Quality Time Left

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jalanlong
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Quality Time Left

Post by jalanlong » Sun Jul 10, 2022 9:11 pm

I have a random thought I would like to get the forum's opinions on.

I have spent a lot of time the last 10-20 years studying stocks, investments, optimal portfolios etc. The irony was that I never made that much money or had that much in savings for it to amount to much. I was always thinking about "one day when I have amassed some money I will put this knowledge to use." Well that day has come. My wife and I make more money now that we could have ever dreamed. But having that income has made me less want to invest now. I feel like I should just pay off my 3.25% mortgage, all debt and then just stockpile cash. In the coming months it is possible that 10 year cds could yield close to 4%. IBonds certainly pay more than that right now. Is all of the time spent on investments really necessary?

My grandfather never made much money. He certainly never bought stocks or funds. He put all of his money in the bank and cds and he retired with quite a large sum. It boiled down to how much he spent and saved, not how much he earned or invested.

I belong to a forum of people who like to maximize their money. They are quite a lot of OCD types. They figure out ways to earn 4-5% on everything they purchase by using a 2% credit card, then paying it off thru Paypal using a debit card that pays 1% and so on. That sounds like a great idea. Until you stop and think that if they spend $5k a month, then earning that extra 1-2% breaks down to about $3-5 a day. Instead of all that time spent jumping thru hoops and moving your money from here to there, couldn't you make that extra $3 a day by just not buying fries with your burger? Or not having that dessert today?

Maybe I am getting to an age where I am all about quality time left and would rather just watch a good movie or spend time with my dogs rather than looking for new ETFs that could add an extra % to my annual returns. Where do you guys stand on someone who makes a good living just paying off all debt and stockpiling cash?
Last edited by jalanlong on Mon Jul 11, 2022 9:51 am, edited 1 time in total.
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Re: Quality Time Left

Post by Pointedstick » Sun Jul 10, 2022 10:22 pm

Relatable topic.

Looking back, I was most obsessed with the PP specifically and finances & investing in general during the period of time when I was most financially insecure--with debt, low net worth, and high monthly expenses. Over a similar-ish period of time, I eventually came to where you're at right now: finally financially comfortable, yet realizing that none of it came from investing!

The irony of using your wealth to pay off your mortgage and debt is that once you do so, your monthly cashflow will be even more positive! So you'll still need to figure out what to do with it.

You're you and not me, so what I did when I found myself in this situation may be totally irrelevant to you. But anyway, I did pay off all my debt, and then I put all the extra cashflow and pre-existing investments into super simple stock index funds because I found that they matched my risk tolerance and time horizon. For you, if cash or cash-like assets make you feel most comfortable, go for it, and accept that the underperformance vs punchier assets when they're doing well is irrelevant to you because you already have enough.

I think in the end it doesn't really matter what you put your savings and investments into as long as it's not patently stupid and you sock away enough of it. Every sane local asset class produces positive returns over the long term as long as the country you live in is geopolitically stable (and if it's not, there is no safe asset class). If you live in such a country with have enough income or savings, the exact yearly return stops being real important after a while. I think once you've got enough money or cashflow to be comfortable, it's time to enjoy it and stop trying to hyper-optimize it. I bought myself a really nice telescope recently and it's been one of the best purchase decisions I've made for myself in a long time. it brings me joy every clear night.
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Re: Quality Time Left

Post by Jack Jones » Mon Jul 11, 2022 4:37 am

It seems like you have lost interest in investing. That’s fine. Interests change.

However, even if you’re not interested in investing anymore, you still have the problem of the wealth you’ve accumulated. In a sane society, you could put it in the bank and forget about it.

