep my minimum account balance, and use whatever I need from them. As of the end of this month, I will have one year's expenses in Series I Bonds, an asset I think of as cash or sufficiently cash-like that it's part of my emergency plan.
"What was true then is true now. Have a plan. Stick to it." -- XXXX, _Layer Cake_ | | I survived my first downturn and all I got was this signature line.

veggivet
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Re: What financial instution do you use for cash?

Post by veggivet » Fri Jan 11, 2019 2:41 pm

Currently use Capital One and Discover Bank, and very happy with both...
If you watch your pennies, your dollars will take care of themselves.

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Sasquatch
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Re: What financial instution do you use for cash?

Post by Sasquatch » Fri Jan 11, 2019 2:41 pm

wolf359 wrote:
Fri Jan 11, 2019 2:16 pm
You may want to structure your question in the form of the portfolio advice format. This will identify your goals, income requirements, and assets.
Thanks wolf, I just went back and read the wiki information again. I will try to be more clear going foreword

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GoldStar
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Re: What financial instution do you use for cash?

Post by GoldStar » Fri Jan 11, 2019 2:43 pm

Marcus by gsbank is always higher than ally as a high-yield savings account (people like ally because they also have checking; which many of the higher-interest options don't). For instance, right now Ally is paying 2.0% while Marcus by GSBank is paying 2.25%. Barclays and Synchrony have also been higher than Ally over the years. Its not a lot - but it does add up.
Here is Marcus (By Goldman Sachs):
https://www.marcus.com/us/en/savings

There are other online banks that are even higher but some don't get good ratings. Here is a good site for reviews/listings/etc:
https://www.depositaccounts.com/banks/rates/

2015
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Re: What financial instution do you use for cash?

Post by 2015 » Fri Jan 11, 2019 2:50 pm

I'm kind of in your situation. Independent and no debt of any kind. So...I just threw all my windfall into ally, liability matched expenses via CD's and one years expenses in ally's savings account until delayed SS at 70. Beyond that, I move expenses one month in advance from ally each month to BofA checking to pay bills.

I hate bleeding life to chase yield or one more fistful of dollars because I'd much rather increase my asset allocation of precious time on this earth towards fulfillment. I know I'm committing BH heresy by not Maximizing (as opposed to Optimizing) every last quarter penny but it allows me to spend time chasing contentment instead. Cash is a legible currency while time is illegible. It's extremely easy to make the mistake of overvaluing seemingly infinite illegible currencies for finite legible ones. No amount of money could pay for the half hour my eyes spent glued on the yellowish quarter moon last night as it slid down the night sky before melting into the silhouetted mountains. What a sight!

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Raybo
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Re: What financial instution do you use for cash?

Post by Raybo » Fri Jan 11, 2019 2:51 pm

I keep my cash at Capital One for the interest but actually spend money from my account at Chase. I transfer money between in a couple of days after an on-line transfer request.

I have been rethinking this, though. All my money, other than cash, is at Vanguard. When I need money, I sell something at Vanguard and move it over to Capital One. Now that interest rates have risen, the money market accounts at Vanguard pay about as much as Capital One. Vanguard will move money to Chase in the same amount of time as Capital One. I only use Capital One to hold my money at a higher interest rate. My suggestion is to establish a local bank, for things like ATMs and other services, and then move money there when you need it, as others have pointed out. If it were me, I'd just keep any cash you are going to hold at Vanguard.

Like you, I have after tax money. All of my after-tax money is invested in US Stocks. This is because I kept rebalancing into stocks during the 2009 meltdown and have huge capital gains on the funds in my after-tax account. When I need money, I sell some of the stocks (being careful not to go over the amount that qualifies for zero capital gains taxes!) and then move money around in my tax deferred accounts to maintain my AA. My point is that it may not matter what you put your after tax money into, as long as it is seen as part of your AA. Since you are required to take money out of your IRAs anyway, you will always be rebalancing things.

As a specific example, to get money for 2019, I sold stock funds in my after tax account (up to the zero CG tax limit) and then in my IRA sold bonds and purchased the same stock funds back. Effectively selling bonds. I did this to bring my AA back to my allocation levels. Note that this works because I am recording a gain. If I were recording a loss, it would be a wash sale, unless done after 30 days.
No matter how long the hill, if you keep pedaling you'll eventually get up to the top.

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Sasquatch
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Re: What financial instution do you use for cash?

Post by Sasquatch » Fri Jan 11, 2019 7:03 pm

2015 wrote:
Fri Jan 11, 2019 2:50 pm
No amount of money could pay for the half hour my eyes spent glued on the yellowish quarter moon last night as it slid down the night sky before melting into the silhouetted mountains. What a sight!
Agreed! Spent yesterday in the mountains at 8000 ft elevation. Beautiful snow covered mountain peaks, clean air, and sunshine!

Thanks for sharing your money strategy too

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Sasquatch
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Re: What financial instution do you use for cash?

Post by Sasquatch » Fri Jan 11, 2019 7:07 pm

Raybo wrote:
Fri Jan 11, 2019 2:51 pm
My point is that it may not matter what you put your after tax money into, as long as it is seen as part of your AA. Since you are required to take money out of your IRAs anyway, you will always be rebalancing things.
That was another question I had. Thanks for bringing it up. I will need to move some things around in my IRA to hit my AA

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