Easy way to monitor [savings account interest] rate changes?

[FeeFighter]

I was hoping to automate moving money to the highest rate savings accounts, but was disappointed by maxmyinterest.com after signing up to learn that it only supports a few banks.

I'm working on using Visual Ping with a few rate monitoring websites to see if I can limit notifications to when only the highest savings rate changes. I'll report back once I find a site that seems reliable absent any better advice.

Does anyone know of a better tool? Ideally there would be an email or text notification subscription that would notify users only when the highest interest rate changes.

[dratkinson]

You don't need to chase teaser rates and account opening bonuses.


Idea. There is a technique that added ~2%/yr tax-free to your existing low-interest checking/saving interest. Could use it to boost the return of your 1st-tier EF (emergency funds: 6-12mos of livings expenses in checking, savings, CDs,...). It saves having to chase bank teaser rates and account opening bonuses. So you can select your banking relationships for the convenience* they provide to your life, and stop worrying about it. It helps to simplify your life.** (* I prefer online bank and local CU that provided free mailed statements---easier for my heirs and me to remember.)

* Some BHs do chase teaser rates and account opening bonuses. Claim to earn an additional ~$2K/yr doing this. (Too much work for me; to each their own.)


Search forum for "ABP by CC technique".

Basically, set up all of your bills to be paid by your (trusted) creditors' automatic bill payment (ABP) plan, targeted to a 2% cashback CC where you can, and to checking where you must. (CC ABP must target checking.)
--This technique changes this relationship: Creditors' bills ---> bank/CU (low-interest). (Paid by mail or pushed from checking.)
--To this relationship: Creditors' bills (ABP) ---> CC (2% cashback/mo) ---> bank/CU (low-interest). (Paid by ABP pulled from CC/checking.)

Interesting fact. ABP payments are deducted from CC/checking 0-3 days after due date. Why? Creditors seem not to process ABP on weekends/holidays.


Since the "ABP by CC" math doesn't care where you keep your money, keep at least 2mos of living expenses in checking so you never need to worry about your checking balance until next month's statement reconciliation and rebalancing.

Bottom line. All your 1st-tier EFs (6-12mos of living expenses) gets an interest rate boost of ~2%/yr, and you no longer need to write checks or push money from your bank/CU to pay your monthly bills. (Been doing this for >10yrs with no problems noted. Helps to keep my life simple.)



Idea. Now for your extended-tier EFs (money >1yr of living expenses).

In this I deviate from the forum's safe advice. I use Vanguard's LT national muni bond fund (VWLTX). Why? The current interest-rate environment is causing some exceptions, but generally...
--VWLTX's taxable-equivalent yield (TEY) is > VBTLX's SEC yield (TBM: Vanguard's total bond market index fund) in all fed tax brackets >=12%.
--VWLTX is preferable to 2/3 of VBTLX holdings (1/3 each: treasuries, mortgage-backed securities (deprecated), corporate (greater risk)).
--VWLTX's TEY is > 5yr CDs' APY is > HY savings' APY.

VWLTX is slightly more risky than TBM. But bond risk, in a taxable account, can be TLH (tax-loss harvested), if it annoys you too much.

Between TLHs, you're earning more after-tax income than TBM.

Muni dividends don't add to AGI, so don't push you toward the next tax bracket.

Once you have 2-3yrs of living expenses in munis, you'll be surprised by how financial emergency shrink to become financial annoyances.

You need bonds. If you put some in taxable, that frees space in your TA (tax-advantaged = tax-deferred + tax-free) accounts for more stocks for their assumed increased growth (over bonds).

What's not to love?



"Don't be too greedy, leave 10% for the other guy." (Unknown)

Above (ABP by CC technique and VWLTX) gets me close enough to not leaving too much money on the table, while keeping my life simple. The little that I miss is left for those who don't mind working much more than I care to.

So you can do all of above, and still chase teaser rate and account opening bonuses. If you want to.

[Kendall]

This topic is now in the Personal Finance forum.

Thank you to the member who reported the post.

[tashnewbie]

I don't have an answer for an automated way to monitor these things. You could manually check a site like doctorofcredit.com or depositaccounts.com on a regular basis to see current rates.

But in general, I agree with user above that you shouldn't worry about chasing the best rates. I recommend picking a bank that's reputable, has competitive rates (doesn't have to be the best, but one that's generally in the top 10-25 would be good enough imo), and offers services you may need.

