What's the consensus on stashing cash these days? Can always do T-bills, but what are folks' thoughts on floating ETFs such as USFR, FLRN, etc at this point in time?
FLRN is attractive in quality but I don't relish the combined tax hit compared to something like USFR which is mostly treasuries and therefore state-tax free (VA) for me. USFR is attrative on the tax front, of course .. but if we're coming to the end of higher rates, wouldn't it make sense to start going out 12-18/36 months in duration (either in t-bills or etfs) versus buying short-term floaters?
If it's not going into equities or t-bills, I'd like to move remaining idle cash into anything stable-ish except Schwab's expensive (imo) MMFs.
Comments
Two thirds of my floating money is now in VRIG, one third in USFR. What's the worst thing that could happen if I don't correctly anticipate the cut, and I'm a little late to the party? Will all the punch be gone?
If I
werewas looking for an A rating a little further out I'ld take a look at WSHNX. In the meantime, THOPX has been good to me, FCFAX has been middling.I have no idea where rates are headed. I’m fairly certain there’s a recession out there somewhere waiting to happen. Could be a humdinger when it finally arrives. Should benefit longer duration good credit quality stuff.
Note - Recently sold core position in PYLD to raise cash for an equity dive (adventure / excursion). But I continue to hold CVSIX in the core as a fixed-income substitute.
Going out a bit farther on duration, I really like the RiverPark/Crossbridge products, RSIIX and CBLDX.
On tax efficiency, I admit I don't pay attention since these are all held in an IRA. So maybe they don't fit as well for you.
Dumped the cash into SGOV. Far cheaper than Schwab's Treasury MMFs and I won't be paying Schwab an insane fee for the privilege of holding my cash.
We are shifting to 1 and 2 year treasuries as they are rising in recent weeks.
Pros and cons exist in either ETF or treasury approaches. Once can extend the duration of the ladder % from 6 months to 1 to 3 year treasury. Also keep some in money market.
More or less like @Sven, I've been working on a collection of 1y and 2y T's, thinking even the reduced current rates are probably going to look pretty good over the next year or two.
But right, high-ish for longer isn't out of the picture yet.
https://www.schwabassetmanagement.com/products/money-fund-yields
Schwab lags when like comparisons are made - between government funds, and between retail-prime funds.
I have seen many bad ads where Schwab retail-prime is the only fund listed among government m-mkt funds.
Vanguard sweep account, which has a 7 day yield of 5.28% as of 6/5/2024.
Yes, yields are net of expense ratios. But the Schwab yields are not competitive with Vanguard's for MM balances below $1M. I have not checked for the higher balances.
Rougly 20% (19.94%) of VUSXX was subject to state income tax.
That shaves ~20% x 5.28% x ~10% ≈ 0.1% off the after tax return.
In contrast, SUTXX was virtually 100% (99.61%) state tax exempt.
@msf - quite some time ago you pointed that out to me, and I changed our Schwab MMKT account to SUTXX. Thanks again for that suggestion. I have no idea how I would function financially without the good suggestions from you MFO folks.
Thanks to all of you- OJ
YTD, USFR has kept up with RPHIX with lower volatility. I will be surprised if there are not MM with lower volatility and similar 3 mo return as RPHIX.
Since 11/2022, it keeps saying 99+% invested. Right now it's not even close to a SELL signal.