Parking Business Cash - WHERE?

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oaks
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Parking Business Cash - WHERE?

Post by oaks » Fri Mar 16, 2018 12:13 pm

WHERE are small businesses parking their extra cash to avoid the slow death of inflation?

My understanding is that a business can open a treasury direct account and purchase whatever needed there. however that could get time consuming if buying extremely short term duration items. If this is the best route, what are the best instruments for short duration of 6 months to a year? Would buying on secondary market be more effective or less time consuming?

Is the alternative savings/money market accounts and play the yield chasing game and research out banks that cater to high yield business accounts?

Are CD's an issue for businesses? If CD's catered to businesses are available I assume that they are like savings accounts catered to businesses with about 10% of the normal personal yield.

So what is a small business to do with extra cash that needs to stay in the business for balance sheet purposes? Goal again is to retain principal without losing out completely to inflation.

WWYD?

NYGiantsFan
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Re: Parking Business Cash - WHERE?

Post by NYGiantsFan » Fri Mar 16, 2018 1:18 pm

Look into opening brokerage account (Fidelity/Schwab etc) for business which will increase number of options that you have.

oaks
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Re: Parking Business Cash - WHERE?

Post by oaks » Mon Mar 19, 2018 1:37 pm

NYGiantsFan wrote:
Fri Mar 16, 2018 1:18 pm
Look into opening brokerage account (Fidelity/Schwab etc) for business which will increase number of options that you have.
What options exactly? Not looking to buy into index funds, stocks or bonds. The primary goal is keeping principal while not eroding to inflation. So very little, if non-existant risk with very little if non-existant after inflation reward. Maybe brokerage at Fidelity or Schwab would be the avenue but what would be the product?

Atgard
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Re: Parking Business Cash - WHERE?

Post by Atgard » Mon Mar 19, 2018 1:59 pm

It's a good question. For "business" cash I'm assuming you want something safe & liquid (otherwise you would take it as a distribution and invest it personally in accordance with your AA). Right now I'm in the same boat with a business account with good features & no fees, but no interest either. It would be nice to at least earn 1%+ on that cash.

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MP123
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Re: Parking Business Cash - WHERE?

Post by MP123 » Mon Mar 19, 2018 2:11 pm

Atgard wrote:
Mon Mar 19, 2018 1:59 pm
It would be nice to at least earn 1%+ on that cash.
It certainly would! We're getting about .5% with a Business Money Market at Everbank.

Be aware that interest rates for business accounts and CDs are generally quite a bit lower than they are for personal accounts.

rguina
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Re: Parking Business Cash - WHERE?

Post by rguina » Mon Mar 19, 2018 2:15 pm

Most business savings accounts don't offer very good interest rates. The best I've come across is Capital One Spark Business - they have an intro rate of 1.50% APY for 12 months.

After that it drops to 0.40%.

So it's a great solution for the first year, and well above average after the first year. You may be able to beat the ongoing interest rate if you shop around.

ChinchillaWhiplash
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Re: Parking Business Cash - WHERE?

Post by ChinchillaWhiplash » Mon Mar 19, 2018 2:17 pm

We set up an online savings account link to business checking and get 1.45% interest. Way better than the brick and mortar bank and still has liquidity.

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mhadden1
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Re: Parking Business Cash - WHERE?

Post by mhadden1 » Mon Mar 19, 2018 2:32 pm

If you need a business account you can open one with a bank that pays a bonus. That's better than the 0.01% accounts I get marketed for. I think new taxable brokerage accounts sometimes pay bonuses too. I do some churning of personal bank accounts for bonuses myself. I am retired and piddle with that while drinking coffee in the AM.
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tfb
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Re: Parking Business Cash - WHERE?

Post by tfb » Mon Mar 19, 2018 10:49 pm

oaks wrote:
Mon Mar 19, 2018 1:37 pm
NYGiantsFan wrote:
Fri Mar 16, 2018 1:18 pm
Look into opening brokerage account (Fidelity/Schwab etc) for business which will increase number of options that you have.
What options exactly? Not looking to buy into index funds, stocks or bonds. The primary goal is keeping principal while not eroding to inflation. So very little, if non-existant risk with very little if non-existant after inflation reward. Maybe brokerage at Fidelity or Schwab would be the avenue but what would be the product?
Treasury bills or short-term TIPS for example.
Harry Sit, taking a break from the forums.

