Marcus savings account best for parking cash <1year?

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hlinee
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Marcus savings account best for parking cash <1year?

Post by hlinee »

I have about 100k sitting in a Marcus account at 2.25% currently. I will need to withdraw 30k in a few weeks and another 30k in September. I will probably need to withdraw another 30k in January 2020. Because of my short time frame, I was thinking either savings or money market would be best, and Marcus seems to have one of the best rates right now. Is there a better option I am missing? I could probably put 10k in a CD at 2.75% for a year, but that's only an extra $50 for the loss of liquidity.
MikeG62
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Re: Marcus savings account best for parking cash <1year?

Post by MikeG62 »

Treasury bond ladder would yield more.

Could leave $30K in Marcus, invest $30K in a 6-month treasury and $30K in a 12 month treasury. Could move the money earmarked for Marcus to either Vanguard or Fidelity and get higher yield in their prime or premium MM funds.

Reality is that every 10bps on $90K is $90 per year pre-tax. So even if you pick up 30-40bps, it's not a ton of money and this could require you to spend time opening accounts and learning how to buy treasuries (although that could pay dividends for you in the future).
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stan1
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Re: Marcus savings account best for parking cash <1year?

Post by stan1 »

I would probably use Prime Money Market Fund (or maybe Treasury Money Market Fund if I had a high state tax rate).
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Wiggums
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Re: Marcus savings account best for parking cash <1year?

Post by Wiggums »

I don’t think it would be wrong to go with any of those options. Personally, I would put the money market and the transfer it out when needed.
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travelogue
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Re: Marcus savings account best for parking cash <1year?

Post by travelogue »

As MikeG62 suggested, you could do Treasury Bills (through Treasury Direct) maturing before the times you need the funds and save on state taxes. A Vanguard Treasury fund like VUSXX could be another decent (and easier) option. Vanguard's VMFXX in a settlement fund is easy and convenient.

There are a few recent threads on emergency funds and short-term cash options.

That said, for your time horizon, leaving everything in high yield savings sounds reasonable to me.
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hlinee
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Re: Marcus savings account best for parking cash <1year?

Post by hlinee »

I'm at the lowest tax rate (still a student), so I'm not too concerned about taxes. Also, looking at the interest rates for money markets, after the expense ratio, doesn't seem to be doing much better than 2.25%. Buying treasuries directly sounds interesting, although I'm more tempted to buy funds instead for simplicity. What are the advantages to doing that over a treasury fund like travelogue suggested?
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midareff
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Re: Marcus savings account best for parking cash <1year?

Post by midareff »

Ally Bank No Penalty for breaking early 11 month CD is paying 2.30%
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travelogue
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Re: Marcus savings account best for parking cash <1year?

Post by travelogue »

hlinee wrote: Thu Jan 31, 2019 9:41 am I'm at the lowest tax rate (still a student), so I'm not too concerned about taxes. Also, looking at the interest rates for money markets, after the expense ratio, doesn't seem to be doing much better than 2.25%. Buying treasuries directly sounds interesting, although I'm more tempted to buy funds instead for simplicity. What are the advantages to doing that over a treasury fund like travelogue suggested?

Treasury securities are not taxed at the state level, but that might not be much of an issue for you. Money market fund yields are reported net of expenses, so the 7-day yield (2.48% for Vanguard VMMXX) is what you're actually earning before taxes.
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hlinee
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Re: Marcus savings account best for parking cash <1year?

Post by hlinee »

travelogue wrote: Thu Jan 31, 2019 10:34 am
hlinee wrote: Thu Jan 31, 2019 9:41 am I'm at the lowest tax rate (still a student), so I'm not too concerned about taxes. Also, looking at the interest rates for money markets, after the expense ratio, doesn't seem to be doing much better than 2.25%. Buying treasuries directly sounds interesting, although I'm more tempted to buy funds instead for simplicity. What are the advantages to doing that over a treasury fund like travelogue suggested?

Treasury securities are not taxed at the state level, but that might not be much of an issue for you. Money market fund yields are reported net of expenses, so the 7-day yield (2.48% for Vanguard VMMXX) is what you're actually earning before taxes.

Oh really? I didn't know that. Is that for every fund or just for Vanguard? I'm with Schwab right now and the "7-day yield (with waivers)" for SWVXX is 2.33%. Does the "with waivers" mean that the ER of 0.35% is waived or what? Sorry I'm pretty new to investing.
pdavi21
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Re: Marcus savings account best for parking cash <1year?

