Parking cash for 6 weeks: CD or MMF?

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boomer_techie
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Joined: Fri Jan 18, 2019 6:47 am

Parking cash for 6 weeks: CD or MMF?

Post by boomer_techie » Thu Feb 27, 2020 7:41 pm

A five figure CD earmarked for paying income tax matured today. My original plan was to put it into a 1 month CD, and when that matures, at that time figure out what to do for the remaining two weeks.

Because of falling interest rates, plus this week's market plummet, I'm reconsidering. Which option should I choose?

A) One month CD, followed by two weeks in a MMF (i.e SWVXX). Pros: CD's might pay a higher rate than SWVXX. Cons: SWVXX rates lag the market - it might actually be higher than CD's for a short while. This requires cash to sit in my sweep account three times while waiting for settlement/withdrawal dates while earning worse than a non-alcoholic beer.

A1) One month CD, and then two weeks in the sweep account. Pros: Simple. Cons: Low yield.

B) Just dump it in SWVXX until April 15th. Pros: Less time with cash sitting in the sweep account. Cons: Potentially worse interest rates.

I expect the cash from the CD to deposit in the next two to four hours - just early enough to select a CD before the nightly blackout.

Thesaints
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Re: Parking cash for 6 weeks: CD or MMF?

Post by Thesaints » Thu Feb 27, 2020 7:45 pm

Let's say that five figures means half a million. A 1% annual interest difference over 1.5 months is about $600 before taxes.
Maybe it is not that critical ?

rockstar
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Re: Parking cash for 6 weeks: CD or MMF?

Post by rockstar » Thu Feb 27, 2020 8:16 pm

I thought CDs were only FDIC insured up to $250k.

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obafgkm
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Re: Parking cash for 6 weeks: CD or MMF?

Post by obafgkm » Thu Feb 27, 2020 8:34 pm

Thesaints wrote:
Thu Feb 27, 2020 7:45 pm
Let's say that five figures means half a million.
Five figures could not possibly mean half a million.

Topic Author
boomer_techie
Posts: 351
Joined: Fri Jan 18, 2019 6:47 am

Re: Parking cash for 6 weeks: CD or MMF?

Post by boomer_techie » Thu Feb 27, 2020 9:03 pm

Thesaints wrote:
Thu Feb 27, 2020 7:45 pm
Let's say that five figures means half a million. A 1% annual interest difference over 1.5 months is about $600 before taxes.
Maybe it is not that critical ?
Your guess is a factor of ten too high! :P And then some. (But definitely more than $10K!)

retired@50
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Location: Living in the U.S.A.

Re: Parking cash for 6 weeks: CD or MMF?

Post by retired@50 » Thu Feb 27, 2020 9:19 pm

Thesaints wrote:
Thu Feb 27, 2020 7:45 pm
Let's say that five figures means half a million. A 1% annual interest difference over 1.5 months is about $600 before taxes.
Maybe it is not that critical ?
My understanding of 5 figures is this. 12,345. At most 99,999.

So, nowhere near a half a million. That would be 6 figures.

Regards,
This is one person's opinion. Nothing more.

Thesaints
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Re: Parking cash for 6 weeks: CD or MMF?

Post by Thesaints » Thu Feb 27, 2020 9:41 pm

My mistake.
So this is really a non-issue.

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anon_investor
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Re: Parking cash for 6 weeks: CD or MMF?

Post by anon_investor » Thu Feb 27, 2020 9:51 pm

Just do a no penalty CD at Marcus, 1.9% right now:

https://www.marcus.com/us/en/savings/no-penalty-cds

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