Where to place cash for monthly expenses?

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Topic Author
Jon_PassiveInvestor
Posts: 306
Joined: Sat Mar 12, 2011 10:23 pm

Where to place cash for monthly expenses?

Post by Jon_PassiveInvestor » Thu Apr 30, 2020 3:25 pm

In my taxable, I currently invest in vtsax and cash is in VUSXX. The cash is for monthly expenses as I recently sold my business. I live in Texas so no state tax.

Is VUSXX still the best bet to hold this cash for the foreseeable future?
100% VTSAX in Taxable Account. | 100% VTSAX in Retirement Accounts

vipertom1970
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Re: Where to place cash for monthly expenses?

Post by vipertom1970 » Thu Apr 30, 2020 3:28 pm

pay off mortgage, 3% guarantee return.

123
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Re: Where to place cash for monthly expenses?

Post by 123 » Thu Apr 30, 2020 3:29 pm

Banks are pretty good at keeping cash. Checking accounts are called demand deposits because you can get your money any day the bank is open, even other times with an ATM.
The closest helping hand is at the end of your own arm.

Topic Author
Jon_PassiveInvestor
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Re: Where to place cash for monthly expenses?

Post by Jon_PassiveInvestor » Thu Apr 30, 2020 3:32 pm

123 wrote:
Thu Apr 30, 2020 3:29 pm
Banks are pretty good at keeping cash. Checking accounts are called demand deposits because you can get your money any day the bank is open, even other times with an ATM.
My banks are maxed out for FDIC.
100% VTSAX in Taxable Account. | 100% VTSAX in Retirement Accounts

Topic Author
Jon_PassiveInvestor
Posts: 306
Joined: Sat Mar 12, 2011 10:23 pm

Re: Where to place cash for monthly expenses?

Post by Jon_PassiveInvestor » Thu Apr 30, 2020 3:32 pm

vipertom1970 wrote:
Thu Apr 30, 2020 3:28 pm
pay off mortgage, 3% guarantee return.
Paid half off. Holding cash back right now during the virus craziness.
100% VTSAX in Taxable Account. | 100% VTSAX in Retirement Accounts

LookinAround
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Location: Chicagoland

Re: Where to place cash for monthly expenses?

Post by LookinAround » Thu Apr 30, 2020 3:34 pm

Jon_PassiveInvestor wrote:
Thu Apr 30, 2020 3:32 pm
123 wrote:
Thu Apr 30, 2020 3:29 pm
Banks are pretty good at keeping cash. Checking accounts are called demand deposits because you can get your money any day the bank is open, even other times with an ATM.
My banks are maxed out for FDIC.
Isn't there an infinite supply of FDIC insured banks?

mega317
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Re: Where to place cash for monthly expenses?

Post by mega317 » Thu Apr 30, 2020 3:35 pm

If you truly need more cash than you have in multiple FDIC maxed bank accounts then yeah a money market fund is fine. If you just want a bunch of lower volatility money indefinitely because of the virus, I would suggest taking a little more risk such as intermediate-term bonds.
Last edited by mega317 on Thu Apr 30, 2020 3:36 pm, edited 1 time in total.
https://www.bogleheads.org/forum/viewtopic.php?t=6212

jks1985
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Re: Where to place cash for monthly expenses?

Post by jks1985 » Thu Apr 30, 2020 3:36 pm

I'm doing VUSXX and high yield savings accounts.

mlipps
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Re: Where to place cash for monthly expenses?

Post by mlipps » Thu Apr 30, 2020 3:36 pm

Read another thread here recently that the Fidelity cash management account will automatically spread your cash between up to 5 underlying institutions to FDIC insure up to $1.25 million. Have not personally investigated but that could be a good account for this purpose.

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vineviz
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Re: Where to place cash for monthly expenses?

Post by vineviz » Thu Apr 30, 2020 3:36 pm

Jon_PassiveInvestor wrote:
Thu Apr 30, 2020 3:32 pm
123 wrote:
Thu Apr 30, 2020 3:29 pm
Banks are pretty good at keeping cash. Checking accounts are called demand deposits because you can get your money any day the bank is open, even other times with an ATM.
My banks are maxed out for FDIC.
Your monthly expenses must be monstrous if the FDIC limit isn't sufficiently high to cover them. $250k/month is pretty high living where I'm from.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch

Topic Author
Jon_PassiveInvestor
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Re: Where to place cash for monthly expenses?

Post by Jon_PassiveInvestor » Thu Apr 30, 2020 3:38 pm

jks1985 wrote:
Thu Apr 30, 2020 3:36 pm
I'm doing VUSXX and high yield savings accounts.
That’s what I’ve been doing for 8 months now. Just needed a sanity check. I’m glad to see someone else doing that as well.
100% VTSAX in Taxable Account. | 100% VTSAX in Retirement Accounts

Topic Author
Jon_PassiveInvestor
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Re: Where to place cash for monthly expenses?

Post by Jon_PassiveInvestor » Thu Apr 30, 2020 3:39 pm

vineviz wrote:
Thu Apr 30, 2020 3:36 pm
Jon_PassiveInvestor wrote:
Thu Apr 30, 2020 3:32 pm
123 wrote:
Thu Apr 30, 2020 3:29 pm
Banks are pretty good at keeping cash. Checking accounts are called demand deposits because you can get your money any day the bank is open, even other times with an ATM.
My banks are maxed out for FDIC.
Your monthly expenses must be monstrous if the FDIC limit isn't sufficiently high to cover them. $250k/month is pretty high living where I'm from.
This gave me a good laugh when I read it.
100% VTSAX in Taxable Account. | 100% VTSAX in Retirement Accounts

dbr
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Re: Where to place cash for monthly expenses?