[As an aside, the biggest return will probably come from things like bank and brokerage bonuses, but that's a different conversation.]

[FeeFighter]

In this I deviate from the forum's safe advice. I use Vanguard's LT national muni bond fund (VWLTX). Why? The current interest-rate environment is causing some exceptions,

You need bonds. If you put some in taxable, that frees space in your TA (tax-advantaged = tax-deferred + tax-free) accounts for more stocks for their assumed increased growth (over bonds).

What's not to love?

I wasn't looking for general investing advice, but since you were nice enough to offer it I did take a quick look at VWLTX. Its one-year price ranged from $10 to $12, at times a 16% loss. And the one-year total return is -10.4% for 2022, excluding inflation losses. On the other hand, my bank accounts were guaranteed to increase in value, and most importantly are insured. I already also have a significant amount invested in bonds and stocks and my cash reserves are well above my annual spending and I do already pay everything I can with my 2.5% cashback card, which if anything increases my savings reserve, making the need to keep it in the highest rate account that much more pertinent.

To others who suggested benefiting from signup bonuses, the qualifications are often a huge pain in the ass, often involving opening multiple low-interest accounts, direct deposits and worse. There is also risk that you missed fine print. Additionally, they are not sustainable because they usually require you have never opened an account. And most importantly for me the math just doesn't work out with high savings balances. The best I've seen are about $500 and require monthslong paperwork-intensive commitments.

I'll report back with whatever automated monitoring technique I find that functions best.

[tashnewbie]

To others who suggested benefiting from signup bonuses, the qualifications are often a huge pain in the ass, often involving opening multiple low-interest accounts, direct deposits and worse. There is also risk that you missed fine print. Additionally, they are not sustainable because they usually require you have never opened an account. And most importantly for me the math just doesn't work out with high savings balances. The best I've seen are about $500 and require monthslong paperwork-intensive commitments.

How much money are you planning to put into these types of accounts? The spread between the bank with the highest return and a bank with a moderate one is probably generally no more than 0.50%. That appears to be the spread, currently. You're talking about an extra $500/year for each $100k you want to save.

I was able to fairly easily make an extra $2k or so in 2022 from bank and brokerage bonuses. Very minimal time commitment. It does require a bit of tracking, but nothing unreasonable in my opinion. I don't know if I'll do any this year, but that's another story.

Have you checked your local credit unions to see if any have something like a rewards checking account with a good rate? I have a local credit that has 5% return on up to $10k if certain requirements are met, which I deem minor (e.g., electronic statements, monthly direct deposits...easy for me to do).

That may not help depending on how much money you're dealing with.

[the_wiki]

The best money market funds stay a bit ahead of the best savings account rates with the same protection from price fluctuations. You can get your money out in a day or 2, so nearly as good as a savings account for ease of access. They go up steadily with rising rates, so you'll get the best rates without having to chase bank changes.


The selection will vary by broker, but the best ones at E*Trade right now are:

Ticker Current Yield
PCOXX 4.36%
FUGXX 4.25%
VMFXX 4.27%


Frankly moving money around to new banks to make an extra tenth of a percent is a waste of time and just puts your financial data at risk by having it spread to too many partners. Even with a million bucks, you are going to be making peanuts on extra interest. Sure it made sense to move from my local CU that is still paying .10%, but going from a good rate to a slightly better one is not worth it (to me at least).

[exodusNH]

I was hoping to automate moving money to the highest rate savings accounts, but was disappointed by maxmyinterest.com after signing up to learn that it only supports a few banks.

I'm working on using Visual Ping with a few rate monitoring websites to see if I can limit notifications to when only the highest savings rate changes. I'll report back once I find a site that seems reliable absent any better advice.

Does anyone know of a better tool? Ideally there would be an email or text notification subscription that would notify users only when the highest interest rate changes.

In general, chasing the absolute highest interest rate accounts is not going to be worth it. Even if we're talking $500,000k, a 0.1% difference is only $500 over a full year.

Most banks have pretty low ACH limits, making it a multiday or even multimonthly process to shift between accounts. Wiring the money is a possibility, but that can have fees. Maybe you can call to get limits raised or fees waived, but even if that takes 30 minutes, how much is your time worth?

You also risk getting your money locked due to overzealous fraud checks. Multiple accounts means multiple vulnerabilities, especially if you link accounts to make money movement easier.

