Goals, roughly in priority order:
- Earning something, but doesn't have to be a lot. These will be short-term investments by definition
- Safe, but not necessarily riskless - we can easily cash flow the difference if we fall slightly short
- Separated from rest of account - so we can easily see where the money allocated without tracking a balance in a spreadsheet somewhere
- Tax-efficient: we're in highest federal bracket and in CA. This is not earning a ton of interest so low in the list
- Automated so we don't have to think about it
We "bank" with Schwab, so most conveniently this money would be in Schwab. Currently putting this money in bond funds, with automatic investments each month. The convenient thing about this is we don't have to think about it - it feels like an automated bill payment to ourselves. These are the funds on the shortlist:
SWAGX: Schwab U.S. Aggregate Bond Index Fund
SWCAX: Schwab California Tax-Free Bond Fund
SWNTX: Schwab Tax-Free Bond Fund
For variable savings such as car, looking at money market fund, which doesn't have an automatic investing option:
SWVXX: Schwab Value Advantage Money Fund
Would like feedback on:
- How do experienced monthly budgeters approach budgeting annual items?
- Any downsides to be aware of about holding these types of bond funds short-term?
- Are these good fund choices for this purpose? Any recommendations?