I think there is sort of a moral obligation to wealth. You spent so much of your precious time on earth earning it. It can be used to improve the lives of your heirs or other people. With this in mind, to knowingly let your wealth rot away in a bank due to inflation seems wrong to me, even if you can afford to do so.
jalanlong wrote:
Sun Jul 10, 2022 9:11 pm
Maybe I am getting to an age where I am all about quality time left and would rather just watch a good movie or spend time with my dogs rather than looking for new ETFs that could add an extra % to my annual returns. Where do you guys stand on someone who makes a good living just paying off all debt and stockpiling cash?
Isn't there a middle ground that you're missing here? The promise of the Permanent Portfolio is that you don't have to spend your time looking for new ETFs, AND you're not victim to inflation.
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Re: Quality Time Left

Post by flyingpylon » Mon Jul 11, 2022 6:17 am

Have you tried fully embracing the “lazy” part of a lazy portfolio? It doesn’t seem like many people here actually do that.
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Re: Quality Time Left

Post by Smith1776 » Mon Jul 11, 2022 10:44 am

jalanlong wrote:
Sun Jul 10, 2022 9:11 pm
I have a random thought I would like to get the forum's opinions on.

I have spent a lot of time the last 10-20 years studying stocks, investments, optimal portfolios etc. The irony was that I never made that much money or had that much in savings for it to amount to much. I was always thinking about "one day when I have amassed some money I will put this knowledge to use." Well that day has come. My wife and I make more money now that we could have ever dreamed. But having that income has made me less want to invest now. I feel like I should just pay off my 3.25% mortgage, all debt and then just stockpile cash. In the coming months it is possible that 10 year cds could yield close to 4%. IBonds certainly pay more than that right now. Is all of the time spent on investments really necessary?

My grandfather never made much money. He certainly never bought stocks or funds. He put all of his money in the bank and cds and he retired with quite a large sum. It boiled down to how much he spent and saved, not how much he earned or invested.

I belong to a forum of people who like to maximize their money. They are quite a lot of OCD types. They figure out ways to earn 4-5% on everything they purchase by using a 2% credit card, then paying it off thru Paypal using a debit card that pays 1% and so on. That sounds like a great idea. Until you stop and think that if they spend $5k a month, then earning that extra 1-2% breaks down to about $3-5 a day. Instead of all that time spent jumping thru hoops and moving your money from here to there, couldn't you make that extra $3 a day by just not buying fries with your burger? Or not having that dessert today?

Maybe I am getting to an age where I am all about quality time left and would rather just watch a good movie or spend time with my dogs rather than looking for new ETFs that could add an extra % to my annual returns. Where do you guys stand on someone who makes a good living just paying off all debt and stockpiling cash?
It's not an uncommon refrain. Once you've "won the game", throwing all your money into a ladder of TIPS and calling it a day is not a bad approach. This assumes that the money you've accumulated is a truly substantial sum.

There are some people who choose to retire with a fairly modest sum but do so under the calculated assumption they will receive at least a reasonable risk premium from equities or other sources. That requires more complicated modeling, and it sounds like it's a bunch of rigmarole you don't want to get involved in. I don't blame you.
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Re: Quality Time Left

Post by whatchamacallit » Mon Jul 11, 2022 11:25 am

Cash is my favorite asset as well. I guess it is the at least you know your nominal return factor of it.

Just make sure you have at least 25% stocks according to Ben Graham

https://www.bogleheads.org/wiki/Graham_75-25_rule

And 20% gold according to belangp

https://gyroscopicinvesting.com/forum/v ... hp?t=10777

Then you are pretty much back to PP

>:D
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Re: Quality Time Left

Post by Smith1776 » Mon Jul 11, 2022 11:43 am

whatchamacallit wrote:
Mon Jul 11, 2022 11:25 am
Cash is my favorite asset as well. I guess it is the at least you know your nominal return factor of it.

