Something better place to park my cash??

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dave1054
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Something better place to park my cash??

Post by dave1054 » Sat Aug 20, 2016 9:09 am

I have $100000 plus sitting in money market I will have no need for in next 3-5 years. Not searching for high yield.
Would like 1.5-3% somewhat safe return. I have some in Vanguard short term high grade corporate bonds (vfsux). Any other suggestions.

Jack FFR1846
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Re: Something better place to park my cash??

Post by Jack FFR1846 » Sat Aug 20, 2016 9:34 am

Look for CD rates at terms that you can live with. Understand the penalty for early withdrawal as several places have increased these pretty dramatically lately. You could consider iBonds for a limited amount, $10k per person.
Bogle: Smart Beta is stupid

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Makaveli
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Re: Something better place to park my cash??

Post by Makaveli » Sat Aug 20, 2016 10:04 am

dave1054 wrote:I have $100000 plus sitting in money market I will have no need for in next 3-5 years. Not searching for high yield.
Would like 1.5-3% somewhat safe return. I have some in Vanguard short term high grade corporate bonds (vfsux). Any other suggestions.
High-yield savings account at a risk-free (as free as it gets) 1.00%-1.25%. Is losing principal worth that extra 1.00%-1.50% or $1,000 - $1,500?

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Toons
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Re: Something better place to park my cash??

Post by Toons » Sat Aug 20, 2016 10:10 am

While I was "thinking" about it,
I would let it reside in
Vanguard Intermediate Tax Exempt Admiral. :mrgreen:
https://personal.vanguard.com/us/funds/ ... IntExt=INT


:mrgreen:
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

andy2012
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Re: Something better place to park my cash??

Post by andy2012 » Sat Aug 20, 2016 2:50 pm

What are iBonds?

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arcticpineapplecorp.
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Re: Something better place to park my cash??

Post by arcticpineapplecorp. » Sat Aug 20, 2016 7:26 pm

andy2012 wrote:What are iBonds?
read more about them here:
https://www.bogleheads.org/wiki/I_savings_bonds

from the wiki:
Series I Savings Bonds (often called I Bonds) are government savings bonds issued by the U.S. Treasury that offer inflation protection. I Bonds offer tax-deferral for up to 30 years and are free from state and local taxation. I Bonds are not marketable securities and cannot be traded in the secondary market.

Note: Treasury Inflation Protected Securities (TIPS) also provide inflation protection. TIPS are considered alternatives to I Bonds. See I Bonds vs TIPS for similarities and differences between the two instruments.

I bonds were first issued in September, 1998. Historical interest rates, along with computation metrics, for I bond issues can be found at TreasuryDirect."
"May you live as long as you want and never want as long as you live" -- Irish Blessing | "Invest we must" -- Jack Bogle

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goingup
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Re: Something better place to park my cash??

Post by goingup » Sat Aug 20, 2016 7:38 pm

Toons wrote:While I was "thinking" about it,
I would let it reside in
Vanguard Intermediate Tax Exempt Admiral. :mrgreen:
https://personal.vanguard.com/us/funds/ ... IntExt=INT


:mrgreen:
This muni fund has been been part of our bond allocation for years. Good quality low-cost fund. If I wanted completely safe (won't lose principal) I'd choose CDs or high-yield savings.

duckcalldan
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Re: Something better place to park my cash??

Post by duckcalldan » Sat Aug 20, 2016 8:21 pm

Toons wrote:While I was "thinking" about it,
I would let it reside in
Vanguard Intermediate Tax Exempt Admiral.
https://personal.vanguard.com/us/funds/ ... IntExt=INT
We've got a good chunk in this same fund. An even larger amount is in Vanguard Short-Term Investment Grade Admiral (best ticker ever: VFSUX)
https://personal.vanguard.com/us/funds/ ... IntExt=INT

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munemaker
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Re: Something better place to park my cash??

Post by munemaker » Sat Aug 20, 2016 8:39 pm


Dontridetheindexdown
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Re: Something better place to park my cash??

Post by Dontridetheindexdown » Sat Aug 20, 2016 9:10 pm

VBIRX - Vanguard Short-Term Bond Index Fund Admiral Shares, 1.07% SEC yield, 2.16% total 12 month return.

We have used it as a "cash equivalent" for many years.

sambb
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Re: Something better place to park my cash??

Post by sambb » Sat Aug 20, 2016 9:16 pm

emerging markets may be good

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Toons
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Re: Something better place to park my cash??

Post by Toons » Sat Aug 20, 2016 9:17 pm

duckcalldan wrote:
Toons wrote:While I was "thinking" about it,
I would let it reside in
Vanguard Intermediate Tax Exempt Admiral.
https://personal.vanguard.com/us/funds/ ... IntExt=INT
We've got a good chunk in this same fund. An even larger amount is in Vanguard Short-Term Investment Grade Admiral (best ticker ever: VFSUX)
https://personal.vanguard.com/us/funds/ ... IntExt=INT

+1
The same here ,,,both funds :mrgreen: :mrgreen:
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

ReadyOrNot
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Re: Something better place to park my cash??

