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Hi @johnN: Thanks for posting the article in which the author's choice is a two year treasury which currently has a yield of about 2.8%. For me, in the cash area of my portfolio, instead of the two year treasury I've done a four step money market & cd ladder with a step for every six months. The first (base) step consist of a money market fund, the second step is a six month cd, the third step is a one year cd and the fouth step is a 18 month cd. After the FOMC's December meeting I may add the fifth step which will be a two year cd. Should interest rates continue to move upward I most likely will increase the size of my base step plus add steps to my cd ladder.
Not that the tail of taxes should wag the dog of returns, but FWIW: for short term (1 year or less) CDs paying interest at maturity and for short term zero coupon Treasuries, the interest isn't taxable until maturity. So you can often defer taxes on interest for a year.
Also, interest paid by Treasuries is state-tax-free. That can make Treasuries look more attractive than CDs in states with higher income tax rates.
Hi @johnN: Thanks for posting the article in which the author's choice is a two year treasury which currently has a yield of about 2.8%. For me, in the cash area of my portfolio, instead of the two year treasury I've done a four step money market & cd ladder with a step for every six months. The first (base) step consist of a money market fund, the second step is a six month cd, the third step is a one year cd and the fouth step is a 18 month cd. After the FOMC's December meeting I may add the fifth step which will be a two year cd. Should interest rates continue to move upward I most likely will increase the size of my base step plus add steps to my cd ladder.
Thanks for sharing. What money market fund are you currently using?
Hi @MikeW: I'm using a couple money market funds. They are Federated Prime Cash (PCOXX), Gabelli US Treasury (GBAXX) and Pimco Government (AMAXX). When I add a step to the cd ladder I'll simply draw from one of these money market funds to fund the cd purchase; and, most likely it will be AMAXX.
(Inverse:) Woody Boyd, taking his turn on "Cheers" sharing a dream he's had: "You know that one that keeps comin back, and you want to impress a girl. So you take her to a fancy restaurant, with a coat and hat-check booth. So, you give your coat to the attendant, and he give you a little chit with #6 on it, to claim your coat later on. Then you sit down and start eating your fork, but you really can't enjoy it, because you're worried that someone else has #9, but maybe he'll end up claiming your coat by mistake because he and the attendant will be looking at it upside-down..." Norm: "...(after a long, delayed pause:) Ya, Woody. I hate that one, too."
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Also, interest paid by Treasuries is state-tax-free. That can make Treasuries look more attractive than CDs in states with higher income tax rates.
Current rates (per Fidelity):
https://fixedincome.fidelity.com/ftgw/fi/FILanding
Norm: "...(after a long, delayed pause:) Ya, Woody. I hate that one, too."