Alternatives to not-so-high yield savings??

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simpleidiot
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Alternatives to not-so-high yield savings??

Post by simpleidiot »

What are you smart folks doing with your cash in "high yield" savings that have dropped due to fed funds slash?

Doing nothing? Moving elsewhere?

I put some money in goldman's Marcus online savings when it was 1.6% earlier in 2020. Today's update drops that to 0.5% APY.

Anyone have a better option?

thanks!
Buy the truth and do not sell it; get wisdom, discipline, and understanding.
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arcticpineapplecorp.
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Re: Alternatives to not-so-high yield savings??

Post by arcticpineapplecorp. »

you want the same amount of safety yet higher returns?

does life work that way?

risk and return are inextricably linked.

you want higher returns with no extra risk.

wanting it doesn't make it so.

as a famous celebrity host once said, "It is what it is."
It's "Stay" the course, not Stray the Course. Buy and Hold works. You should really try it sometime. Get a plan: www.bogleheads.org/wiki/Investment_policy_statement
7eight9
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Re: Alternatives to not-so-high yield savings??

Post by 7eight9 »

If you are willing to jump through some hoops there are higher yielding accounts. One good resource is Doctor of Credit --- https://www.doctorofcredit.com/high-int ... gs-to-get/.
I guess it all could be much worse. | They could be warming up my hearse.
MikeG62
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Re: Alternatives to not-so-high yield savings??

Post by MikeG62 »

7eight9 wrote: Tue Nov 17, 2020 9:21 pm If you are willing to jump through some hoops there are higher yielding accounts. One good resource is Doctor of Credit --- https://www.doctorofcredit.com/high-int ... gs-to-get/.
+1

The pickings are getting slimmer and slimmer, but you should be able to find a home at a yield well above what Marcus is paying. Might require tying up the funds for a period of time (i.e., traditional CD with EWP).

I've done lots of CD's this year all found through the DA website.
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arcticpineapplecorp.
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Re: Alternatives to not-so-high yield savings??

Post by arcticpineapplecorp. »

MikeG62 wrote: Wed Nov 18, 2020 10:35 am
7eight9 wrote: Tue Nov 17, 2020 9:21 pm If you are willing to jump through some hoops there are higher yielding accounts. One good resource is Doctor of Credit --- https://www.doctorofcredit.com/high-int ... gs-to-get/.
+1

The pickings are getting slimmer and slimmer, but you should be able to find a home at a yield well above what Marcus is paying. Might require tying up the funds for a period of time (i.e., traditional CD with EWP).

I've done lots of CD's this year all found through the DA website.
so there's an illequidity premium.

not apples to apples if client's current account doesn't have the same limitations.

didn't say the client can't get a higher rate of return...but what is s/he willing to do to get it (take additional risk, be more illiquid, jump through hoops which requires time/effort which costs "something").
It's "Stay" the course, not Stray the Course. Buy and Hold works. You should really try it sometime. Get a plan: www.bogleheads.org/wiki/Investment_policy_statement
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birdog
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Re: Alternatives to not-so-high yield savings??

Post by birdog »

I'm just staying put in Marcus as I need the liquidity.
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vineviz
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Re: Alternatives to not-so-high yield savings??

Post by vineviz »

simpleidiot wrote: Tue Nov 17, 2020 9:11 pm What are you smart folks doing with your cash in "high yield" savings that have dropped due to fed funds slash?

Doing nothing? Moving elsewhere?

I put some money in goldman's Marcus online savings when it was 1.6% earlier in 2020. Today's update drops that to 0.5% APY.

Anyone have a better option?

thanks!
The smart people have avoided holding cash unnecessarily and are invested in bonds which match their investment time horizon.

Vanguard Long-Term Bond ETF (BLV) has a SEC yield of 2.3%.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch
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AerialWombat
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Re: Alternatives to not-so-high yield savings??

Post by AerialWombat »

I’ve been aggressively moving cash into VTSAX in order to get back to my target AA. Almost there.
Mike Scott
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Re: Alternatives to not-so-high yield savings??

Post by Mike Scott »

I let it sit. The interest is still better than nothing and that's not the reason the $$ is in a savings account.
Marseille07
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Re: Alternatives to not-so-high yield savings??

Post by Marseille07 »

I'm DCA-ing into 80/20 in taxable. Send money, rebalance, rinse & repeat.
Bobby Lupo
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Re: Alternatives to not-so-high yield savings??

Post by Bobby Lupo »

As long as the cash isn't part of your emergency fund, you might want to at a 50/50 fund like Vanguard Tax-Managed Balanced Fund Admiral Shares (VTMFX)
am
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Re: Alternatives to not-so-high yield savings??

Post by am »

vineviz wrote: Wed Nov 18, 2020 10:44 am
simpleidiot wrote: Tue Nov 17, 2020 9:11 pm What are you smart folks doing with your cash in "high yield" savings that have dropped due to fed funds slash?

Doing nothing? Moving elsewhere?

I put some money in goldman's Marcus online savings when it was 1.6% earlier in 2020. Today's update drops that to 0.5% APY.

Anyone have a better option?

thanks!
The smart people have avoided holding cash unnecessarily and are invested in bonds which match their investment time horizon.

Vanguard Long-Term Bond ETF (BLV) has a SEC yield of 2.3%.
I don’t think that yield is worth the risk for the safe part of the portfolio.

I have been “investing” taxable fixed income into high yield savings at Amex (.6%). Avoiding bonds as I don’t think risk is worth the return. The rest into stock indexes. As long as bonds are returning nothing, the stock market should be generous.
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vineviz
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Re: Alternatives to not-so-high yield savings??