Post by dbr » Thu Apr 30, 2020 3:39 pm

Jon_PassiveInvestor wrote:
Thu Apr 30, 2020 3:32 pm
123 wrote:
Thu Apr 30, 2020 3:29 pm
Banks are pretty good at keeping cash. Checking accounts are called demand deposits because you can get your money any day the bank is open, even other times with an ATM.
My banks are maxed out for FDIC.
Do you really mean your monthly expenses exceed several banks worth of FDIC coverage?

It sounds like you have a lot of cash from selling your business that needs to be invested rather than being cash for monthly expenses.

Most people probably manage monthly expenses out of checking accounts and sometimes money market accounts or funds that allow check writing. Another option is credit cards for cash management and then paying those off monthly from checking or check writable money markets, etc.

Maybe we are missing what your question is.

vipertom1970
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Re: Where to place cash for monthly expenses?

Post by vipertom1970 » Thu Apr 30, 2020 3:44 pm

Jon_PassiveInvestor wrote:
Thu Apr 30, 2020 3:32 pm
vipertom1970 wrote:
Thu Apr 30, 2020 3:28 pm
pay off mortgage, 3% guarantee return.
Paid half off. Holding cash back right now during the virus craziness.
what do you gain holding cash in CD vs paying off the mortgage ? I have not had a mortgage for over 20 years and have been 100% in equities ever since.

Topic Author
Jon_PassiveInvestor
Posts: 306
Joined: Sat Mar 12, 2011 10:23 pm

Re: Where to place cash for monthly expenses?

Post by Jon_PassiveInvestor » Thu Apr 30, 2020 3:45 pm

dbr wrote:
Thu Apr 30, 2020 3:39 pm
Jon_PassiveInvestor wrote:
Thu Apr 30, 2020 3:32 pm
123 wrote:
Thu Apr 30, 2020 3:29 pm
Banks are pretty good at keeping cash. Checking accounts are called demand deposits because you can get your money any day the bank is open, even other times with an ATM.
My banks are maxed out for FDIC.
Do you really mean your monthly expenses exceed several banks worth of FDIC coverage?

It sounds like you have a lot of cash from selling your business that needs to be invested rather than being cash for monthly expenses.

Most people probably manage monthly expenses out of checking accounts and sometimes money market accounts or funds that allow check writing. Another option is credit cards for cash management and then paying those off monthly from checking or check writable money markets, etc.

Maybe we are missing what your question is.
Oh heavens no! Monthly expenses are around 7k and I store multiple months in my Chase checking and pull from my VUSXX with Vanguard.

I’m asking about a large amount of cash for highest yield. I’m 25% invested after selling my business. I’m buying 5k chunks of VTSAX ever week currently.
100% VTSAX in Taxable Account. | 100% VTSAX in Retirement Accounts

Topic Author
Jon_PassiveInvestor
Posts: 306
Joined: Sat Mar 12, 2011 10:23 pm

Re: Where to place cash for monthly expenses?

Post by Jon_PassiveInvestor » Thu Apr 30, 2020 3:46 pm

vipertom1970 wrote:
Thu Apr 30, 2020 3:44 pm
Jon_PassiveInvestor wrote:
Thu Apr 30, 2020 3:32 pm
vipertom1970 wrote:
Thu Apr 30, 2020 3:28 pm
pay off mortgage, 3% guarantee return.
Paid half off. Holding cash back right now during the virus craziness.
what do you gain holding cash in CD vs paying off the mortgage ? I have not had a mortgage for over 20 years and have been 100% in equities ever since.
I’m hoarding some cash as my cash flow is now zero. Being conservative with a portion until my new business takes off and generates cash flow again. Once I get my monthly expenses covered again, I will probably invest 95% of cash into VTSAX and pay rest of mortgage off.
100% VTSAX in Taxable Account. | 100% VTSAX in Retirement Accounts

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cos
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Re: Where to place cash for monthly expenses?

Post by cos » Sat May 02, 2020 9:28 pm

Jon_PassiveInvestor wrote:
Thu Apr 30, 2020 3:46 pm
vipertom1970 wrote:
Thu Apr 30, 2020 3:44 pm
Jon_PassiveInvestor wrote:
Thu Apr 30, 2020 3:32 pm
vipertom1970 wrote:
Thu Apr 30, 2020 3:28 pm
pay off mortgage, 3% guarantee return.
Paid half off. Holding cash back right now during the virus craziness.
what do you gain holding cash in CD vs paying off the mortgage ? I have not had a mortgage for over 20 years and have been 100% in equities ever since.
I’m hoarding some cash as my cash flow is now zero. Being conservative with a portion until my new business takes off and generates cash flow again. Once I get my monthly expenses covered again, I will probably invest 95% of cash into VTSAX and pay rest of mortgage off.
I'm in a very different situation than you, but I keep close to 100% of my net worth (including emergency fund) invested at all times. Anything else would be market timing. The only money I have outside of my retirement and taxable investments is 1 month of expenses in a high-yield checking account. At the end of every month, after I've cashed my checks and paid my bills, I sell investments in my taxable account to top up my checking account.

I think that if I were in your shoes, I'd go ahead and invest that 95% when the market opens Monday morning. If you find you're hesitant due to current market volatility, you should probably increase your bond allocation so that your overall portfolio better matches your apparent risk tolerance.

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