Best current options for cash and STT's?

Discussion of the Cash portion of the Permanent Portfolio

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Kevin K.
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Best current options for cash and STT's?

Post by Kevin K. » Fri Sep 04, 2020 10:17 am

I've been hesitant to open a Treasury Direct account just because it's one more thing to manage but the info kindly shared here about I Bonds has convinced me my wife and I would be foolish not to buy 10K a year of them apiece so we'll open the account.

My question is does it make sense to then also just buy T-bills at auction for most or all of the rest of the cash? I have most of my investments at Schwab where my big slug of SCHO (1-3 year Treasury ETF) is in the red thanks to interest rate spikes and where Schwab's Treasury MM is paying a subsized 0% thanks to the combination of pitiful T-bill yields and high ER. SHV is an option but its .15ER exceeds the return on the T-bills; I've even thought of parking a big slug of cash in Schwab Bank savings paying .05% but with FDIC insurance.

Any recommendations appreciated. I understand anything safe will pay next to nothing and I'm OK with that.
Last edited by Kevin K. on Sat Sep 05, 2020 3:35 pm, edited 1 time in total.
mukramesh
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Re: Best current options for cash and STT's?

Post by mukramesh » Fri Sep 04, 2020 10:24 am

Have you considered buying T-bills in your brokerage account?

I don't think there is any advantage using Treasury Direct for anything other than Savings Bonds (I/EE).
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Re: Best current options for cash and STT's?

Post by Kevin K. » Fri Sep 04, 2020 11:55 am

Thanks!

I was buying T-bills in my Schwab account but they (understandably) stopped offering automatic rollover when rates got close to zero. I imagine Treasury Direct doesn’t offer that either but if I just buy 6-12 month bills it isn’t a big hassle to do my work own.
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jhogue
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Re: Best current options for cash and STT's?

Post by jhogue » Tue Sep 08, 2020 9:14 am

Kevin,
Once you and your wife have bought your annual quota of I-bonds, you have already made the best current investment there is in terms of safety, liquidity and yield for Cash for the PP.

Having the discipline to stick with high quality Treasury securities when real yields are going negative is the wisest strategy right now. Here are a few alternatives you might consider, depending on your personal situation.

1. Overpay your taxes next January to buy the extra $5 in I-bonds with your refund..

2. Set up a trust. With a different EIN you can purchase an additional $10 in I-Bonds each year

3. Buy shorter maturity T-Bills. A 3 month T-bill has virtually the same yield as a 1 year T-bill. You can switch back to 1 year T-bills if interest rates rise later.

4. Make sure you have your full 25% allocation of gold, especially physical gold. In times like these, when the Fed is pursuing ZIRP, it makes sense to remember that gold is our alternative currency and hedge against monetary manipulations.

5. Buy a new car. There are a number of dealers advertising 0% down and 72 months. Make super low interest rates work for you.
“Groucho Marx wrote:
A stock trader asked him, "Groucho, where do you put all your money?" Groucho was said to have replied, "In Treasury bonds", and the trader said, "You can't make much money on those." Groucho said, "You can if you have enough of them!"
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Re: Best current options for cash and STT's?

Post by vnatale » Tue Sep 08, 2020 10:57 am

jhogue wrote:
Tue Sep 08, 2020 9:14 am
Kevin,
Once you and your wife have bought your annual quota of I-bonds, you have already made the best current investment there is in terms of safety, liquidity and yield for Cash for the PP.

Having the discipline to stick with high quality Treasury securities when real yields are going negative is the wisest strategy right now. Here are a few alternatives you might consider, depending on your personal situation.

1. Overpay your taxes next January to buy the extra $5 in I-bonds with your refund..

2. Set up a trust. With a different EIN you can purchase an additional $10 in I-Bonds each year

3. Buy shorter maturity T-Bills. A 3 month T-bill has virtually the same yield as a 1 year T-bill. You can switch back to 1 year T-bills if interest rates rise later.

4. Make sure you have your full 25% allocation of gold, especially physical gold. In times like these, when the Fed is pursuing ZIRP, it makes sense to remember that gold is our alternative currency and hedge against monetary manipulations.

5. Buy a new car. There are a number of dealers advertising 0% down and 72 months. Make super low interest rates work for you.
I'll give more information later...but regarding #1.

I did do that this year for my 2019 filing: overpaid by $5,000 and filled out the form to have the bonds purchased. Imagine my surprise when I soon received a $5,000 refund! I went back to look at the return I filed and all looked in order.

Vinny
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Re: Best current options for cash and STT's?

Post by Xan » Tue Sep 08, 2020 11:10 am

vnatale wrote:
Tue Sep 08, 2020 10:57 am
jhogue wrote:
Tue Sep 08, 2020 9:14 am
Kevin,
Once you and your wife have bought your annual quota of I-bonds, you have already made the best current investment there is in terms of safety, liquidity and yield for Cash for the PP.

Having the discipline to stick with high quality Treasury securities when real yields are going negative is the wisest strategy right now. Here are a few alternatives you might consider, depending on your personal situation.

1. Overpay your taxes next January to buy the extra $5 in I-bonds with your refund..

2. Set up a trust. With a different EIN you can purchase an additional $10 in I-Bonds each year

3. Buy shorter maturity T-Bills. A 3 month T-bill has virtually the same yield as a 1 year T-bill. You can switch back to 1 year T-bills if interest rates rise later.

