Best Cash Accounts

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powercherry5
Posts: 107
Joined: Thu Dec 12, 2019 3:46 pm

Best Cash Accounts

Post by powercherry5 »

Due to a sale of a business, I have millions that need to be invested. I have a plan to allocate all the funds into stocks/bonds. Due to record highs in all asset markets, for comforts sake I am doing it over the next year versus lump sum.

Is there minimally risky or risk free place to hold them in the meantime. Treasury markets like VUSXX are at a laughable 0.04%. Well known banking companies provide near zero bank accounts. I see there are a few 0.5% APY savings accounts from online banks which would be decent. But they aren't exactly Chase Bank and I'm not sure I would be comfortable investing much more than what they insured for which is 250k by the Govt. Due to my time and motivation,it's just not realistic for me to open a ton of accounts in dozens of places for a paltry % that may change at any time.

Most of the money is officially owned in a business account, so that sometimes makes options worse too (there are less business accounts with APY than consumer ones)

Any advice?
exodusNH
Posts: 10345
Joined: Wed Jan 06, 2021 7:21 pm

Re: Best Cash Accounts

Post by exodusNH »

powercherry5 wrote: Mon Jul 26, 2021 5:22 pm Due to a sale of a business, I have millions that need to be invested. I have a plan to allocate all the funds into stocks/bonds. Due to record highs in all asset markets, for comforts sake I am doing it over the next year versus lump sum.

Is there minimally risky or risk free place to hold them in the meantime. Treasury markets like VUSXX are at a laughable 0.04%. Well known banking companies provide near zero bank accounts. I see there are a few 0.5% APY savings accounts from online banks which would be decent. But they aren't exactly Chase Bank and I'm not sure I would be comfortable investing much more than what they insured for which is 250k by the Govt. Due to my time and motivation,it's just not realistic for me to open a ton of accounts in dozens of places for a paltry % that may change at any time.

Most of the money is officially owned in a business account, so that sometimes makes options worse too (there are less business accounts with APY than consumer ones)

Any advice?
2/3rd of the time you're better off with lump sum. You could always to 50% now and then do the rest monthly.

With savings, if you have a spouse and don't mind opening an account in their name, you can get $750K in FDIC per institution -- $250K in your name, $250K in spouse's, and then $250K in a joint you & spouse account. There are also banks that will insure up to $1M by spreading out the money among different banks behind the scenes.

Citi is paying 0.5% (https://banking.citi.com/cbol/high-yiel ... channel=ps).

I use Vio bank as my "high-yield" bank -- 0.57% on savings, 0.61% on a money market. They're the online division of MidFirst Bank, which has been around since 1982 and has $31B in assets.

The most annoying thing you'll run into with these banks is the daily transfer limits. If you want to pull $100K out, it may take a week to get the funds fully extracted. (And then may also get dinged with the "excess transaction fee". They all still run under the now-unenforced Regulation D limits. But $20 on millions isn't something to be concerned about.)

Many brokerages have new customer bonuses. I wonder if you bring money into them and stuff it in a money market account if you would qualify? The bonus would make up for the paltry return.
an_asker
Posts: 4903
Joined: Thu Jun 27, 2013 2:15 pm

Re: Best Cash Accounts

Post by an_asker »

exodusNH wrote: Mon Jul 26, 2021 6:51 pm
powercherry5 wrote: Mon Jul 26, 2021 5:22 pm Due to a sale of a business, I have millions that need to be invested. I have a plan to allocate all the funds into stocks/bonds. Due to record highs in all asset markets, for comforts sake I am doing it over the next year versus lump sum.

Is there minimally risky or risk free place to hold them in the meantime. Treasury markets like VUSXX are at a laughable 0.04%. Well known banking companies provide near zero bank accounts. I see there are a few 0.5% APY savings accounts from online banks which would be decent. But they aren't exactly Chase Bank and I'm not sure I would be comfortable investing much more than what they insured for which is 250k by the Govt. Due to my time and motivation,it's just not realistic for me to open a ton of accounts in dozens of places for a paltry % that may change at any time.

Most of the money is officially owned in a business account, so that sometimes makes options worse too (there are less business accounts with APY than consumer ones)

Any advice?
2/3rd of the time you're better off with lump sum. You could always to 50% now and then do the rest monthly.
[...]
Maybe lumpsum 2/3 [or is it 1/3? I've got my probability theory basics shot] then :-)
UpperNwGuy
Posts: 9479
Joined: Sun Oct 08, 2017 7:16 pm

Re: Best Cash Accounts

Post by UpperNwGuy »

Just put it into a short term bond fund, but don't expect to make any money from it. If you want to make money, stop holding back and dump it all into the stock market. You can't have it both ways. Safety and earnings are two different paths. You're at the fork in the road.
lakpr
Posts: 11612
Joined: Fri Mar 18, 2011 9:59 am

Re: Best Cash Accounts

Post by lakpr »

Would Toyota Income Driver Notes be a candidate for at least part of the money?

viewtopic.php?f=1&t=340088

Income Driver Notes are like the I bonds and EE bonds, except that instead of US government as the obligor, Toyota Motor Credit Corporation is your obligor. You buy the notes from TMCC, and you sell them back to TMCC. They are paying 1.3% currently. Highly liquid, you can redeem them in as little as one month after purchase.

They are NOT insured by FDIC or any government agency, it's your trust and gut feeling whether TMCC would go bankrupt within your time horizon of 1 year that you intend to deploy the money into the market.
inverter
Posts: 1021
Joined: Mon Jul 27, 2015 1:40 pm
Location: New York, NY

Re: Best Cash Accounts

Post by inverter »

Take a look at Flourish (flourish.com). It's slightly lower than some of the individual HYSA but would allow you to get FDIC insurance for up to $2m in an individual account.
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