I would recommend picking a bank that's responsive to interest rate changes and doesn't play games like creating new account types to get better rates. I have experience with Vio, which is very good at raising rates and CIT, who plays the "Savings Builder XVIV" vs "Savings Builder XVIII" game.

I have settled on a combination of Vio and Vanguard's settlement account. Vio has faster ACH transfers out, but still limits withdrawals to 6 per statement even though the Fed no longer enforces it.

[FeeFighter]

I like the idea of the money market funds, but I am under the impression that these are not FDIC insured. I have about $750,000 in savings right now and the top bank right now is 4.35%. My longtime online bank is 3.3%. I don't consider $7,500 in lost earnings if I don't move money around to be chump change. Wiring is a one-time fee of $20. I also never suggested here that it would be fruitful to change banks to earn a 0.1% difference. I'll do the math when I see that the top rates change, and once it's up to about $1,500 a year, I'll switch and I recommend anyone else do the same. But this post wasn't seeking advice about the strategy.

Frankly I'm kind of floored at the push back of wanting to earn and easily monitor the highest savings rate in forums that are all about maximizing returns. Chasing high guaranteed returns is really no different than chasing low administrative expenses from my perspective.

[Parkinglotracer]

I like the idea of the money market funds, but I am under the impression that these are not FDIC insured. I have about $750,000 in savings right now and the top bank right now is 4.35%. My longtime online bank is 3.3%. I don't consider $7,500 in lost earnings if I don't move money around to be chump change. Wiring is a one-time fee of $20. I also never suggested here that it would be fruitful to change banks to earn a 0.1% difference. I'll do the math when I see that the top rates change, and once it's up to about $1,500 a year, I'll switch and I recommend anyone else do the same. But this post wasn't seeking advice about the strategy.

Frankly I'm kind of floored at the push back of wanting to earn and easily monitor the highest savings rate in forums that are all about maximizing returns. Chasing high guaranteed returns is really no different than chasing low administrative expenses from my perspective.

No push back from me - I’d switch for a few hundred dollars a year - vanguard mm looks great north of 4% for me but I don’t have that much in my savings acct. You could buy short term treasuries. I moved a hundred K plus between accounts as I hunted interest rates - chase bank was painful to deal with fraud alert dept. good luck.

[tashnewbie]

I like the idea of the money market funds, but I am under the impression that these are not FDIC insured. I have about $750,000 in savings right now and the top bank right now is 4.35%. My longtime online bank is 3.3%. I don't consider $7,500 in lost earnings if I don't move money around to be chump change. Wiring is a one-time fee of $20. I also never suggested here that it would be fruitful to change banks to earn a 0.1% difference. I'll do the math when I see that the top rates change, and once it's up to about $1,500 a year, I'll switch and I recommend anyone else do the same. But this post wasn't seeking advice about the strategy.

Frankly I'm kind of floored at the push back of wanting to earn and easily monitor the highest savings rate in forums that are all about maximizing returns. Chasing high guaranteed returns is really no different than chasing low administrative expenses from my perspective.

I agree that $7500 would be worth the squeeze of moving money to a different location. But I would never have that much cash (I don't think). If I was holding that much cash, it'd be because I was planning to spend it in the short-term (i.e., within the next 12 months or even sooner). In your shoes I'd probably explore nominal Treasuries, if you don't want to use a MMF that doesn't have FDIC coverage.

I'm sure you know this, but there are limits to FDIC insurance, so you'll want to ensure you set up your accounts in a way to provide maximum coverage possible under the rules, which may include co-ownership of the account or having accounts at multiple places.

[exodusNH]

I like the idea of the money market funds, but I am under the impression that these are not FDIC insured. I have about $750,000 in savings right now and the top bank right now is 4.35%. My longtime online bank is 3.3%. I don't consider $7,500 in lost earnings if I don't move money around to be chump change. Wiring is a one-time fee of $20. I also never suggested here that it would be fruitful to change banks to earn a 0.1% difference. I'll do the math when I see that the top rates change, and once it's up to about $1,500 a year, I'll switch and I recommend anyone else do the same. But this post wasn't seeking advice about the strategy.

Frankly I'm kind of floored at the push back of wanting to earn and easily monitor the highest savings rate in forums that are all about maximizing returns. Chasing high guaranteed returns is really no different than chasing low administrative expenses from my perspective.

That's if you hold it for a year. But if next month your original bank is 4.40%, would you switch to back? The wire might be $20, but do you spend 30 minutes on the phone arranging it?

