safe cash

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joeaverage144
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safe cash

Post by joeaverage144 »

Hello all, new here, appreciate any feedback. Great forum. Looking for advice, thoughts, on what vanguard fund anyone uses for cash they want access to, but keep relatively safe, that you might need to access in the event of an emergency, or anything else in life that comes up. Don't need to be too safe, as i don't plan to take it out unless absolutely needed. Currently its split between wellington, wellesley, and total bond admiral. I am ok with that, but was looking other opinions. Thanks for any info.
funkysi
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Re: safe cash

Post by funkysi »

Hi there

Depending on how much cash you have and how complicated you want to make maintaining it there are a few options to look into. Doctorofcredit.com is a place to start.
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goodenyou
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Re: safe cash

Post by goodenyou »

What to do with cash can depend on how long you are able to forego liquidity, how old you are, how much cash you are investing and how much risk you are willing to take.

Checking accounts, CDs, HYSA, Money Market accounts, I-Bonds/EE-Bonds, MYGAs, Ultra Short Term Bonds, Toyota Income Driver Notes. There may be more options as well.
"Ignorance more frequently begets confidence than does knowledge" | “At 50, everyone has the face he deserves”
dbr
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Re: safe cash

Post by dbr »

joeaverage144 wrote: Mon Oct 11, 2021 1:14 am Currently its split between wellington, wellesley, and total bond admiral. I am ok with that, but was looking other opinions. Thanks for any info.
Those things are not cash, not even close. It might be that what you are saying is that you don't keep any cash for emergencies, and that is actually fine if it fits your needs. I don't keep cash except enough in a checking account to manage ups and downs of cash flow, but then we have income from pensions and SS that refills the account.

If you do really want cash then the standard options are checking accounts, savings accounts, money markets, CDs, and so on. Some people would possibly use a stash of I bonds or one can hold a short term bond fund or short term TIPS fund, these being not cash but similar enough in purpose. There are no special choices here.
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JoMoney
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Re: safe cash

Post by JoMoney »

I would keep money I wanted for safe, potentially short-term access, in a bank or money market fund.
"Total Bond" fund has too long/high a duration then I'd be comfortable with for short term money. I don't like the idea of buying a bond or a portfolio of bonds, with a maturity much further out then my potential need of the money. If I was comfortable with the risk of the money not being there when I needed it, I would be looking more at my stocks bucket.
In the past I have used the short-term bond index fund, most of those are a bit longer then I'd prefer, but I'd still consider it again. I'm currently using bank accounts, savings bonds, and the "Stable Value" fund in my workplace 401k.
Some people consider it a waste of 401k space to have it in cash/stable value fund, but I have a very large equity allocation over all (mostly in rollover/roth IRAs), am trying to build up my FI with new contributions, and the Stable Value fund offers a better value then what I can get elsewhere right now. There's a good chance if I needed a big chunk of money for short-term purposes I would do it through a 401k loan since I could pay the interest back to myself, and if employment status changes I have other (but less preferred) places to withdraw from to pay it back immediately if necessary.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham
zie
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Re: safe cash

Post by zie »

joeaverage144 wrote: Mon Oct 11, 2021 1:14 am Hello all, new here, appreciate any feedback. Great forum. Looking for advice, thoughts, on what vanguard fund anyone uses for cash they want access to, but keep relatively safe, that you might need to access in the event of an emergency, or anything else in life that comes up. Don't need to be too safe, as i don't plan to take it out unless absolutely needed. Currently its split between wellington, wellesley, and total bond admiral. I am ok with that, but was looking other opinions. Thanks for any info.
You don't mention inflation at all, and that's something that matters when talking about "safe cash".


An FDIC insured account will be safe and be actual cash, but will be safe except for inflation risk. I.e. with 2%/yr inflation, that same $10k today can't buy the same $10k worth of stuff in 10 years, it would only buy about $8k worth of stuff instead.