Post by vineviz »

am wrote: Wed Nov 18, 2020 11:42 am I don’t think that yield is worth the risk for the safe part of the portfolio.

I have been “investing” taxable fixed income into high yield savings at Amex (.6%). Avoiding bonds as I don’t think risk is worth the return. The rest into stock indexes. As long as bonds are returning nothing, the stock market should be generous.
Portfolios don't have "safe parts" and "risky parts": it's the performance of the overall portfolio that matters, not the individual pieces.

Moreover, unless 100% of your expenses will be incurred in the next 30 days then cash is not the lowest-risk asset you can choose. If you're a long-term investor, long-term bonds are LOWER risk not higher risk than cash.

Finally, it's not true that "bonds are returning nothing". I mentioned a core bond fund with a yield of 2.3% which, last time I checked, is more than 0.6%.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch
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dratkinson
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Re: Alternatives to not-so-high yield savings??

Post by dratkinson »

Money is fungible. Search forum for "ABP by CC technique".

It'll teach you to earn ~2%/yr tax-free on your 1st-tier EFs kept in ~zero% checking, savings, mmkt.

Then the remainder if your money can be invested for the market return.
d.r.a., not dr.a. | I'm a novice investor, you are forewarned.
am
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Re: Alternatives to not-so-high yield savings??

Post by am »

vineviz wrote: Wed Nov 18, 2020 12:14 pm
am wrote: Wed Nov 18, 2020 11:42 am I don’t think that yield is worth the risk for the safe part of the portfolio.

I have been “investing” taxable fixed income into high yield savings at Amex (.6%). Avoiding bonds as I don’t think risk is worth the return. The rest into stock indexes. As long as bonds are returning nothing, the stock market should be generous.
Portfolios don't have "safe parts" and "risky parts": it's the performance of the overall portfolio that matters, not the individual pieces.

Moreover, unless 100% of your expenses will be incurred in the next 30 days then cash is not the lowest-risk asset you can choose. If you're a long-term investor, long-term bonds are LOWER risk not higher risk than cash.

Finally, it's not true that "bonds are returning nothing". I mentioned a core bond fund with a yield of 2.3% which, last time I checked, is more than 0.6%.
How much will your long term bond fund lose if rates start increasing? There’s not much room to go lower. I only see risk and little gain.
ArmchairArchitect
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Re: Alternatives to not-so-high yield savings??

Post by ArmchairArchitect »

Mike Scott wrote: Wed Nov 18, 2020 10:48 am I let it sit. The interest is still better than nothing and that's not the reason the $$ is in a savings account.
Wrong. You're losing money when you take inflation into account, of which a TON is coming due to massive fiscal stimulus/bailouts, and the Fed's decision to go above the 2% inflation target, of which the official figures underrepresent actual inflation to begin with.

Gold or Bitcoin as inflation hedges is my pick. Almost all fiat currencies around the world are going to be inflated to hell after dealing with the fiscal fallout of the CCP virus.
ChiKid24
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Re: Alternatives to not-so-high yield savings??

Post by ChiKid24 »

I moved my Marcus money to Affirm yesterday. APY is 1.0%. I also play the bank bonus game on the doctorofcredit link previously posted. Requires a little work, but bonuses of $200-$500 can juice the yield.
JBTX
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Re: Alternatives to not-so-high yield savings??

Post by JBTX »

- ibonds
-eebonds (if you think you can hold on to it 20 years)
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vineviz
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Re: Alternatives to not-so-high yield savings??

Post by vineviz »

am wrote: Wed Nov 18, 2020 2:07 pm
vineviz wrote: Wed Nov 18, 2020 12:14 pm
am wrote: Wed Nov 18, 2020 11:42 am I don’t think that yield is worth the risk for the safe part of the portfolio.

I have been “investing” taxable fixed income into high yield savings at Amex (.6%). Avoiding bonds as I don’t think risk is worth the return. The rest into stock indexes. As long as bonds are returning nothing, the stock market should be generous.
Portfolios don't have "safe parts" and "risky parts": it's the performance of the overall portfolio that matters, not the individual pieces.

Moreover, unless 100% of your expenses will be incurred in the next 30 days then cash is not the lowest-risk asset you can choose. If you're a long-term investor, long-term bonds are LOWER risk not higher risk than cash.

Finally, it's not true that "bonds are returning nothing". I mentioned a core bond fund with a yield of 2.3% which, last time I checked, is more than 0.6%.
How much will your long term bond fund lose if rates start increasing? There’s not much room to go lower. I only see risk and little gain.
That’s a myth. A commonly held one, but a myth none the less.

The important thing that people forget is that interest rate risk only exists when your bond funds average duration is different from your investment horizon.

Holding cash (with a duration of zero) when your investment horizon is years or decades is the risky bet, as we can clearly now.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch
Chuck
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Re: Alternatives to not-so-high yield savings??

Post by Chuck »

I gave up and started buying EE bonds. I figure if the rates are close to 0%, then I'm not losing much if I'm getting 0.1% for the next 5-10 years.
tashnewbie
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Re: Alternatives to not-so-high yield savings??

Post by tashnewbie »

Check to see if any of your local credit unions offer reward checking accounts. There may be some hoops to jump through. For example, one of my local CUs offers 5% APY on a balance up to $10k if I have certain direct deposits (no debit card transaction requirement).

Also check out Doctor of Credit website as others have mentioned, which as they have also mentioned, will require jumping through some hoops.
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