Understanding Fixed Income Options

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
boogiehead
Posts: 118
Joined: Wed Sep 27, 2017 11:45 pm

Understanding Fixed Income Options

Post by boogiehead » Tue Apr 23, 2019 1:58 pm

I just recently sold my rental property so I got a windfall about $200,000. I'm in the process of coming up with a plan on how to invest the proceeds (1 year time frame or so), but right now I'm just thinking about doing a simple CD ladder, however I know there are other fixed income options (i.e. treasury, corporate, muni bonds, etc...) in which I never bothered to use before. Can someone let me know if I should be looking into those other options or is the yield basically about the same and I should just keep it simple with CDs. Thanks, any input is appreciated.

livesoft
Posts: 68637
Joined: Thu Mar 01, 2007 8:00 pm

Re: Understanding Fixed Income Options

Post by livesoft » Tue Apr 23, 2019 2:05 pm

Some simple money market funds from Vanguard have the following reported 7-day SEC yields:

2.44% VMMXX Vanguard Prime Money Market
2.35% VMFXX Vanguard Federal Money Market

And Ally savings account:
2.20% APY

What do you see for the CDs that you are thinking about? And CDs are more complicated than the above options.
Wiki This signature message sponsored by sscritic: Learn to fish.

inbox788
Posts: 6661
Joined: Thu Mar 15, 2012 5:24 pm

Re: Understanding Fixed Income Options

Post by inbox788 » Tue Apr 23, 2019 2:47 pm

What kind of ladder? CDs might get you a little more, but are more complicated than simply savings account or MM as mentioned above.

Topic Author
boogiehead
Posts: 118
Joined: Wed Sep 27, 2017 11:45 pm

Re: Understanding Fixed Income Options

Post by boogiehead » Tue Apr 23, 2019 3:37 pm

livesoft wrote:
Tue Apr 23, 2019 2:05 pm
Some simple money market funds from Vanguard have the following reported 7-day SEC yields:

2.44% VMMXX Vanguard Prime Money Market
2.35% VMFXX Vanguard Federal Money Market

And Ally savings account:
2.20% APY

What do you see for the CDs that you are thinking about? And CDs are more complicated than the above options.
I was looking into my merrill edge account which had under fixed income - 6 months CD with 2.35 yield.... but I like your idea to stash it in money market account for the time being, is there a similar money market fund with Merrill Edge? And is the federal money market tax exempt?

Topic Author
boogiehead
Posts: 118
Joined: Wed Sep 27, 2017 11:45 pm

Re: Understanding Fixed Income Options

Post by boogiehead » Tue Apr 23, 2019 3:38 pm

inbox788 wrote:
Tue Apr 23, 2019 2:47 pm
What kind of ladder? CDs might get you a little more, but are more complicated than simply savings account or MM as mentioned above.
I was looking at like a 3, 6, 9 month CD, however the yields are basically all the same at this time, so I think I'll go with the stated simple MM account idea.

inbox788
Posts: 6661
Joined: Thu Mar 15, 2012 5:24 pm

Re: Understanding Fixed Income Options

Post by inbox788 » Tue Apr 23, 2019 3:52 pm

boogiehead wrote:
Tue Apr 23, 2019 3:38 pm
inbox788 wrote:
Tue Apr 23, 2019 2:47 pm
What kind of ladder? CDs might get you a little more, but are more complicated than simply savings account or MM as mentioned above.
I was looking at like a 3, 6, 9 month CD, however the yields are basically all the same at this time, so I think I'll go with the stated simple MM account idea.
You have to chase yield to get more. Saw some up to 2.8% 1 year CDs, but once you build the ladder the average is lower, and even less compelling.

Post Reply