The safest in terms of real dollars (i.e. without inflation) would be TIPS. TIPS basically take away inflation risk, so $10k in TIPS today will in theory buy the same amount of stuff 10 years from now when the TIPS mature(assuming a 10 yr TIPS).

There are 2 well known ways to deal with inflation:
  • Own some equities, since they handle inflation fine (something like VASIX)
  • Own TIPS & friends (VAIPX)
The problems with the above approaches:

Something like VASIX(20/80 AA) in a very down market(like 2008), might be down 10-15% at peak bottom.

Something like VAIPX will guarantee inflation, but won't guarantee deflation. I.e. if deflation happens, VAIPX will go down. Also VAIPX doesn't account for interest rate risk, so you aren't completely guaranteed of buying power in the future with VAIPX either. I-Bonds are an exception to this, they have deflation risk covered also, and are well worth it, if you can handle all the rules.

I'm not completely familiar with the wellington and wellesley funds, but I believe they are actively managed versions of VASIX with different equity mixes(I believe they are higher in equities). If you want a passive version, then the ETF AOK is 30/70 and VSCGX is 40/60, but both of those when talking about "CASH" are suddenly looking downright VERY risky, as they could lose 20% of their value in a big crash.

So it all depends own how you define cash. Based on your current holdings of "Cash" you don't seem to mean actual cash, you want the upside also. Sadly all upside requires taking actual risk. So then it's a question of which risks are you willing to take??
worlhis
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Re: safe cash

Post by worlhis »

Treasury I bonds could be a great choice. The funds would be locked up for 1 year, but they are currently earning 3.54% for bonds issued in October 2021. You can purchase up to $10,000 per person. If you're ok with leaving it there for at least 1 year, then I think that could be a great way to store cash.

https://www.treasurydirect.gov/indiv/pr ... glance.htm
Topic Author
joeaverage144
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Re: safe cash

Post by joeaverage144 »

Thanks for the replies. I guess what i was looking for were where others keep their non reitrement money at vanguard. I am not interested in having a savings account at a bank anymore. So, any suggestions of safer vanguard products, that you would occasionally dip into if needed.
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anon_investor
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Re: safe cash

Post by anon_investor »

joeaverage144 wrote: Mon Oct 11, 2021 1:14 am Hello all, new here, appreciate any feedback. Great forum. Looking for advice, thoughts, on what vanguard fund anyone uses for cash they want access to, but keep relatively safe, that you might need to access in the event of an emergency, or anything else in life that comes up. Don't need to be too safe, as i don't plan to take it out unless absolutely needed. Currently its split between wellington, wellesley, and total bond admiral. I am ok with that, but was looking other opinions. Thanks for any info.
With the current near 0% interest rate, it is literally a NO BRAINER to just keep cash for emergency needs in an FDIC insured HYSA (e.g. Ally Bank, Marcus, etc.). Money market funds at Vanguard pay about 0.01% right now compared to some HYSA that pay 0.5%. We are taking about a 50x better return from a HYSA than a money market fund.
dbr
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Re: safe cash

Post by dbr »

joeaverage144 wrote: Mon Oct 11, 2021 12:23 pm Thanks for the replies. I guess what i was looking for were where others keep their non reitrement money at vanguard. I am not interested in having a savings account at a bank anymore. So, any suggestions of safer vanguard products, that you would occasionally dip into if needed.
Traditionally one can invest in short term bonds. Risk is a matter of default risk, which is nil for Treasuries and greater for corporates, and of duration, meaning the least for short term bonds and the most for long term bonds. There are also money market funds which are about the same as savings accounts. CDs offer more interest. You can eliminate inflation risk with TIPS. I bonds can be a good alternative to savings accounts but you have to buy those at Treasury Direct, not at Vanguard.
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FoundingFather
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Re: safe cash