Post by ReadyOrNot » Tue Aug 23, 2016 4:22 pm

I don't really understand why, but I tried the Vanguard Short Term Bond fund for a short time last year and it reported dividends and capital gains about twice as much as the actual value increase -- I think my increased taxes must have eaten up almost all the gains or maybe even more.

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Phineas J. Whoopee
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Re: Something better place to park my cash??

Post by Phineas J. Whoopee » Tue Aug 23, 2016 4:58 pm

ReadyOrNot wrote:I don't really understand why, but I tried the Vanguard Short Term Bond fund for a short time last year and it reported dividends and capital gains about twice as much as the actual value increase -- I think my increased taxes must have eaten up almost all the gains or maybe even more.
Hi, ReadyOrNot, and welcome to the forum!

I looked, and assuming you're talking about the fund OP mentioned, Vanguard's Short-Term Investment-Grade Fund, Admiral Shares, VFSUX, I can see that from the beginning to the end of last year its Net Asset Value declined from $10.67 to 10.56, which would erase some of the value. You held it for a short time. The 2015 high was $10.75 in April, and the low was $10.55 in December, so you could have seen as much as a 1.8% NAV decline depending on the start and end dates. The distribution yield looks to have been about 2% annualized, and you wouldn't have received that much if you only held for part of the year.

You mention a capital gain distribution, and that happened in late December, right around the time of the lowest price, so you must still have held it then.

It easily could be, I'll go so far as to say probably is the case that it wasn't so much your taxes which ate up the gains, even if you took the money to pay them out of the fund, but rather the price change. Even short-term bonds fluctuate over time, and 2% high to low during a calendar year wouldn't be especially unusual.

Does that make sense?

PJW

sco
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Re: Something better place to park my cash??

Post by sco » Tue Aug 23, 2016 9:52 pm

Could someone explain the Risk/Return differences between using either
Vanguard Intermediate-Term Tax-Exempt Fund Admiral Shares (VWIUX)
or
Short-Term Investment-Grade Fund, Admiral Shares, VFSUX


To park some shorter term cash? I'm thinking a 2nd or 3rd tier of the EF. Should I start a new thread?

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Phineas J. Whoopee
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Re: Something better place to park my cash??

Post by Phineas J. Whoopee » Tue Aug 23, 2016 10:47 pm

sco wrote:Could someone explain the Risk/Return differences between using either
Vanguard Intermediate-Term Tax-Exempt Fund Admiral Shares (VWIUX)
or
Short-Term Investment-Grade Fund, Admiral Shares, VFSUX
...
I'll give it a try.

The first fund you list, at 4.7 year average duration, has more term risk than the second at 2.6 years. The second may have more credit risk, although ratings are within categories, not across them. Municipal defaults certainly are rarer than corporate, but I'm not confident I can say the same about investment-grade corporate.

The first will probably experience more price fluctuation, but you can mitigate that for a 2nd or 3rd tier emergency fund by putting more into it, such that even if it's down when you need it, there's still enough.

The after-tax return depends on your federal marginal tax bracket. If it's 10% or 15%, stay away from VWIUX. At 25% it may start to be a wash, and if more then municipals might be a good choice for you. Without considering income tax the muni's SEC yield is 1.34%, and the other's is 1.63%.

Does that help?

PJW

sco
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Re: Something better place to park my cash??

Post by sco » Wed Aug 24, 2016 8:41 am

Phineas J. Whoopee wrote:
sco wrote:Could someone explain the Risk/Return differences between using either
Vanguard Intermediate-Term Tax-Exempt Fund Admiral Shares (VWIUX)
or
Short-Term Investment-Grade Fund, Admiral Shares, VFSUX
...
I'll give it a try.

The first fund you list, at 4.7 year average duration, has more term risk than the second at 2.6 years. The second may have more credit risk, although ratings are within categories, not across them. Municipal defaults certainly are rarer than corporate, but I'm not confident I can say the same about investment-grade corporate.

The first will probably experience more price fluctuation, but you can mitigate that for a 2nd or 3rd tier emergency fund by putting more into it, such that even if it's down when you need it, there's still enough.

The after-tax return depends on your federal marginal tax bracket. If it's 10% or 15%, stay away from VWIUX. At 25% it may start to be a wash, and if more then municipals might be a good choice for you. Without considering income tax the muni's SEC yield is 1.34%, and the other's is 1.63%.

Does that help?

PJW
That helps a lot actually. At the 25% Fed Marginal rate (5% state), It doesn't seem to make much difference either way.

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