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msi
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Re: Parking Business Cash - WHERE?

Post by msi » Wed Mar 21, 2018 12:45 pm

oaks wrote:
Mon Mar 19, 2018 1:37 pm
NYGiantsFan wrote:
Fri Mar 16, 2018 1:18 pm
Look into opening brokerage account (Fidelity/Schwab etc) for business which will increase number of options that you have.
What options exactly? Not looking to buy into index funds, stocks or bonds. The primary goal is keeping principal while not eroding to inflation. So very little, if non-existant risk with very little if non-existant after inflation reward. Maybe brokerage at Fidelity or Schwab would be the avenue but what would be the product?
-3 month to 1 yr brokerage CD
-BIL, which trades commission-free at Fidelity, an ETF of treasury bills to save you some hassle
-Money market mutual fund

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willthrill81
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Re: Parking Business Cash - WHERE?

Post by willthrill81 » Thu Mar 22, 2018 11:49 pm

What's wrong the Vanguard Short-Term bond fund (VBIRX) or ETF (BSV)? The SEC yield is currently 2.56%, far better than any savings account and offering very good liquidity with very little downside risk. The fund's biggest drawdown since 1995 was -1.85% back in 2004. It's not likely to do more than roughly keep pace with inflation, but that's all you can expect if you want liquidity and don't want much volatility.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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welderwannabe
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Re: Parking Business Cash - WHERE?

Post by welderwannabe » Mon Mar 26, 2018 9:24 am

oaks wrote:
Mon Mar 19, 2018 1:37 pm
What options exactly? Not looking to buy into index funds, stocks or bonds. The primary goal is keeping principal while not eroding to inflation. So very little, if non-existant risk with very little if non-existant after inflation reward. Maybe brokerage at Fidelity or Schwab would be the avenue but what would be the product?
I looked into this before. Business savings account stink for Interest. Open a Vanguard brokerage account and keep $$$ in the Federal MM or the Treasury MM. It has a stable $1 NAV and pays better than anything else I could find for a business. Any of the other money markets are not usable by businesses unless you want to get into floating NAV funds (and I don't think Vanguard even has any options there). Government money markets are allowed to have a stable NAV and be used by businesses and 'natural persons'.
I am not an investment professional, but I did stay at a Holiday Inn Express last night.

NextMil
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Re: Parking Business Cash - WHERE?

Post by NextMil » Mon Mar 26, 2018 11:41 am

I opened a schwab corporate account and play the short term cd game. Not much better, but better.

longleaf
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Re: Parking Business Cash - WHERE?

Post by longleaf » Mon Mar 26, 2018 11:53 am

Vanguard Money Market Fund.
Frugality, indexing, time.

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mickeyd
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Re: Parking Business Cash - WHERE?

Post by mickeyd » Mon Mar 26, 2018 1:05 pm

PMMF is yielding 1.63% that last time I checked. It has been increasing recently, if that helps.
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NYGiantsFan
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Re: Parking Business Cash - WHERE?

Post by NYGiantsFan » Mon Mar 26, 2018 3:39 pm

oaks wrote:
Mon Mar 19, 2018 1:37 pm
NYGiantsFan wrote:
Fri Mar 16, 2018 1:18 pm
Look into opening brokerage account (Fidelity/Schwab etc) for business which will increase number of options that you have.
What options exactly? Not looking to buy into index funds, stocks or bonds. The primary goal is keeping principal while not eroding to inflation. So very little, if non-existant risk with very little if non-existant after inflation reward. Maybe brokerage at Fidelity or Schwab would be the avenue but what would be the product?
You can invest in number of options based upon your aptitude for risk. Low end of the risk would be money market fund or laddered CD.
These brokerage accounts will allow you to sweep money from your bank account to brokerage account (and vice versa) via ACH in automated way.

oaks
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Re: Parking Business Cash - WHERE?