Just make sure you have at least 25% stocks according to Ben Graham

https://www.bogleheads.org/wiki/Graham_75-25_rule

And 20% gold according to belangp

https://gyroscopicinvesting.com/forum/v ... hp?t=10777

Then you are pretty much back to PP

>:D
Do you prefer cash holdings in bank deposits or T-bills?
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Re: Quality Time Left

Post by whatchamacallit » Mon Jul 11, 2022 11:57 am

Smith1776 wrote:
Mon Jul 11, 2022 11:43 am
]

Do you prefer cash holdings in bank deposits or T-bills?
Whatever is paying more.

Favorite thing is I bonds right now.
It was EE bonds when all rates were so low. EE bonds not so appealing now but they saved me from buying LTT at low rates.

CDs could be appealing if rates go higher but they are not competitive yet

I would feel quite comfortable buying 1 to 2 year Treasury bonds paying around 3% right now.
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Re: Quality Time Left

Post by Smith1776 » Mon Jul 11, 2022 12:06 pm

whatchamacallit wrote:
Mon Jul 11, 2022 11:57 am
Smith1776 wrote:
Mon Jul 11, 2022 11:43 am
]

Do you prefer cash holdings in bank deposits or T-bills?
Whatever is paying more.

Favorite thing is I bonds right now.
It was EE bonds when all rates were so low. EE bonds not so appealing now but they saved me from buying LTT at low rates.

CDs could be appealing if rates go higher but they are not competitive yet

I would feel quite comfortable buying 1 to 2 year Treasury bonds paying around 3% right now.
I wish we had those kinds of options here in Canada. After our federal government dismantled the savings bond program we're down to just bank accounts and ETFs for all practical intents and purposes.
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Re: Quality Time Left

Post by Smith1776 » Mon Jul 11, 2022 3:12 pm

MangoMan wrote:
Mon Jul 11, 2022 2:56 pm
If you live in Canada, that's the least of your problems right now.
lol O0
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Re: Quality Time Left

Post by I Shrugged » Mon Jul 11, 2022 9:07 pm

J, there is a middle ground, you know. :)

That’s why I like the PP.

Me personally, I would NOT pay down that 3.25 mortgage. By the way, weren’t you despairing about not ever being able to buy a house last year? Or am I thinking of someone else?
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Re: Quality Time Left

Post by vnatale » Mon Jul 11, 2022 9:50 pm

I Shrugged wrote:
Mon Jul 11, 2022 9:07 pm

J, there is a middle ground, you know. :)

That’s why I like the PP.

Me personally, I would NOT pay down that 3.25 mortgage. By the way, weren’t you despairing about not ever being able to buy a house last year? Or am I thinking of someone else?


I'd definitely pay down that mortgage. It's a guaranteed after-tax 3.25% return. Where else you going to get that. And, I can tell you as a person that who has owned my house for 40 years with never a mortgage on it that it is quite the nice feeling to be in that position. Plus, there is no cash outflow going for mortgage payments.
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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Re: Quality Time Left

Post by joypog » Mon Jul 11, 2022 11:12 pm

Agreed on paying down that mortgage. The type of person who is PP-curious (if not already a practitioner) is most likely someone who would really benefit from the mental freedom having zero debt.

If this was the Rational Reminder forum where everyone is optimizing for the last BP and trading on margin, I'd say forgoing such low rates would not be good for their equanimity since they're "leaving money on the table".
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Re: Quality Time Left

Post by jalanlong » Tue Jul 12, 2022 7:53 am

I Shrugged wrote:
Mon Jul 11, 2022 9:07 pm
J, there is a middle ground, you know. :)

That’s why I like the PP.

Me personally, I would NOT pay down that 3.25 mortgage. By the way, weren’t you despairing about not ever being able to buy a house last year? Or am I thinking of someone else?
No, definitely not me. Although I would wonder how on earth a young person with an average salary would ever get on the property ladder here in North Texas any longer.
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Re: Quality Time Left

Post by I Shrugged » Tue Jul 12, 2022 8:35 am

vnatale wrote:
Mon Jul 11, 2022 9:50 pm
I Shrugged wrote:
Mon Jul 11, 2022 9:07 pm
J, there is a middle ground, you know. :)

That’s why I like the PP.