I agree that $7500 is worth switching for.

In terms of money market not being FDIC insured, that's true, but with any MMF that's primarily US Treasury obligations, there is no real difference in safety.

[casualflower]

Well the pushback is that this is a Bogleheads forum, where the overall philosophy is about passive investing in index funds...and no one thought you had $750K in savings accounts. A Boglehead would put much of that into an index fund, with 6 months of living expenses in a savings account. A very onservative Boglehead might keep out 12 months of expenses in savings and put the rest in a T Bill or CD. You're way way more conservative than most others here as your primary concern seems to be FDIC insurance.

[goaties]

Could you perhaps check depositaccounts.com on a daily basis? That site is a tremendous resource, listing all the best rates for all bank products. There's a blog on the site which alerts you to the latest deals. The guy who runs the site must spend all day every day combing the bankings sites, so you don't have to!

[dratkinson]

In this I deviate from the forum's safe advice. I use Vanguard's LT national muni bond fund (VWLTX). Why? The current interest-rate environment is causing some exceptions,

You need bonds. If you put some in taxable, that frees space in your TA (tax-advantaged = tax-deferred + tax-free) accounts for more stocks for their assumed increased growth (over bonds).

What's not to love?

I wasn't looking for general investing advice, but since you were nice enough to offer it I did take a quick look at VWLTX. Its one-year price ranged from $10 to $12, at times a 16% loss. And the one-year total return is -10.4% for 2022, excluding inflation losses. On the other hand, my bank accounts were guaranteed to increase in value, and most importantly are insured. I already also have a significant amount invested in bonds and stocks and my cash reserves are well above my annual spending and I do already pay everything I can with my 2.5% cashback card, which if anything increases my savings reserve, making the need to keep it in the highest rate account that much more pertinent.

To others who suggested benefiting from signup bonuses, the qualifications are often a huge pain in the ass, often involving opening multiple low-interest accounts, direct deposits and worse. There is also risk that you missed fine print. Additionally, they are not sustainable because they usually require you have never opened an account. And most importantly for me the math just doesn't work out with high savings balances. The best I've seen are about $500 and require monthslong paperwork-intensive commitments.

I'll report back with whatever automated monitoring technique I find that functions best.

The short answer.

We may be talking at cross purposes, if so, my bad.

I know you were not looking for investing advice, only wanted to learn how to find the best savings rates.
--If you are only looking to fill your 1st-tier EFs, then your course seems reasonable.
--If you are wanting to jump among banks as their rates change, then that seems like a lot of work.

But if you are looking to also fill your extended-tier EFs, with bond prices currently low and the difference between saving rates and bond returns being so small, I wondered if you understood what you might be missing by focusing on the short-term---savings rates; instead of the long-term---buying bonds on sale?

Ignore the next if I've misunderstood. Best wishes.



The long answer.

I agree with you that we need some money in insured bank accounts. These are our 1st-tier EFs: checking, savings, CDs. And we can boost their return by using the ABP by CC technique. Maybe we'll boost them enough that we don't feel the need to look elsewhere; if so then this will keep our life simpler.

I'm only suggesting that we use bonds (munis) for our extended-tier EF*---everything above 1yr (more/less, your choice) of living expenses.


You are correct. The interest-rate changes enacted by the fed reserve board are whipsawing all bond prices, which results in the apparent losses in bond NAVs. But if we are not selling, then those losses are only on paper---so we don't care. In the meantime, the owners of unsold bonds are receiving monthly dividends.

And since dividends are the major component of bond fund total return, and longer durations return more than shorter (normally), I prefer longer durations ...which also fare better in inverted-yield environments. (The current is the worst I've experienced.)


In the current invested-yield environment, see: https://home.treasury.gov/resource-cent ... nth=202301
...shorter-term fed rates are higher than long-term.

This is unsustainable in the long-term. Why? Banks borrow at ST rates, but lend to businesses at LT rates. Businesses can't execute plans if they can't borrow, because banks can't afford to lend. An inverted-yield environment is not good for the long-term economy.


* Bond example. Assume 22% fed tax bracket.
VWLTX TEY = 3.52% / (1-.22) = 4.51%. See: https://investor.vanguard.com/investmen ... file/vwltx
VTEB** TEY = 3.26 / .78 = 4.18%. See: https://investor.vanguard.com/investmen ... ofile/vteb

** A non-Vanguard client has only VTEB as a Vanguard muni ETF option. Another recommended muni option is MUB from iShares.