Post by oaks » Thu Apr 12, 2018 11:35 am

Are the brokered CD's for a corporate/business account at schwab, ameritrade, vanguard, etc the same brokered CD's offered to individual clients? if so, the rates would be much better than traditional business banking CD's.

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heartwood
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Re: Parking Business Cash - WHERE?

Post by heartwood » Thu Apr 12, 2018 2:02 pm

longleaf wrote:
Mon Mar 26, 2018 11:53 am
Vanguard Money Market Fund.
In general Vanguard MM accounts are only available to retail investors (natural persons). So no account in a business or LLC name.

See first sentence in last paragraph. https://advisors.vanguard.com/web/cf/fa ... 0/overview

longleaf
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Re: Parking Business Cash - WHERE?

Post by longleaf » Fri Apr 13, 2018 6:37 am

heartwood wrote:
Thu Apr 12, 2018 2:02 pm
longleaf wrote:
Mon Mar 26, 2018 11:53 am
Vanguard Money Market Fund.
In general Vanguard MM accounts are only available to retail investors (natural persons). So no account in a business or LLC name.

See first sentence in last paragraph. https://advisors.vanguard.com/web/cf/fa ... 0/overview
You are incorrect. Businesses can have Vanguard accounts, too. It is a money market FUND not a bank account.

Personal experience with the matter.
Frugality, indexing, time.

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heartwood
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Re: Parking Business Cash - WHERE?

Post by heartwood » Fri Apr 13, 2018 8:07 am

longleaf wrote:
Fri Apr 13, 2018 6:37 am
heartwood wrote:
Thu Apr 12, 2018 2:02 pm
longleaf wrote:
Mon Mar 26, 2018 11:53 am
Vanguard Money Market Fund.
In general Vanguard MM accounts are only available to retail investors (natural persons). So no account in a business or LLC name.

See first sentence in last paragraph. https://advisors.vanguard.com/web/cf/fa ... 0/overview
You are incorrect. Businesses can have Vanguard accounts, too. It is a money market FUND not a bank account.

Personal experience with the matter.
begin edit:
OK, just re-read your comment. I was inartful in my language. Businesses can have Vanguard accounts. I have one for my LLC. My experience is that businesses do not have access to certain MM funds in that account.

End edit

Which MM fund are you able to use with a business name? My experience, within the last year or so, is I have a Federal MM fund as the settlement account for my LLC at Vanguard. I tried to open a Prime MM or state specific MM fund under the same account and was unable to do so. The language in the link I provided (and my personal experience) suggests a business/LLC cannot hold a Prime MM fund at Vanguard. What MM fund are you using?

longleaf
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Re: Parking Business Cash - WHERE?

Post by longleaf » Fri Apr 13, 2018 8:15 am

Federal works. Bond funds may be of use. Using settlement allows for easier trading rather than having to move from prime to federal. The APY isnt too bad on the federal anyway.

I believe there was once a time when more than just federal was available to businesses


Edit:
Here's a link:

https://institutional.vanguard.com/VGAp ... Term=vmmxx
In accordance with the SEC's money market reform rules, institutional assets are no longer accepted into this fund. These assets include defined benefit, endowment and foundation, corporate, plan-sponsor directed defined contribution, and donor-advised fund assets. Instead, you may consider Vanguard Federal or Treasury money market funds, which are open to institutional assets.
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welderwannabe
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Re: Parking Business Cash - WHERE?

Post by welderwannabe » Fri Apr 13, 2018 9:57 am

heartwood wrote:
Fri Apr 13, 2018 8:07 am
Which MM fund are you able to use with a business name? My experience, within the last year or so, is I have a Federal MM fund as the settlement account for my LLC at Vanguard. I tried to open a Prime MM or state specific MM fund under the same account and was unable to do so. The language in the link I provided (and my personal experience) suggests a business/LLC cannot hold a Prime MM fund at Vanguard. What MM fund are you using?
I answered this a couple of posts above. The Vanguard Federal MM or Treasury MM are available to all investors, including business. All other Vanguard MM funds are considered 'retail' funds and only available to natural persons. This was part of the money market reform regulations.
I am not an investment professional, but I did stay at a Holiday Inn Express last night.

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