Post by FoundingFather »

joeaverage144 wrote: Mon Oct 11, 2021 1:14 am Hello all, new here, appreciate any feedback. Great forum. Looking for advice, thoughts, on what vanguard fund anyone uses for cash they want access to, but keep relatively safe, that you might need to access in the event of an emergency, or anything else in life that comes up. Don't need to be too safe, as i don't plan to take it out unless absolutely needed. Currently its split between wellington, wellesley, and total bond admiral. I am ok with that, but was looking other opinions. Thanks for any info.
I am a fan of I Bonds for this purpose. It does require an extra account, and there is a 1 year period of the money being untouchable. However, it is the safest thing on the planet, backed by the US government, and has some protection against inflation, so there is some good nominal returns on them right now.

If you don't want the extra account, then ultrashort to intermediate duration bonds are reasonable, based on your risk tolerance and desire for yield.

Overall, I like the idea of a small emergency fund that is 100% safe, rather than a larger fund that has some volatility, which is what it sounds like you have now.

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Topic Author
joeaverage144
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Re: safe cash

Post by joeaverage144 »

Thanks, i probably should have given more details. I am 45, have a 401k with my employer, currently about 470k. Also have the vanguard account, which has a roth with about 115k, and then the non retirement account that i am asking about, which has roughly 50k. Curious how others stack their non retirement accounts and how often they dip into them. I don't touch it unless i have to, only to pay my annual property taxes if i don't have the funds available. I elected to not have an escrow account with my mortgage. Would rather invest that money myself. Love vanguard so far tho, have only been there for 3 years, after ditching Edward Jones. Thanks for the replies.
Ferdinand2014
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Re: safe cash

Post by Ferdinand2014 »

“Cash at that time is like oxygen. When you don't need it, you don't notice it. When you do need it, it's the only thing you need.”

-Warren Buffett referring to having cash during the GFC.

Cash is about the worst investment possible. It’s also vital to have some. The trick in my mind is to decide how much is the minimum you need to be comfortable. Stable job? Good health? Paid off mortgage? Dependents? Only you can decide this. Every thing else you invest in with the possible exception of iBonds (although it also has its drawbacks and limits) goes up the risk scale as you go up the reward scale. Risk and reward are attached at the hip.

I am self employed, but have no dependents, paid off house and large equity holding. I keep short term treasuries equal to about a year of expenses and enough extra to cover known large expenses over the next 3 years (car, roof, etc). Every thing else goes right into equities.
“You only find out who is swimming naked when the tide goes out.“ — Warren Buffett
RyeBourbon
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Re: safe cash

Post by RyeBourbon »

joeaverage144 wrote: Tue Oct 12, 2021 3:15 am Thanks, i probably should have given more details. I am 45, have a 401k with my employer, currently about 470k. Also have the vanguard account, which has a roth with about 115k, and then the non retirement account that i am asking about, which has roughly 50k. Curious how others stack their non retirement accounts and how often they dip into them. I don't touch it unless i have to, only to pay my annual property taxes if i don't have the funds available. I elected to not have an escrow account with my mortgage. Would rather invest that money myself. Love vanguard so far tho, have only been there for 3 years, after ditching Edward Jones. Thanks for the replies.
50k I would keep in HYSA (Amex = 0.4%)
hudson
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Re: safe cash

Post by hudson »

joeaverage144 wrote: Mon Oct 11, 2021 12:23 pm Thanks for the replies. I guess what i was looking for were where others keep their non reitrement money at vanguard. I am not interested in having a savings account at a bank anymore. So, any suggestions of safer vanguard products, that you would occasionally dip into if needed.
Short treasuries… https://investor.vanguard.com/mutual-fu ... view/vusxx
Houdini563
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Re: safe cash

Post by Houdini563 »

I keep $200,000 in a savings account. I sleep great knowing that in any situation I can act fluidly.
wetgear
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Re: safe cash

