Best short term liquid option

[gutonc]

Simple question that I think I know the answer to, but figured I'd check with the hive.

I have a moderate ($50-100K) amount of somewhat unexpected money that I may need immediate access to in the next 2-6 months. It's currently sitting in a HYSA at 3.75% APY. Same bank offers a 4% APY MMA which I'm probably going to put it into. 3-6 month CD rates that I've seen are in the 2.5-4.15% range. I have other money out there taking chances, but I want to have access to this on a moment's notice if needed. Just making sure that the 4% MMA (at a bank I already use) seems like a good enough plan. I won't move it elsewhere for 0.25% but will for 1%+, which seems unlikely with FDIC/NCUA guarantees.

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[mvenus929]

Seems like the best option - you get some interest, but have security. I doubt any other options are going to guarantee 4% without chance of loss.

 

[Neopolymath]

Do you need access to all of it immediately? Consider looking into T-bill laddering to see if it fits your needs.

 

[gutonc]

Do you need access to all of it immediately? Consider looking into T-bill laddering to see if it fits your needs.

Not a bad idea. The biggest issue is that I don’t exactly know how much of it I’m going to need to get, at what time.

But I can probably use a portion of it to ladder 1-3 month T-bills over 6-12 months. Still very safe, a little less liquid but a little higher yield. Rates are currently 4.5-5% for 1-12 month T-bills, with 6 and 9 months being the sweet spot.

But I have been told, in no uncertain terms, “do whatever you want with it, but don’t lose a single penny !”, so I’m trying to play around a little, but not too much.

 

[OraclePL]

I would do the same thing you’re doing right now. For money that needs to be available on a short moments notice, I don’t tend to over complicate things. HYSA/MMA

 

[forchinet121]

Not a bad idea. The biggest issue is that I don’t exactly know how much of it I’m going to need to get, at what time.

But I can probably use a portion of it to ladder 1-3 month T-bills over 6-12 months. Still very safe, a little less liquid but a little higher yield. Rates are currently 4.5-5% for 1-12 month T-bills, with 6 and 9 months being the sweet spot.

But I have been told, in no uncertain terms, “do whatever you want with it, but don’t lose a single penny !”, so I’m trying to play around a little, but not too much.

Assuming you have 100k and you get 4 percent on that entire 100k for the full 6 months, the most you will make is 2k..in other words it’s not a sum of money worth thinking or stressing about in any way

 

[dieABRdie]

Not a bad idea. The biggest issue is that I don’t exactly know how much of it I’m going to need to get, at what time.

But I can probably use a portion of it to ladder 1-3 month T-bills over 6-12 months. Still very safe, a little less liquid but a little higher yield. Rates are currently 4.5-5% for 1-12 month T-bills, with 6 and 9 months being the sweet spot.

But I have been told, in no uncertain terms, “do whatever you want with it, but don’t lose a single penny !”, so I’m trying to play around a little, but not too much.

I'm doing the same thing.... it feels REALLY weird just leaving it sit in an account. But seems like the best option right now.

 

[gutonc]

I'm doing the same thing.... it feels REALLY weird just leaving it sit in an account. But seems like the best option right now.

It’s what I decided to do in the end. I took 10% to play with in the market but if that completely disappeared I wouldn’t miss it.

 

[thesauce]

I’m holding mine in HYS right now. Around 4% with discover. Others are even higher but not worth the effort of switching.

Another option would be to look for an account-opening bonus such as capital one bank that will require a big opening deposit and keeping it in the account for a number of months. You’ll get the savings rate + the bonus.

 

[Angler]

I believe many here (not referring to Med Students, sorry) are in tax brackets in the thirties. Especially if they are in high income tax states, using State or Federal Tax Free money market funds can be financially advantageous.

Take VMSXX Vanguard Muni MMF. Very safe, very liquid. Currently yielding 3.83%, this is equivalent to a 5.11% yield in a 32% tax bracket. You couldn’t get this a year ago. If you live in NY or CA or you are in the 35/37 brackets, you have even better options.

Tax Equivalent Yield Calculator

Bankrate.com provides a FREE tax equivalent yield calculator and other TEY calculators to view the yield of your municipal bonds.

www.bankrate.com

 

[The White Coat Investor]

Vanguard Federal MMF is awfully good. Not always the absolute highest, but seemingly always in the top 10.

Vanguard Mutual Fund Profile | Vanguard

investor.vanguard.com

Yield today is 5.04%.

The problem with muni MMFs is you have to watch them closely as the yields are much more volatile. Sometimes they're great for those in high tax brackets and a week later they're not.

 

[Angler]

The problem with muni MMFs is you have to watch them closely as the yields are much more volatile.

This is absolutely correct!