Best Low Cost ETF for Cash

Discussion of the Cash portion of the Permanent Portfolio

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mathjak107
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Re: Best Low Cost ETF for Cash

Post by mathjak107 » Sun Apr 18, 2021 8:08 am

Remember fdlxx is not a core , so buys , sells and bills still have to have money moved manually to the core. Kind of like from savings to checking would be
barrett
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Re: Best Low Cost ETF for Cash

Post by barrett » Sun Apr 18, 2021 8:19 am

mathjak107 wrote:
Sun Apr 18, 2021 8:08 am
Remember fdlxx is not a core , so buys , sells and bills still have to have money moved manually to the core. Kind of like from savings to checking would be
Thanks for that, MJ. Much appreciated!
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pugchief
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Re: Best Low Cost ETF for Cash

Post by pugchief » Sun Apr 18, 2021 8:30 am

mathjak107 wrote:
Sun Apr 18, 2021 8:08 am
Remember fdlxx is not a core , so buys , sells and bills still have to have money moved manually to the core. Kind of like from savings to checking would be
Incorrect.
If my core doesn't have enough cash to cover a transaction and there is money in FDLXX, Fidelity will automatically move the money. This happens repeatedly as I use Fidelity as my main checking / billpay account.
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jhogue
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Re: Best Low Cost ETF for Cash

Post by jhogue » Sun Apr 18, 2021 12:30 pm

@ barrett:

-I like the idea of “re-loading”: I also switched from EE bonds to I bonds after our daughter graduated from college. So far, it seems like a workable plan.

-In the short term, the upcoming minimum variable interest rate guarantees a minimum one year yield on 1 May 2022 of 1.77%. That beats any 1-year CD, government, agency, corporate, or municipal bond yield AND beats current yields on 1, 5, or 10 year Treasurys.

-In the long term, meaning once you have constructed a ladder with 5 – 10 years worth of rungs, I don’t see how you can accumulate “too much” Deep Cash. I have 37% of my entire Cash in I-bonds and don’t think that it constrains my ability to withdraw funds in case of a rebalance.
“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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mathjak107
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Re: Best Low Cost ETF for Cash

Post by mathjak107 » Mon Apr 19, 2021 3:00 am

pugchief wrote:
Sun Apr 18, 2021 8:30 am
mathjak107 wrote:
Sun Apr 18, 2021 8:08 am
Remember fdlxx is not a core , so buys , sells and bills still have to have money moved manually to the core. Kind of like from savings to checking would be
Incorrect.
If my core doesn't have enough cash to cover a transaction and there is money in FDLXX, Fidelity will automatically move the money. This happens repeatedly as I use Fidelity as my main checking / billpay account.
Yes they will but if you have more than one other non core account they may pull from the wrong one ... I have their premium money market fzdxx which is a non core as well as fdlxx for the pp ....I don’t want any money pulled from fdlxx so I always move the money I want to the core
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Re: Best Low Cost ETF for Cash

Post by barrett » Tue Apr 20, 2021 7:40 am

jhogue wrote:
Sun Apr 18, 2021 12:30 pm
@ barrett:

-I like the idea of “re-loading”: I also switched from EE bonds to I bonds after our daughter graduated from college. So far, it seems like a workable plan.

-In the short term, the upcoming minimum variable interest rate guarantees a minimum one year yield on 1 May 2022 of 1.77%. That beats any 1-year CD, government, agency, corporate, or municipal bond yield AND beats current yields on 1, 5, or 10 year Treasurys.

-In the long term, meaning once you have constructed a ladder with 5 – 10 years worth of rungs, I don’t see how you can accumulate “too much” Deep Cash. I have 37% of my entire Cash in I-bonds and don’t think that it constrains my ability to withdraw funds in case of a rebalance.
Regarding your last point, jhogue, my savings bonds inventory is very lumpy as I either didn't buy many years or redeemed a bunch of bonds to buy places to live. Anyway, through less than ideal planning, I have a lot of EEs that are coming due in the next 21 months with interest gains of over $90,000. So for 2021-2023 I kind of have RMDs from my cash position. And I'll have the same situation for I-Bonds in another 9-11 years. That is, I'll have a bunch of them maturing over a span of 2-3 years and the gains will be considerable. All of these EE-Bonds and I-Bonds are just too good to cash in early (The EEs have been chugging along at 4% for years after an initial interest rate that was even higher. The I-Bonds all have very nice fixed rates).

It's not a bad "problem" to have, but having a lumpy ladder means that I can't just treat them like cash in the same way as I would, say, SHY or T-Bills. Over the next couple of years I really have to take gains from these savings bonds into account for tax planning/health insurance purposes (I retired at 59.5 and won't start Medicare for another 29 months).

Will keep this all in mind going forward and hopefully build a smoother ladder for old age. O0
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Re: Best Low Cost ETF for Cash

Post by jhogue » Tue Apr 20, 2021 9:59 am

@ barrett:

Congratulations on your first world problem. A few suggestions, if I may:

-Create a spreadsheet from now through final end of I-bond maturity. It could show you that it might make sense to cash some of them in early to smooth out that “lumpiness” of redemption years.

-One way to stem tax bracket creep with your EE bond maturities is to make an offsetting contribution in the same tax year to a charitable donor advised fund. To make it worthwhile, the amount of the donation should exceed your standard deduction and you have to itemize your deductions.

If all else fails, take the redemptions, pay the taxes, and take a nice long cruise or buy a new car with all the extras. Both are on sale now, but probably not next year.
“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 Low Cost ETF for Cash

Post by barrett » Wed Apr 21, 2021 1:59 pm

Just checked out the fixed income options at Fidelity and there's a AAA six-month corporate bond available with a yield of -1.09%!

Das ist ja mit der LANDWIRTSCHAFTLICHE RENTENBANK!

Might just nix all the good advice I get here and load up on these babies just to be on the safe side. O0
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Re: Best Low Cost ETF for Cash

Post by jswinner » Wed Apr 21, 2021 7:56 pm

barrett wrote:
Wed Apr 21, 2021 1:59 pm
Just checked out the fixed income options at Fidelity and there's a AAA six-month corporate bond available with a yield of -1.09%!

Das ist ja mit der LANDWIRTSCHAFTLICHE RENTENBANK!

Might just nix all the good advice I get here and load up on these babies just to be on the safe side. O0
Good thing I got 912796G52 last week then. Will be looking for a large truck in October to haul that load off to my hidey hole
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