Post by wetgear »

joeaverage144 wrote: Tue Oct 12, 2021 3:15 am Thanks, i probably should have given more details. I am 45, have a 401k with my employer, currently about 470k. Also have the vanguard account, which has a roth with about 115k, and then the non retirement account that i am asking about, which has roughly 50k. Curious how others stack their non retirement accounts and how often they dip into them. I don't touch it unless i have to, only to pay my annual property taxes if i don't have the funds available. I elected to not have an escrow account with my mortgage. Would rather invest that money myself. Love vanguard so far tho, have only been there for 3 years, after ditching Edward Jones. Thanks for the replies.
Outside of my emergency fund which is in iBonds and HYSA all my extra money is invested in a 3 fund portfolio (retirement funds or not).
3funder
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Re: safe cash

Post by 3funder »

Short-term treasury bonds would be appropriate.
Global stocks, US bonds, and time.
hudson
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Re: safe cash

Post by hudson »

hudson wrote: Tue Oct 12, 2021 6:54 am
joeaverage144 wrote: Mon Oct 11, 2021 12:23 pm Thanks for the replies. I guess what i was looking for were where others keep their non reitrement money at vanguard. I am not interested in having a savings account at a bank anymore. So, any suggestions of safer vanguard products, that you would occasionally dip into if needed.
Short treasuries… https://investor.vanguard.com/mutual-fu ... view/vusxx
Update:
Go to Vanguard Mutual Fund List...or ETF List: https://investor.vanguard.com/mutual-fu ... attributes
Select Filter, then select only US Bond and Money Market
Make sure $50K and up is checked
Under RISK, uncheck all except the one LESS RISK box.
Uncheck TAX EXEMPT and TAX MANAGED
Then SEE FUNDS...you should see a list of around 15 funds.
I'd pass on the investment grade selections; I like the ones that have "treasury" in the title.

Update 2:
I speculate that the safest cash-like choice for a fund would be the Vanguard Treasury Money Market Fund (VUSXX).
It's average maturity is 57 days; it's treasuries.
To avoid fund expenses, you could buy individual treasuries through Vanguard.
Last edited by hudson on Wed Oct 13, 2021 6:17 am, edited 2 times in total.
ivgrivchuck
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Re: safe cash

Post by ivgrivchuck »

joeaverage144 wrote: Tue Oct 12, 2021 3:15 am Thanks, i probably should have given more details. I am 45, have a 401k with my employer, currently about 470k. Also have the vanguard account, which has a roth with about 115k, and then the non retirement account that i am asking about, which has roughly 50k. Curious how others stack their non retirement accounts and how often they dip into them. I don't touch it unless i have to, only to pay my annual property taxes if i don't have the funds available. I elected to not have an escrow account with my mortgage. Would rather invest that money myself. Love vanguard so far tho, have only been there for 3 years, after ditching Edward Jones. Thanks for the replies.
The default boglehead recommendation for investing is the 3-fund portfolio. A lot of info in the wiki.

It is not exactly clear what you are asking for.
40% VTI | 40% VXUS | 13% I-bonds | 7% EE-bonds
Fortune
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Re: safe cash

Post by Fortune »

RyeBourbon wrote: Tue Oct 12, 2021 6:47 am
joeaverage144 wrote: Tue Oct 12, 2021 3:15 am Thanks, i probably should have given more details. I am 45, have a 401k with my employer, currently about 470k. Also have the vanguard account, which has a roth with about 115k, and then the non retirement account that i am asking about, which has roughly 50k. Curious how others stack their non retirement accounts and how often they dip into them. I don't touch it unless i have to, only to pay my annual property taxes if i don't have the funds available. I elected to not have an escrow account with my mortgage. Would rather invest that money myself. Love vanguard so far tho, have only been there for 3 years, after ditching Edward Jones. Thanks for the replies.
50k I would keep in HYSA (Amex = 0.4%)
You can also consider Toyota IncomeDriver Notes currently @1.35%
UpperNwGuy
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Re: safe cash

Post by UpperNwGuy »

joeaverage144 wrote: Mon Oct 11, 2021 12:23 pm Thanks for the replies. I guess what i was looking for were where others keep their non reitrement money at vanguard. I am not interested in having a savings account at a bank anymore. So, any suggestions of safer vanguard products, that you would occasionally dip into if needed.
When people here speak of nonretirement (taxable) investments at Vanguard, they are usually not talking about cash or about pots that you can occasionally dip into if needed.

