I agree that the value all depends on the fixed income options available, which is why I noted this in my post. But in reality, short term fixed income returns haven’t come anywhere close to 4% in a decade and are nowhere close right now. Who knows what the future holds but, as I’ve already noted, we’d re-evaluate at that point. Either way, though, we’d never pay the monthly account fee; we’d just close the Platinum CashPlus account, pay the AmEx annual fee and continue getting the free authorized user.SpaethCo wrote: ↑Sat May 01, 2021 3:20 amThe only things I'd point out is this value proposition only holds in today's rate environment, and this setup forces you to treat this money almost like it's an undefined duration CD.Gus Chiggins wrote: ↑Fri Apr 30, 2021 9:15 pm Our taxable accounts all hold well above $25,000 in fixed income, so we simply move $25,000 in fixed income allocation from Fidelity to our Platinum CashPlus account. We’ve now guaranteed ourselves a 3.8% tax equivalent yield, something we can’t come close to beating with any other current fixed income options within our risk appetite for fixed income (e.g. CA intermediate munis in taxable). The only ongoing activity is transferring one spouse’s paychecks out to Fidelity once a month, as the paychecks are needed to meet the $5,000 monthly direct deposit requirement. But Platinum CashPlus is just a pass through, so no substantive change to our finances.
- If prevailing rates on safe investments jump up to something like 4%, logically you need to move cash out of this account. At that point you're back to paying the $45/mo ($540/year) for this setup. Under those conditions would you still find value in the CashPlus account considering you're back within $10 of just paying the $550 annual fee again?
- This is less like a bond fund and more like a CD, because the return starts to fade rapidly as soon as your average daily balance drops to $24,999.99 or below and you start incurring the $45/mo fee.
I also agree that this setup essentially behaves like a CD (or other deposit accounts). That’s the beauty of it. A 3.8% one year $25,000 CD. Can’t get anywhere close to that today. Because we don’t care if our fixed income is in CDs, treasuries or munis, we’re solely focused on finding fixed income options that preserve capital and provide the best tax efficient return possible, and all the aforementioned options meet this standard for us. This option just happens to allow us to get the best risk free return available to us in this market with very little effort, effectively lowering our risk and improving our return (i.e. a nearly proverbial free lunch).