Me personally, I would NOT pay down that 3.25 mortgage. By the way, weren’t you despairing about not ever being able to buy a house last year? Or am I thinking of someone else?
I'd definitely pay down that mortgage. It's a guaranteed after-tax 3.25% return. Where else you going to get that. And, I can tell you as a person that who has owned my house for 40 years with never a mortgage on it that it is quite the nice feeling to be in that position. Plus, there is no cash outflow going for mortgage payments.
Would you buy a 3.25% 30 year mortgage?
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Re: Quality Time Left

Post by barrett » Tue Jul 12, 2022 10:46 am

jalanlong wrote:
Sun Jul 10, 2022 9:11 pm
Maybe I am getting to an age where I am all about quality time left and would rather just watch a good movie or spend time with my dogs rather than looking for new ETFs that could add an extra % to my annual returns. Where do you guys stand on someone who makes a good living just paying off all debt and stockpiling cash?
Maybe not a bad idea to just hold a bunch of cash, but everyone's situation is different. If you are close to retiring and getting a pension, or thinking about claiming SS, then you may not be so dependent on your investments for living expenses. If you are 35 and likely to live another 50-60 years, then your savings will be taking an annual hit from inflation *most* of the time. I mean, there have been times in the past where T-Bills have paid higher than inflation (Tyler wrote an excellent article about this on Portfolio Charts), but, in general after taxes, you would still lose to inflation.

Also, if you do go the all cash route, it doesn't have to be a permanent decision. One-year T-Bills are paying 3% at the moment. You could buy a bunch of those and re-evaluate in a year... or ladder them out to a year or even two (but no extra gain for going longer than a year at the moment as the yield curve is flat as a pancake). Max out your I-Bonds for 2022 and do the same for your spouse if you are married.

You pose a fascinating question. I spend WAY too much time thinking about money, but in my case I am mostly retired and not wealthy, so I figure that optimizing is maybe worth it for me. Good luck with whatever you decide!

Ah, one last thing. If going to cash allows you to really not think about investing, then you are unlikely to make any rash & costly asset allocation mistakes. Alas, I seem to specialize in these!.
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Re: Quality Time Left

Post by whatchamacallit » Tue Jul 12, 2022 11:24 am

I Shrugged wrote:
Tue Jul 12, 2022 8:35 am

Would you buy a 3.25% 30 year mortgage?
Another way to think about it, If you had a paid for house would you take out a mortgage on it? If so what would you use cash to buy? Maybe I bonds but I wouldn't want to buy stocks or gold. Leave it in cash if you need for emergency fund but you would not beat the interest rate of mortgage.
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Re: Quality Time Left

Post by Kbg » Tue Jul 12, 2022 12:16 pm

I definitely relate to jl's last paragraph.

A couple of quick thoughts. Holding actual non-interest bearing cash in a fiat money system is categorically about as stupid as it gets financially.

In the US you at least need to be holding STTs. You can buy them as short as 4 weeks. Also, the Boglehead's "match expiration to spending needs" is outstandingly good advice. Obviously we can only make estimates of future spending needs, but it's a good principle to try to employ the best you can.

For all the bad press Treasury Direct gets, I think the site makes rolling T-Bills effectively and automatically (with zero cost) about as easy as it gets.
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Re: Quality Time Left

Post by GT » Tue Jul 12, 2022 6:21 pm

jalanlong wrote:
Sun Jul 10, 2022 9:11 pm
I have a random thought I would like to get the forum's opinions on.

I have spent a lot of time the last 10-20 years studying stocks, investments, optimal portfolios etc. The irony was that I never made that much money or had that much in savings for it to amount to much. I was always thinking about "one day when I have amassed some money I will put this knowledge to use." Well that day has come. My wife and I make more money now that we could have ever dreamed. But having that income has made me less want to invest now. I feel like I should just pay off my 3.25% mortgage, all debt and then just stockpile cash. In the coming months it is possible that 10 year cds could yield close to 4%. IBonds certainly pay more than that right now. Is all of the time spent on investments really necessary?

