Investing in cash?

[SavingWithBabies]

I know some of us are holding cash right now. How are you investing in cash?

I went through these steps so far (I think worst to better):

- money sitting in checking
- money sitting in savings with very low APR
- money in "special" savings with slightly better APR (but still very low -- sub-inflation)
- money in Vanguard Prime Money Market Fund

Other options:

- CDs / CD ladder
- high APR rewards checking if these come back or are back (although they had low limits and hassle of N debit card transactions)
- ?

Am I missing something obvious that I should put some money into? I think someone motioned something about t-bills and a $10,000. Or maybe it was MUNI bonds. But something that had some tax advantage. I did try to search for it but not finding it so far.

Best guess: Put it all in the Vanguard Prime Money Market Fund and wait a bit while rates go up and then maybe start a CD ladder (if okay with it being locked up for a bit).

[jacob]

What?: CD ladder.

How?: Brokered and 3 months longs since the funds rate is still getting hiked regularly.

Why?: It's the most convenient/controllable option in my situation. I consider this to be my dry powder. It's not part of some fancy allocation strategy. The ladder also helps to instill some discipline so I don't talk myself into how stocks are "on sale" just because they're down 5-10%.

[Kriegsspiel]

Vanguard's Treasury Bill fund, VGSH.

[Nomad]

I put some money into regular savings accounts. 5% interest.

[Lucky C]

I have some USD in Vanguard Money Market and some Capital One CDs, but there may be better opportunities holding cash in foreign currencies.

[cmonkey]

Fidelity has a nice selection of CD options available. I'd stick with the 3-6 month range since the Fed is still raising rates.

[2Birds1Stone]

5 Year CD Ladder of 12 month CD's (2-2.5%)
High Interest Savings Account (1.9%)
Vanguard MM Fund (2.14%)

Overall, this cash is equal to roughly 1/4 of my net worth, and could sustain me for 5 years at current lifestyle.

[Chris]

Deep cash: I-Bonds (no state tax; fed tax-deferred)
Near cash: Short term treasury bond fund (no state tax)
Ready cash: High-yield savings

[arcyallen]

I put some money into regular savings accounts. 5% interest.

Nomad, where are you getting 5% interest on cash?

[Clarice]

Here is a counterargument to investing in cash... Analysis paralysis anyone?

http://cluborlov.blogspot.com/2018/10/h ... .html#more

[CS]

Treasury Direct - two ladders - one of 4 - 4 week t-bills (so one matures every week) for quick cash if needed. The second of 13 week bills, which I'm planning on switching to 26 week bills and have one mature either every two or three months (undecided). They can be set for automatic reinvestment. I have this cycle through my business checking account, which also gets the bank off my back for inactivity if I'm not working.

I'm going to start using VGSH for the retirement funds. Did not know about that one.

[Mister Imperceptible]

Some physical notes too

[Nomad]

Nomad, where are you getting 5% interest on cash?

HSBC regular savings account £250 per month
First Direct regular savings account £300 per month.
So £6600 gradually invested by end of year and then given £165 in interest -
the average amount in the accounts is £3300 during the course of the year.

Then put it into something else and start again.

[Nomad]

At present it is probably a good idea to keep about 10-15% of investment money in cash or savings accounts rather than 'normal' investments.

[Bankai]

@Nomad - also tsb, nationwide & m&s.

[George the original one]

CDs that will pay expenses for the next two years. Why that range? Because my pension starts paying then.

[UK-with-kids]

Peer to peer lending?

[bostonimproper]

Ally has a promotion for an extra 1% deposit for adding money to their savings and checking for 3 months. That's on top of their usual 1.8% interest, so effectively ~6% for those three months. So that's where all my excess cash is sitting right now. Enrollment for the promo recently closed though.

[jacob]

Peer to peer lending?

That's not investing in cash. That's invest in non-secured junior junk bonds for consumers (the kind the banks won't touch).

For me, never again:
http://earlyretirementextreme.com/my-mo ... osper.html
http://earlyretirementextreme.com/prosp ... tices.html (what a nightmare that was)

I think personal experiences have a lot to do with timing. I got mine from 2006-2009 so I experienced the credit crisis and got burned. I just about escaped by the skin of my teeth(*). The fundamental lesson was that P2P is not paying e.g. 10% APY for AAA-rated people, it's paying 2% APY+8% credit risk. Maybe 2%+16% risk for C-rated people. It's just that this credit risk is not experienced in the good years. Or maybe LendingClub really is materially different and better. I don't know.

(*) Largely thanks to doing the math and being heavily diversified.

Right now, we've had 9 good years for the economy, so P2P is getting popular and people are jumping on board, just like I did in 2006.

[UK-with-kids]

That's not investing in cash. That's invest in non-secured junior junk bonds for consumers (the kind the banks won't touch).

Good point.