Post by pdavi21 »

VMMXX 2.48%, but it's not FDIC.
There are higher yielding savings accounts, but I think Goldman has a better history than most of them.
If you go CD ladder, I think Goldman has some very competitive rates.
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GoldStar
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Re: Marcus savings account best for parking cash <1year?

Post by GoldStar »

pdavi21 wrote: Thu Jan 31, 2019 3:58 pm VMMXX 2.48%, but it's not FDIC.
There are higher yielding savings accounts, but I think Goldman has a better history than most of them.
If you go CD ladder, I think Goldman has some very competitive rates.
The only thing I HATE about Goldman CDs is that you actually have to pick up the phone and call them during the maturity grace period for it not to auto-renew. This is so 1990's as Ally, Synchrony, etc. allow you to go online and put in how you want the funds dispensed upon maturity (and you can specify it years before the maturity).

That said - I do have and like their (Marcus/gsbank/Goldman) Online Savings Account (now marketed as "Marcus"). They had better rates than MMs up until recently, and at 2.25% they are still (as they have always been) slightly better than Ally and many others. ACH's also only take a single day (Synchrony takes 3 days).
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travelogue
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Re: Marcus savings account best for parking cash <1year?

Post by travelogue »

hlinee wrote: Thu Jan 31, 2019 3:31 pm
travelogue wrote: Thu Jan 31, 2019 10:34 am ...Money market fund yields are reported net of expenses, so the 7-day yield (2.48% for Vanguard VMMXX) is what you're actually earning before taxes.
Oh really? I didn't know that. Is that for every fund or just for Vanguard? I'm with Schwab right now and the "7-day yield (with waivers)" for SWVXX is 2.33%. Does the "with waivers" mean that the ER of 0.35% is waived or what? Sorry I'm pretty new to investing.
All funds are required by the SEC to report 7-day yields net of expenses. Take a look at this Goldman pamphlet defining some money market fund terms: https://www.gsam.com/content/dam/gsam/p ... ?sa=n&rd=n
The Standardized 7-Day Current Yield is the average income return over the previous seven days. It is the Fund's total income net of expenses, divided by the total number of outstanding shares. The yield may differ slightly from the actual distribution rate of a given portfolio because of the exclusion of distributed capital gains or losses which are non-recurring. The SEC Yield is a required yield to quote to clients. This yield does not allow for the inclusion of capital gains or losses.
“Waivers” refers to fees or expenses the sponsoring firm voluntarily waives or reimburses in order to defray costs to the fund holders. These waivers can be discontinued at any time.

Waivers are used to keep yields competitive and to attract more capital. They were also used coming out of the financial crisis in order to avoid negative yields.
Jimsad
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Re: Marcus savings account best for parking cash <1year?

Post by Jimsad »

For online savings accounts , Marcus has one of the best rates now for accounts , better than Ally
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hlinee
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Re: Marcus savings account best for parking cash <1year?

Post by hlinee »

travelogue wrote: Thu Jan 31, 2019 5:46 pm All funds are required by the SEC to report 7-day yields net of expenses. Take a look at this Goldman pamphlet defining some money market fund terms: https://www.gsam.com/content/dam/gsam/p ... ?sa=n&rd=n
The Standardized 7-Day Current Yield is the average income return over the previous seven days. It is the Fund's total income net of expenses, divided by the total number of outstanding shares. The yield may differ slightly from the actual distribution rate of a given portfolio because of the exclusion of distributed capital gains or losses which are non-recurring. The SEC Yield is a required yield to quote to clients. This yield does not allow for the inclusion of capital gains or losses.
“Waivers” refers to fees or expenses the sponsoring firm voluntarily waives or reimburses in order to defray costs to the fund holders. These waivers can be discontinued at any time.

Waivers are used to keep yields competitive and to attract more capital. They were also used coming out of the financial crisis in order to avoid negative yields.
Thank you for explaining. The pamphlet may as well have been written in Greek though! I'm working my way through the Boglehead's Guide to Investing so hopefully the financial terminology will come with time.
Corgitodd
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Re: Marcus savings account best for parking cash <1year?

Post by Corgitodd »

I saw today that Citizens online has 2.35 percent, dont know how they compare with Marcus. I opened a Marcus acount inline it was easy and I didnt have to call and wait in hold forever like when I dealt with Synchrony.
averagedude
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Re: Marcus savings account best for parking cash <1year?

Post by averagedude »

Keep it where it is. Don't sweat the small stuff.
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