Compare to HY savings: https://www.bankrate.com/banking/saving ... in-content
The highest currently seems to be 4.35%.

Compare to 5yr CD rates: https://www.bankrate.com/banking/cds/be ... -cd-rates/
The highest currently seems to be 4.55%.

If I'm losing anything by preferring VWLTX/VWLUX instead of savings/CDs for my extended-tier EF, it's not much. And I don't need to chase rates to get it.


Question. Would you prefer to buy bonds that paid similar SEC yields at ~$10/share or ~$12/share? The better deal seems to be ~$10/share.

I expect the current interest-rate environment (which is affecting bond prices) to self-correct (it must, for the sake of the economy), so now seems to be the time to buy bonds. While. they. are. on. sale.


You can chase savings rates now. But when the interest-rate environment reverts (1-2yrs from now?) to more normal times, savings and CD rates decline and bond prices rise ...what then? Will you buy ~$12/share bonds?

I follow the advice: "Don't be too greedy, leave 10% for the other guy." --Unknown
--In the current interest-rate environment, the little that I'm actually losing (monthly dividends) is within the 10% tolerance range.
--I'm able to buy bonds on sale now, which means I'll own more than waiting for bond prices to revert to normal to buy.
--I'm not selling so don't care about paper losses, but I have TLHed to reduce my taxes---for several years to come . (The best time to TLH/reduce taxes, is when you have the losses.)


You mentioned inflation. It's currently ~6.5%. See: https://tradingeconomics.com/united-sta ... lation-cpi
Notice inflation has been dropping since June. So maybe the fed will get it under control within 1-2 years. (Knock wood.)

This also means the fed should normalize interest rates as inflation drops---a healthy economy requires it.

This also means bond prices should rise as interest rates drop. See: https://www.marketwatch.com/investing/fund/vbtlx
Notice TBM's price has been rising for the last 2mos, during the same time inflation has eased.


There's a lot we can't control in our investing life. We can't control:
--Inflation.
--Interest-rates, acts of the fed reserve board.

The best we can do is plan for the long-term by looking/investing in what seems to have worked in the past.
--We need some insured cash. The ABP by CC technique may boost its return enough we don't feel the need to chase rates---simplify our life.
--We need some intermediate term investments, that are expected to return more than cash, but are safer than stocks. These are our bonds.
--We need some stocks for their historic expectation of LT growth.


Disclosure.

In 2007, I chased rates and moved my savings/checking to banks paying 5.05% on savings (HSBC, online) and 4.50% checking (Presidential Bank, online). This required me to relink by financial life---a minor pain. Both rates dropped to ~0.10% within ~3yrs.
--Closed the savings account when I moved to a local CU for the B&M convenience.
--Kept the checking account because I liked the free paper statements ...and 0.10% interest was better than the previous 0%.

Invested in sectors in my rIRA. Vanguard's precious metals fund; Vanguard changed it into a commodities fund. Vanguard's energy fund; fracking turned it into a truer commodities fund. Sold both at a loss---ouch. In my rIRA---ouch!

I learned my lesson. I now follow the central road to Dublin. In this way, my investments do not deviate too far from the index, so the economy does not encourage me to whipsaw my financial relationships/investments, so I keep my life simple.

I recall Mr Buffett encouraged us to be greedy when other folks are fearful.* The current interest-rate environment has folks looking for short-term investments; but I don't believe it's economically sustainable, so must end---so not worth pursuing. (I could be wrong; accept the consequence if so.) I, on the other hand, am stocking upon on longer-term higher-yield bonds, which have lost value, for my retirement/extended-tier EFs. Does it hurt? Yes, a little. (* I've translated his advice into a Simple Action Step: if you wish you more---sell/stop buying; if you wish your had less---buy. E.G.: All my bonds are losing value, wish I had less, what to do? Buy more.)

I do keep 1yr of living expenses in checking/savings/mmkt as my 1st-tier EFs, so I should not need to sell bonds in an emergency. I use the ABP by CC technique to boost their return so I feel less the need to chase rates/relink my life.

[Radman]

Short term money market treasury account. Only invests in treasuries. Backed by the federal government (that same organization that provides the FDIC insurance you referenced).

VUSXX current 7 day yield 4.18%, duration is quite short 4-6 weeks if memory serves me right. 1 year performance + 1.5%. As a comparison Ally bank’s current savings deposit rate of 3.3%.