4. Make sure you have your full 25% allocation of gold, especially physical gold. In times like these, when the Fed is pursuing ZIRP, it makes sense to remember that gold is our alternative currency and hedge against monetary manipulations.

5. Buy a new car. There are a number of dealers advertising 0% down and 72 months. Make super low interest rates work for you.
I'll give more information later...but regarding #1.

I did do that this year for my 2019 filing: overpaid by $5,000 and filled out the form to have the bonds purchased. Imagine my surprise when I soon received a $5,000 refund! I went back to look at the return I filed and all looked in order.

Vinny
Yikes! I tried the same thing, but haven't yet heard anything back about my tax year 2019 filing. Certainly hoping I get my bond.
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Re: Best current options for cash and STT's?

Post by Kbg » Tue Sep 08, 2020 1:34 pm

Kevin K. wrote:
Fri Sep 04, 2020 11:55 am
Thanks!

I was buying T-bills in my Schwab account but they (understandably) stopped offering automatic rollover when rates got close to zero. I imagine Treasury Direct doesn’t offer that either but if I just buy 6-12 month bills it isn’t a big hassle to do my work own.
They do sort of...have your bond mature into the Zero Percent C of I account and then purchase from the same account. While it's not an auto-roll you can schedule to redeem/purchase securities for as far out as they have listed auction dates. If you goof something up you just won't get a purchase.
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Re: Best current options for cash and STT's?

Post by johnnywitt » Tue Sep 08, 2020 3:18 pm

It's weird, but between the ETF's BIL. SHV & VGSH: BIL is way more volatile it has a range of about 4 dollars moves this year, while VGSH is only about a 2 dollar range. It's pretty sick when you're losing hundreds AND you're getting no I interest as well >:D
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Re: Best current options for cash and STT's?

Post by vnatale » Tue Sep 08, 2020 7:11 pm

Xan wrote:
Tue Sep 08, 2020 11:10 am
vnatale wrote:
Tue Sep 08, 2020 10:57 am
jhogue wrote:
Tue Sep 08, 2020 9:14 am
Kevin,
Once you and your wife have bought your annual quota of I-bonds, you have already made the best current investment there is in terms of safety, liquidity and yield for Cash for the PP.

Having the discipline to stick with high quality Treasury securities when real yields are going negative is the wisest strategy right now. Here are a few alternatives you might consider, depending on your personal situation.

1. Overpay your taxes next January to buy the extra $5 in I-bonds with your refund..

2. Set up a trust. With a different EIN you can purchase an additional $10 in I-Bonds each year

3. Buy shorter maturity T-Bills. A 3 month T-bill has virtually the same yield as a 1 year T-bill. You can switch back to 1 year T-bills if interest rates rise later.

4. Make sure you have your full 25% allocation of gold, especially physical gold. In times like these, when the Fed is pursuing ZIRP, it makes sense to remember that gold is our alternative currency and hedge against monetary manipulations.

5. Buy a new car. There are a number of dealers advertising 0% down and 72 months. Make super low interest rates work for you.
I'll give more information later...but regarding #1.

I did do that this year for my 2019 filing: overpaid by $5,000 and filled out the form to have the bonds purchased. Imagine my surprise when I soon received a $5,000 refund! I went back to look at the return I filed and all looked in order.

Vinny
Yikes! I tried the same thing, but haven't yet heard anything back about my tax year 2019 filing. Certainly hoping I get my bond.
When did you file? I filed only a day or two before July 15, 2020.

Vinny
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Re: Best current options for cash and STT's?

Post by jhogue » Tue Sep 08, 2020 8:00 pm

Try this:

What do I do if I don't get my paper savings bonds?

The first step is to check the status of your refund by going to " Where's My Refund" on www.irs.gov or calling 800-829-1954. According to the IRS, you can check the status within 24 hours of when the IRS receives your e-filed return, or four weeks after you mail a paper return. If the IRS has processed your refund and placed the order for your savings bonds, call 844-284-2676 (toll free) to inquire about the status of your savings bonds.

(from Treasurydirect.gov)
“Groucho Marx wrote:
A stock trader asked him, "Groucho, where do you put all your money?" Groucho was said to have replied, "In Treasury bonds", and the trader said, "You can't make much money on those." Groucho said, "You can if you have enough of them!"
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Re: Best current options for cash and STT's?

Post by vnatale » Tue Sep 08, 2020 8:08 pm

jhogue wrote:
Tue Sep 08, 2020 8:00 pm
Try this:

What do I do if I don't get my paper savings bonds?

The first step is to check the status of your refund by going to " Where's My Refund" on www.irs.gov or calling 800-829-1954. According to the IRS, you can check the status within 24 hours of when the IRS receives your e-filed return, or four weeks after you mail a paper return. If the IRS has processed your refund and placed the order for your savings bonds, call 844-284-2676 (toll free) to inquire about the status of your savings bonds.

(from Treasurydirect.gov)
I did receive a refund check for $5,000 which I then deposited into one of my bank accounts.

Vinny
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Re: Best current options for cash and STT's?

Post by Xan » Tue Sep 08, 2020 8:25 pm

vnatale wrote:
Tue Sep 08, 2020 7:11 pm
When did you file? I filed only a day or two before July 15, 2020.

Vinny
As did I. I tried the mechanism jhogue outlined (thanks!) and it said it has been received and is still being processed. I'm sure that means there'll be a knock on my door and I'll be hauled away in handcuffs any moment.
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