My grandfather never made much money. He certainly never bought stocks or funds. He put all of his money in the bank and cds and he retired with quite a large sum. It boiled down to how much he spent and saved, not how much he earned or invested.

I belong to a forum of people who like to maximize their money. They are quite a lot of OCD types. They figure out ways to earn 4-5% on everything they purchase by using a 2% credit card, then paying it off thru Paypal using a debit card that pays 1% and so on. That sounds like a great idea. Until you stop and think that if they spend $5k a month, then earning that extra 1-2% breaks down to about $3-5 a day. Instead of all that time spent jumping thru hoops and moving your money from here to there, couldn't you make that extra $3 a day by just not buying fries with your burger? Or not having that dessert today?

Maybe I am getting to an age where I am all about quality time left and would rather just watch a good movie or spend time with my dogs rather than looking for new ETFs that could add an extra % to my annual returns. Where do you guys stand on someone who makes a good living just paying off all debt and stockpiling cash?
After 10 or 20 years, maybe you are getting to the point of guru enlightenment where "good enough" is "ok". The future truly is unknowable so "prefect" is not achievable kind of thinking.... Didn't Bogle think the average investor would be better off with a simple 60/40 balanced fund and Warren Buffet state the average investor would be better off in a low cost S&P 500 index fund for equities.

As far as the mortage, If I was within striking distance of paying it off I would do it for the peace of mind. If I was decades away from pay off, I would keep it and put any extra "payments" in a "house fund" that earns close or more than the mortage interest. I guess I would value the flexibility over the mortage pay down or pay off if I had a lot of years left.
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Re: Quality Time Left

Post by vnatale » Tue Jul 12, 2022 9:42 pm

I Shrugged wrote:
Tue Jul 12, 2022 8:35 am

vnatale wrote:
Mon Jul 11, 2022 9:50 pm

I Shrugged wrote:
Mon Jul 11, 2022 9:07 pm

J, there is a middle ground, you know. :)

That’s why I like the PP.

Me personally, I would NOT pay down that 3.25 mortgage. By the way, weren’t you despairing about not ever being able to buy a house last year? Or am I thinking of someone else?


I'd definitely pay down that mortgage. It's a guaranteed after-tax 3.25% return. Where else you going to get that. And, I can tell you as a person that who has owned my house for 40 years with never a mortgage on it that it is quite the nice feeling to be in that position. Plus, there is no cash outflow going for mortgage payments.


Would you buy a 3.25% 30 year mortgage?


That 3.25% is after tax. If you have a combined 30% federal / state tax rate then that is roughly almost a 5% return.

Would I take that as a guaranteed return over the next 30 years? For how many years so far has that been available as a guaranteed, riskless return? I cannot think of the last time one could get a rate like that and for how many years it had been available for.
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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Re: Quality Time Left

Post by vnatale » Tue Jul 12, 2022 9:45 pm

whatchamacallit wrote:
Tue Jul 12, 2022 11:24 am

I Shrugged wrote:
Tue Jul 12, 2022 8:35 am


Would you buy a 3.25% 30 year mortgage?


Another way to think about it, If you had a paid for house would you take out a mortgage on it? If so what would you use cash to buy? Maybe I bonds but I wouldn't want to buy stocks or gold. Leave it in cash if you need for emergency fund but you would not beat the interest rate of mortgage.


Exactly. As I just wrote that after tax 3.25% is nearly equivalent to 5% on a pre-tax basis.