[FeeFighter]

I don't understand. From what I can tell, if you bought VWLTX on January 20, 2022 and needed your cash on October 20, you would have lost 16% of your savings less any dividends.

If I'm losing anything by preferring VWLTX/VWLUX instead of savings/CDs for my extended-tier EF, it's not much. And I don't need to chase rates to get it.

[FeeFighter]

Thank you; I agree that there is little difference between FDIC and treasuries. This is only 0.1% lower than the highest yield savings account at the moment and for $750 a year, assuming the ratio remains this close, it's not worth the hassle of moving and maintaining multiple accounts to stay under the FDIC limit.

Short term money market treasury account. Only invests in treasuries. Backed by the federal government (that same organization that provides the FDIC insurance you referenced).

VUSXX current 7 day yield 4.18%, duration is quite short 4-6 weeks if memory serves me right. 1 year performance + 1.5%. As a comparison Ally bank’s current savings deposit rate of 3.3%.

[JackoC]

Thank you; I agree that there is little difference between FDIC and treasuries. This is only 0.1% lower than the highest yield savings account at the moment and for $750 a year, assuming the ratio remains this close, it's not worth the hassle of moving and maintaining multiple accounts to stay under the FDIC limit.

Short term money market treasury account. Only invests in treasuries. Backed by the federal government (that same organization that provides the FDIC insurance you referenced).

VUSXX current 7 day yield 4.18%, duration is quite short 4-6 weeks if memory serves me right. 1 year performance + 1.5%. As a comparison Ally bank’s current savings deposit rate of 3.3%.

Also VUSXX interest isn't subject to state income tax, if you have any. At our marginal rates* VUSXX gives 2.93% after tax, best bank rate showing on depositaccounts would be 2.73%, our best actual bank account (4.25% pre tax) 2.66%. Referencing another thread on 'debt ceiling' it would seem a real world possibility (I've no idea how actually likely) that that results in some kind of technical default situation which might cause Vanguard to delay redemptions out of VUSXX by up to 7 days (as they reserve the right to do on all funds). But the Fed is not subject to any ceiling on emergency lending to banks to prevent them failing due to temporary payment delays on treasuries, it would not even get to the point of FDIC bailing out failed banks. Having at least some money in the bank for such disruption contingencies is a good idea IMO. But I agree that in current rate environment (not always true) VUSXX looks better rate wise than chasing highest rate on depositaccounts and 'real' default risk is ambiguous between T-bills and FDIC deposits IMO. Also the fund VMFXX is only barely less safe (I project its after tax rate a little lower than VUSXX's for us, because some of it is state taxable).

*if you have all your investments in cash your average fed/state tax rates might be more relevant, but only a small % of all our assets are cash, it makes sense to evaluate it at the margin.

[FeeFighter]

That's a cool bonus, even better, thank you for clueing me into the state tax break! I actually have a new approach, exchanging my IRA foreign funds into VUSXX or equivalent and buying the same amount instead in my taxable accounts for the foreign tax credit benefit. I'm going to post that on a separate thread since this one is about automatically monitoring top savings account interest rate changes. Or at least it was supposed to be.

Thank you; I agree that there is little difference between FDIC and treasuries. This is only 0.1% lower than the highest yield savings account at the moment and for $750 a year, assuming the ratio remains this close, it's not worth the hassle of moving and maintaining multiple accounts to stay under the FDIC limit.

Short term money market treasury account. Only invests in treasuries. Backed by the federal government (that same organization that provides the FDIC insurance you referenced).

VUSXX current 7 day yield 4.18%, duration is quite short 4-6 weeks if memory serves me right. 1 year performance + 1.5%. As a comparison Ally bank’s current savings deposit rate of 3.3%.

Also VUSXX interest isn't subject to state income tax, if you have any. At our marginal rates* VUSXX gives 2.93% after tax, best bank rate showing on depositaccounts would be 2.73%, our best actual bank account (4.25% pre tax) 2.66%. Referencing another thread on 'debt ceiling' it would seem a real world possibility (I've no idea how actually likely) that that results in some kind of technical default situation which might cause Vanguard to delay redemptions out of VUSXX by up to 7 days (as they reserve the right to do on all funds). But the Fed is not subject to any ceiling on emergency lending to banks to prevent them failing due to temporary payment delays on treasuries, it would not even get to the point of FDIC bailing out failed banks. Having at least some money in the bank for such disruption contingencies is a good idea IMO. But I agree that in current rate environment (not always true) VUSXX looks better rate wise than chasing highest rate on depositaccounts and 'real' default risk is ambiguous between T-bills and FDIC deposits IMO. Also the fund VMFXX is only barely less safe (I project its after tax rate a little lower than VUSXX's for us, because some of it is state taxable).

