How do you invest the Cash portion?

[Kriegsspiel]

What about the superb Gyroscope, by Dismemberment Plan?

[Smith1776]

You see, for the longest time I've kind of lamented choosing "Smith1776" as my username.

Because now changing my avatar to any other historical thinker looks incongruous.

If only I could now be Newton1687 haha.

[dualstow]

You see, for the longest time I've kind of lamented choosing "Smith1776" as my username.

Because now changing my avatar to any other historical thinker looks incongruous.

If only I could now be Newton1687 haha.

You can have it changed. Greg, who made an appearance here recently, was 1NV3ST0R or something like that once upon a time.

[Smith1776]

Hehe, dualstow, I personally think the PP is more like Iron Man than the hulk -- because it's armoured on all sides.

[dualstow]

Hehe, dualstow, I personally think the PP is more like Iron Man than the hulk -- because it's armoured on all sides.

With extremely precious metals.

[Smith1776]

A bit of water cooler talk here.

Which would you guys consider to be safer for the cash portion of the PP, assuming you could only pick one?

1) A ladder of 1 - 5 year federal government treasuries

2) A fund with 0 - 90 day commercial paper obligations?

[ochotona]

A bit of water cooler talk here.

Which would you guys consider to be safer for the cash portion of the PP, assuming you could only pick one?

1) A ladder of 1 - 5 year federal government treasuries

2) A fund with 0 - 90 day commercial paper obligations?

2) because interest rate swings will cause volatility for 1). Cash is zero-ish duration almost by definition.

[Kbg]

When it comes to bonds these things are highly efficient and I have no idea why we try to over analyze them. It just isn't hard if you aren't buying a fund. Your return is the interest coupon +/- the par value discount/premium.

The two options provided are time vs. credit risk...treasuries are categorically safer and the interest will be fixed. Commercial paper is more risky as compared to treasuries and the interest return will float/adjust rather quickly.

If the question truly is safety defined as I get all my principal back with interest, no contest.

If the question is where do you think interest rates are going...Och's guess is as good as anybody else's guess.

[Smith1776]

Right, it's very interesting to see who prefers what kind of risk.

Myself? Seeing what happened to the Reserve Primary Fund with its commercial paper, I prefer the longer duration federal notes personally.

[mathjak107]

what money markets can invest in has changed drastically since the reserve fund failed . i owned that money market too

[Smith1776]

what money markets can invest in has changed drastically since the reserve fund failed . i owned that money market too

That is true.

[vnatale]

Regarding the below....

1) I Bonds. The limit is $10,000? Plus, if you overpay your taxes by $5,000 you can purchase another $5,000 with your tax refund? Is that what you do?

2) Can you give more description of: "1-3-6 months TBills in auto-roll at Fidelity"

3) Obviously you have no concern regarding FDLXX when I wrote:

"Similarly going to Fidelity I see that the composition of the Fidelity® Treasury Only Money Market Fund (FDLXX) is:

Normally investing at least 99.5% of total assets in cash and U.S. Treasury securities.
In addition, the fund normally invests at least 80% of its assets in U.S. Treasury securities.

Its current composition is:

U.S. Treasury Bills 72.23% (81.33% / 9/10/19) , U.S. Treasury Coupons 28.64% (23.00% / 9/10/19) , and Net Other Assets (0.87%) (-4.33% / 9/10/19)"

4) Not following this what you wrote (primarily what the abbreviations represent): "(whichever has the best interest rate at the moment), ITOT, IJS (I have a Golden Butterfly, not a pure PP) o IAU."

Thanks

Vinny

3 components for me:
1. I Bonds (every year, as many as I can get)
2. 1-3-6 months TBills in auto-roll at Fidelity
3. $10k-ish in a Fidelity cash account, in FDLXX

The dynamic is fairly easy: when the balance in the cash account reaches $11k (and no big expense is on the horizon), that $1k becomes a T-Bill (whichever has the best interest rate at the moment), ITOT, IJS (I have a Golden Butterfly, not a pure PP) o IAU.
Long term treasury bonds are all in the 401k and HSA (CA resident, so I need to avoid paying state taxes on that HSA), I don't keep cash in them except for the $1-2k building up for the next (mostly bond) purchase.
Once a year, I ransack the T-Bills to get as many I Bonds as I can.
Rinse and repeat.

If some big expense is on the horizon (e.g. new car), I just make sure I keep that money ready available in either the cash account or (if not happening in the next month or so) T-Bills, in excess of my target 20% allocation.