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You may also want to check out the "raisin" platform in which all funds are kept in fdic banks and where you can easily transfer between banks to get the highest savings rate. You get a little less in interest but it is all insured. Current highest apy is 5.20 with Western Alliance Bank. I keep my emergency fund amounts here (1 year living expenses) and have been quite happy with the accounts. Just google - raisin.com if interested. good luck.
I'd be hesitant to go into floating-rate anything right now given that rates are due to go down....but that .25 'bonus' on the note might keep you ahead of (or at least at-par) with rate cuts. And for me, right now I'd prefer something more tax advantaged -- these are taxed both at federal and state.
Nothing against Duke as a company - I'd rather buy a note from them than a Wall Street company.
A number of companies package up variable rate demand notes into bank account-like accounts. Features may vary slightly (e.g. min required, check writing ability, min transaction amount) but the underlying investments are similar as are the way these accounts work.
Companies that offer these accounts seem to be rated BBB or A and are using these accounts as a relatively cheap way to get cash. Some BBBs: Duke, Dominion, GM, and Ford. Some As: Toyota, Mercedes-Benz (only accredited investors), and Caterpillar
Called "variable denomination floating rate demand notes," the securities are basically unsecured bonds, paid by the company's cash from operations. There is no public market and investors can typically withdraw their money at will. Rates can be changed at any time by the company, which can call the securities at its discretion.
If I had to go with a single issuer, I'd look at the A rated companies.
A nuclear accident that bankrupts the company? Not likely.
[The] Price-Anderson [Act has since 1957 freed] nuclear plant operators and all firms involved in nuclear construction and maintenance of any liability for offsite accident damage. The only chance for additional compensation lies in the act’s declaration that if accident damages exceed the legal limit “Congress will thoroughly review the particular incident” and will “take whatever action is determined to be necessary” to provide full compensation to the public. In short, a Fukushima-level accident would toss the costs of compensation and cleanup unto the lap of Congress.
Nothing against Duke as a company - I'd rather buy a note from them than a Wall Street company.
Senior unsecured Duke notes are rated Baa2 (Moody's) and BBB (S&P); current Goldman Sachs new issues (Fidelity listing) are rated A2 (Moody's) and BBB+ (S&P).
Nothing against Duke as a company - I'd rather buy a note from them than a Wall Street company.
Senior unsecured Duke notes are rated Baa2 (Moody's) and BBB (S&P); current Goldman Sachs new issues (Fidelity listing) are rated A2 (Moody's) and BBB+ (S&P).
Hometown bias?
Long-standing anti-bank bias. (and I'm in DC/NoVA)
Besides, folks need electricity more than they need capital market dealmaking....
What I meant was that the ratings agencies might have a hometown bias for "their own kind (financials)".
Ah, ok. Yeah probably you're right. I bet they see the amount of debt utes rack up in the normal course of business and that hurts them on their 'evaluation' for the 'rating.'
(disclosure: after the GFC I don't pay the ratings folks much heed.)
Comments
Nothing against Duke as a company - I'd rather buy a note from them than a Wall Street company.
A number of companies package up variable rate demand notes into bank account-like accounts. Features may vary slightly (e.g. min required, check writing ability, min transaction amount) but the underlying investments are similar as are the way these accounts work.
Companies that offer these accounts seem to be rated BBB or A and are using these accounts as a relatively cheap way to get cash. Some BBBs: Duke, Dominion, GM, and Ford. Some As: Toyota, Mercedes-Benz (only accredited investors), and Caterpillar
A couple of webpages from 2021 on these types of investments:
MyMoneyBlog: https://www.mymoneyblog.com/big-list-of-car-demand-notes-non-fdic.html
Bogleheads thread: https://www.bogleheads.org/forum/viewtopic.php?t=340088
And a 2021 WSJ article cited in the Bogleheads thread (subscription or library card required):
https://www.wsj.com/articles/car-maker-notes-attract-investors-seeking-short-term-yield-11605781801 What's the risk?
For my money (pun intended), I'd rather go with a Treasury MMF yielding around 5.1%; since it's state tax exempt that's not much different from 5.5% fully taxable and a whole lot safer.
https://olui2.fs.ml.com/Publish/Content/application/pdf/GWMOL/ICCRateSheet.pdf
If I had to go with a single issuer, I'd look at the A rated companies.
A nuclear accident that bankrupts the company?
Not likely. https://thebulletin.org/2020/02/the-us-government-insurance-scheme-for-nuclear-power-plant-accidents-no-longer-makes-sense/
This was recently extended (for another 40 years) and expanded with little publicity. It's a sizeable and relatively unknown industry subsidy.
What was publicized were billions of dollars allocated in the Inflation Reduction Act for maintaining existing nuclear plants and building new ones.
https://www.energy.gov/ne/articles/inflation-reduction-act-keeps-momentum-building-nuclear-power
Senior unsecured Duke notes are rated Baa2 (Moody's) and BBB (S&P); current Goldman Sachs new issues (Fidelity listing) are rated A2 (Moody's) and BBB+ (S&P).
Hometown bias?
Besides, folks need electricity more than they need capital market dealmaking....
(disclosure: after the GFC I don't pay the ratings folks much heed.)