*if you have all your investments in cash your average fed/state tax rates might be more relevant, but only a small % of all our assets are cash, it makes sense to evaluate it at the margin.

[FeeFighter]

I have a new approach for the savings and posted to this new thread in case anyone wants to offer their thoughts.

[dratkinson]

I'm trying to answer the question, "What's the biggest bang for your NEW* taxable buck in the current interest-rate environment?"

* If your only interest is in moving old money into new savings, then do as you like.


Existing money in the bank. I notice you joined the forum in 2013, so assume you have your 1st-tier EFs approximately as you want them ...just looking to boost their yield by moving them to banks paying more interest. But you can also boost the yield on your existing bank accounts by using the ABP by CC technique, so would not need to move your money/relink your financial life ...if that is more appealing for you.

New money in taxable. So for your NEW money in taxable, you may be interested in growing your extended-tier EFs, which has been my focus.

But if you are still using new money to fill your 1st-tier EFs, then I must be causing you a lot of confusion. My apology. Please ignore the remainder if you are not considering growing your extended-tier EFs, because we are talking at cross purposes. My bad.

I don't understand. From what I can tell, if you bought VWLTX on January 20, 2022 and needed your cash on October 20, you would have lost 16% of your savings less any dividends.

If I'm losing anything by preferring VWLTX/VWLUX instead of savings/CDs for my extended-tier EF, it's not much. And I don't need to chase rates to get it.

You are absolute correct ...with a few exceptions. What?

1. Our 1st-tier EFs are a wall to protect our extended-tier EFs (in taxable: bonds sold first, then stocks).

2. I would not have sold VWLTX. Why? Because I don't foresee being forced to sell. Why? Because I have walls in front of it to protect it.

Why?
--Because I have my monthly income. (I've assumed you have yours).
--Because I have 1yr of livings expenses in my 1st-tier EF. (I've assumed you have yours.)
--Because I have 3yrs in VWIUX* (Vanguard's IT national muni), which is more stable so fluctuates less. (This gets sold first.)
--So the chance that I'd be forced to sell VWLTX/VWLUX at a loss, is very small. (Unless I choose to take advantage of TLHing.)

* (Edit) Small problem. I'm in 22% tax bracket. In 22% tax brackets, VWIUX does not always produce more after-tax income than TBM. However, until the recent interest-rate environment**, VWITX/VWIUX has returned more after-tax than 5yr-CDs, so I've used it as a CD-proxy with no early withdrawal penalty. Since I'm trying to maximize my after-tax income, all my new money goes into VWLTX/VWLUX---my major retirement bonds. (** I don't change course to chase rates---assumed to be short-lived---because I don't want the interest-rate/tax tail to wag the investing dog.)


In a lot of what I do, I ask the opinion of someone I value more than my current self. Who? My retired self.

My retired self has many years of livings expenses in EFs, pension, SS. Examples of questions I've asked of my older retired self.
--rIRA. What do you prefer here: stocks (expected higher growth), bonds (expected lower growth), treasuries (safe, lower yield)? Stocks!
--Inverted yield environment: chase cash rates, or buy bonds on sale to put in taxable to enlarge EF wall before TA accounts? Buy bonds on sale!


I followed you to your new topic, and noticed you were considering putting cash-like investments in your IRA*. Have you read this BH discussion?

(Edit) What investments wants to be placed in which account types?
--Tax-deferred accounts (tIRA, t401k,...). Everything that comes out (withdrawals, conversions, RMDs) is taxed like ordinary income. Meaning the QDI/LTCG/FTC tax benefits are lost. But since taxable bond dividends are treated no worse here than in taxable, some can go here. Since bonds are expected to grow less than stocks, skewing to bonds should reduce growth/taxes on all withdrawals/conversions/RMDs on surviving spouse. You need bonds in retirement, so some can go here.
--Tax-free accounts (rIRA, r401k,...). Everything here is withdrawn tax-free. Since stocks are expected to grow more than cash/bonds, skewing to stocks should maximize growth/withdrawals/bequests. You need stocks in retirement, so some can go here.
--Taxable accounts. Everything here should be selected for tax-efficiency and have offsetting tax benefits (reported on Sch B part 2) for QDI, LTCG, FTC, and TE dividends.

