Increased Liquidity when buying at Treasury Direct?

Discussion of the Cash portion of the Permanent Portfolio

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pugchief
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Re: Increased Liquidity when buying at Treasury Direct?

Post by pugchief » Sun Jan 20, 2019 4:29 pm

Kbg wrote:
Sun Jan 20, 2019 3:14 pm
For no kidding immediate cash needs I’m going to use my credit card and pay it off in full next billing cycle. If timing is perfect I get 31 days of free cash.

Am I missing something about having a 1-5 day lag?
Yep, and a 2%+ rebate to boot!
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sophie
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Re: Increased Liquidity when buying at Treasury Direct?

Post by sophie » Mon Jan 21, 2019 10:59 am

Credit cards and savings account linked to checking for short term cash, yes!! And at LEAST 2% on the credit cards, I get 6% and 3% for groceries, gas and dept stores, and 5% in the rotating categories at Chase which I can never keep track of.

I can't rely on Fidelity cash management to function like a bank, until I understand completely their long-term hold on funds policy. I read a couple of threads at Bogleheads, and a few posters reported getting stuck with overdraft fees because the deposits they transferred to the cash management account to cover withdrawals were in that long-term hold. Anyway - Fidelity is fine, but my rule with them is that if I need money from the brokerage account I make sure to plan ahead 3 weeks.
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pugchief
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Re: Increased Liquidity when buying at Treasury Direct?

Post by pugchief » Mon Jan 21, 2019 12:27 pm

Sophie,
On the cash management tab in your Fidelity account you will see this:
Image
Whatever is listed as available to withdraw is the equivalent of 'available balance' in a bank checking account.

Always push money from the outside institution rather than pulling it by requesting the funds at Fidelity when depositing. They are generally available faster. I always leave a few thousand more in the account than I need for monthly expenses so I don't run into problems. If I know I have a large payment coming, I try to plan ahead, but I prefer to keep deeper cash at Vanguard (Prime MM) which pays a higher rate.
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jhogue
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Re: Increased Liquidity when buying at Treasury Direct?

Post by jhogue » Tue Jan 22, 2019 9:12 am

Pugchief,

I use my Fidelity brokerage account’s “available to withdraw” window much as you do, except that I replenish for major purchases from STTs I keep on auto-roll. I also like Fidelity’s no-fee credit card with the 2% rebate. It is probably the highest rate that automatically covers all purchases. In practice, I think the major risk of using this form of “ready cash” is identity theft, which is a manageable (if growing) risk, given that the credit card company effectively insures against it.

At the same time, the ultimate form of liquidity within our current financial system theoretically should be physical cash. But similar to physical gold, during “normal times” many of us are relying on physical cash less and less. Increasingly, the pile of greenbacks I keep in my local bank safe deposit box is for “abnormal times” and is a shrinking percentage of my portfolio—even in the present era of relatively low inflation. The major risks of physical cash seem to be: 1) uninsured theft, and 2) the bank could shut its doors before I can get to my safe deposit box. In “normal times” these risks seem small and remote.

I recall Uncle Harry said we should keep some physical gold and cash near by for "abnormal times," but I don’t think he was more specific about it than that. My solution has been to self-insure against these diverse risks by having some of both forms of “ready cash” available. Perhaps our greatest challenge is how to judge “abnormal times” from “normal times”?
“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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Kbg
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Re: Increased Liquidity when buying at Treasury Direct?

Post by Kbg » Tue Jan 22, 2019 1:25 pm

jhogue wrote:
Tue Jan 22, 2019 9:12 am
Pugchief,

I use my Fidelity brokerage account’s “available to withdraw” window much as you do, except that I replenish for major purchases from STTs I keep on auto-roll. I also like Fidelity’s no-fee credit card with the 2% rebate. It is probably the highest rate that automatically covers all purchases. In practice, I think the major risk of using this form of “ready cash” is identity theft, which is a manageable (if growing) risk, given that the credit card company effectively insures against it.
So long as it isn't a debit card...my brokerage offers a pretty good card that charges the margin rate and goes on margin which is good for all kinds of tax reasons. However, wouldn't touch it with a 10 foot pole.
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jhogue
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Re: Increased Liquidity when buying at Treasury Direct?

Post by jhogue » Tue Jan 22, 2019 1:46 pm

Margin loans are a form of leverage. Uncle Harry said never use leverage on PP assets. I'm with Uncle Harry on this one.

EDIT: Come to think of it, margin might be useful as a form of overdraft protection, but I still would not make a habit of it.
“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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