In the good old days we would use Vanguard's money market funds for cash and for money to be dipped into. With today's low interest rates, however, most of us have moved that money out of Vanguard into high yield savings accounts or certificates of deposit. I know you don't want to do that, but that really is the best way, and it's what most of us do.
dbr
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Re: safe cash

Post by dbr »

UpperNwGuy wrote: Wed Oct 13, 2021 6:57 am
joeaverage144 wrote: Mon Oct 11, 2021 12:23 pm Thanks for the replies. I guess what i was looking for were where others keep their non reitrement money at vanguard. I am not interested in having a savings account at a bank anymore. So, any suggestions of safer vanguard products, that you would occasionally dip into if needed.
When people here speak of nonretirement (taxable) investments at Vanguard, they are usually not talking about cash or about pots that you can occasionally dip into if needed.

In the good old days we would use Vanguard's money market funds for cash and for money to be dipped into. With today's low interest rates, however, most of us have moved that money out of Vanguard into high yield savings accounts or certificates of deposit. I know you don't want to do that, but that really is the best way, and it's what most of us do.
In short there is nothing at Vanguard better than just keeping your cash in a bank or if you really have to something less cash like, such as MGYAs, but that is not a recommendation from me. Probably lots of people are tired of low interest rates but that is just tough. The solution is HTHU.
Breakaway72
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Re: safe cash

Post by Breakaway72 »

delete
Last edited by Breakaway72 on Sun Oct 24, 2021 2:06 pm, edited 1 time in total.
namajones
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Re: safe cash

Post by namajones »

Near or in retirement, you probably have to accept some loss to inflation to keep enough funds in a high yield savings account.

Read somewhere recently that a financial advisor said something to the effect that it's better to lose a little to inflation than a lot to an equity swoon. The overall point was to be well diversified, but part of that diversification will have to include safe cash (or as many I bonds as you can get). Otherwise you're probably gambling in markets that owe you nothing and could lose more than cash in various scenarios.

Hopefully some youngster 20 years from now will be reading threads like this and saying, "man, I'm glad I wasn't investing in that environment" rather than "wow, they didn't know how lucky they had it."
Gill
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Re: safe cash

Post by Gill »

Breakaway72 wrote: Sun Oct 24, 2021 4:59 am My wife and I have established separate Revocable Trusts and now have to fund them.

Started with the house which was a snap, took about an hour and cost $10. The house is now jointly owned by John Doe, trustee for the John Doe trust and Jane Doe, trustee for the Jane Doe trust.

Next came our taxable brokerage account at Vanguard. After going round and round we gave up and transferred to Fido. Took a month or so but eventually got it done. Joint account owned by John Doe, trustee of the John Doe trust and Jane Doe, trustee of the Jane Doe trust.

Our emergency fund ($500k) is currently with a small credit union which I have been a member of for 25 years. Great rates but they do not allow joint accounts with trusts as owners. I have been looking on line for a new place to park our emergency funds (Alliant, Ally, PenFed, etc). Their web pages are not very clear as to whether they allow two separate trusts to own a joint account.

Has anyone successfully opened an account at a bank/credit union that will allow us to open a joint account in the name of two separate trusts?
Aren’t you hijacking this thread? However, in answer to your question, I don’t see how two trusts can own an account JTWROS.
Gill
Cost basis is redundant. One has a basis in an investment | One advises and gives advice | One should follow the principle of investing one's principal
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