* If you build a large wall (many years of livings expenses) in cash/bonds/stocks in your taxable accounts, then you are less likely to need to raid your IRA (or any TA account) during an emergency. This will please your retired self.


(Edit) If you are just starting out, it's okay to consider your IRA (assumed to be rIRA, since principal can be removed in some cases) to be part of your EFs. But your retired self will hate it if you actually deplete your IRA; so best to build a large EF wall to protect all of your TA accounts.

Some senior BHs say, “When we have enough (as defined by us), we don't need a dedicated EF, because all of our investments become our EF.”
Which gives us this EF structure.
--Insured cash (1yr) in taxable. Expected to be tapped before bonds in taxable.
--Bonds (many years) in taxable. Expected to be tapped before stocks in taxable.
--Stocks (many years) in taxable. Expected to be tapped before our TA accounts.
--Tax-advantaged accounts. Should not be tapped except in a doomsday scenario, or in retirement.

This structure should please your retired self.


(Edit) If you have your 1st-tier EFs as you like them (okay to move among banks for higher yield), and bonds are now on sale, then now* is a good time to begin using NEW money to put bonds in your taxable account. (* If you have limited income/can't do both, then you'll need to decide which is more important to you: maxing annual TA contributions vs building a larger EF wall to protect your existing TA accounts. Ask your retired self.)

(Edit) TBM is the 3-fund portfolio standard, but VWLTX produces slightly more after-tax income than TBM in the 22%+ tax bracket**, and comes with all attendant TE benefits (TE dividends, doesn't add to AGI, doesn't push us toward next tax bracket,...). It’s slight extra risk can be TLHed, if you want to.

** Since ~2015, when I first noticed, and until recently, this was also true for the 12%+ fed tax brackets; and I expect this relationship to return after the fed normalized interest rates. (I could be wrong.)

(Added) Notice. National munis are state taxable, but since VWLTX have lower SEC yield than TBM, and taxes are based on actual dollars, not taxable-equivalent dollars, the state tax on VWLTX should be less than that on TBM. So VWLTX should return more after tax (fed+state) than TBM.


(Edit) If you are not a Vanguard client, recall Vanguard does have one muni ETF: VTEB. Recall some BHs recommend an ETF from iShares: MUB. There may be other recommended muni ETFs, but I don't recall them so you'll need to search forum to find them.



Edit. Second thoughts.



(Added) Disclosure. During my working career, I only had access to an employer's defined-benefits plan (pension), never a defined-contributions plan (401k,...). So all my personal investing was done in IRAs and taxable. This is why my taxable account is much larger vs my rIRA (conversions).

First. After finding the BHs, I following the advice to be safe---I wanted my rIRA to be save. So for ~5yrs, I put treasuries in my rIRA, TSM in my taxable. Treasuries are very safe, and very low yield, so my rIRA grew very little. I was bored to tears! I learned that I was wasting Roth space. I learned I wanted the potential for my rIRA to grow, even if the account was more volatile.

Second. I changed to follow the BHs' advice on which investments to place where. I put 100% stocks in my rIRA (LC/REIT, so they would not conflict with my taxable ability to TLH TSM/TISM). Which meant I had to put bonds in taxable. This is where I researched muni bond funds.

After my munis (earning more than TBM) had grown to be 3yrs of living expense (+1yr 1st-tier = 4yrs total), I stopped worrying. Why? Because I believed I had enough to weather most financial emergencies.

The only forum advice I'd change would be to encourage folks to buy munis in taxable, before buying TSM/TISM. Why? (1) To begin building a muni EF wall (safer than stocks) to protect all TA accounts, and (2) to skew TA accounts to stocks for increased growth.


Bottom line. Currently the ST rates on cash look good; the ST prices on bonds look bad, if you are selling (good if you are buying). But these rates must change because the economy requires it to function properly. (It may require ~2yrs for interest rates to revert to more normal times.)

For all of these reasons, I believe now is a good time for you to consider putting NEW taxable money into building a larger EF wall to protect your TA accounts.

If you have a large EF wall to protect your TA accounts, then you don't need safe low-growth cash-like investments (treasuries) in your TA accounts. Which means they should grow a little faster.


Enough of this. I've wasted enough of your time and I'm sure I've bored you to tears! My bad.