What could you invest in for a better risk / reward basis?
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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Re: Quality Time Left

Post by Kbg » Wed Jul 13, 2022 10:58 am

We still have a mortgage, took a small gamble and refinanced down to 2.25% for a 15 year mortgage. For once I guessed right that interest rates just were not going to stay that low...weird to be in a place where it makes zero sense to pay it off given we can earn more on T-Bills/Notes. If that changes I'll pay down vs. buy bonds.
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Re: Quality Time Left

Post by I Shrugged » Wed Jul 13, 2022 11:34 am

vnatale wrote:
Tue Jul 12, 2022 9:42 pm
I Shrugged wrote:
Tue Jul 12, 2022 8:35 am
vnatale wrote:
Mon Jul 11, 2022 9:50 pm
I Shrugged wrote:
Mon Jul 11, 2022 9:07 pm
J, there is a middle ground, you know. :)

That’s why I like the PP.

Me personally, I would NOT pay down that 3.25 mortgage. By the way, weren’t you despairing about not ever being able to buy a house last year? Or am I thinking of someone else?
I'd definitely pay down that mortgage. It's a guaranteed after-tax 3.25% return. Where else you going to get that. And, I can tell you as a person that who has owned my house for 40 years with never a mortgage on it that it is quite the nice feeling to be in that position. Plus, there is no cash outflow going for mortgage payments.
Would you buy a 3.25% 30 year mortgage?
That 3.25% is after tax. If you have a combined 30% federal / state tax rate then that is roughly almost a 5% return.

Would I take that as a guaranteed return over the next 30 years? For how many years so far has that been available as a guaranteed, riskless return? I cannot think of the last time one could get a rate like that and for how many years it had been available for.
Your points are good from the buy down side, but would you like to buy and hold a new 30 year private mortgage from someone, no guarantees other than the collateral, for 3.25%? I wouldn't. I think it's priced for perfection. The lack of yield right now will have to change at some point, if inflation persists at 3 or 4 percent or higher. If we do get sustained inflation, a 3.25% debtor is in a good position. Maybe a great position.

Anyway that's my longer term view.
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Re: Quality Time Left

Post by whatchamacallit » Wed Aug 10, 2022 11:09 am

Jalanlong, do you like gold as an investment or just cash?

Here is an idea to help simplify that I have been thinking of for myself.

Pick an amount you want to put in retirement accounts and buy large stock and gold funds in it as automated as possible. Cheapest index fund you have available for stocks and a gold etf. I am liking the idea of buying stocks and gold at 2 to 1 ratio or 67% stocks 33% gold.


Then save in preferred cash instrument outside of retirement accounts and forget about rebalancing out of cash. Just buy real assets to enjoy when you have surplus.


No stressing over rebalancing or picking best performing etf.

End result will probably be not far off from permanent portfolio.
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Re: Quality Time Left

Post by Dieter » Wed Aug 10, 2022 3:46 pm

Kbg wrote:
Tue Jul 12, 2022 12:16 pm
I definitely relate to jl's last paragraph.

A couple of quick thoughts. Holding actual non-interest bearing cash in a fiat money system is categorically about as stupid as it gets financially.

In the US you at least need to be holding STTs. You can buy them as short as 4 weeks. Also, the Boglehead's "match expiration to spending needs" is outstandingly good advice. Obviously we can only make estimates of future spending needs, but it's a good principle to try to employ the best you can.

For all the bad press Treasury Direct gets, I think the site makes rolling T-Bills effectively and automatically (with zero cost) about as easy as it gets.
Thanks for the note -- I hadn't thought about looking at Short Term Treasuries (T-Bills) given that they used to pay less than online savings accounts (<insert discussion about safety of FIDC account vs T-Bills at treasury direct if desired>), but I think it's now higher, even for 4-week T-Bills

(per https://ycharts.com/indicators/4_week_t ... _bill_rate, 2.13% the last few days); my online banks are less than 2%. Not huge, but, figured I'd diversify by "cash" holdings and get some benefits out of it) [Edit: plus, no state tax]

Just put in my first order for a 4-week one with a few auto-re-enrolls to see how it goes (for the auction on 8/11);

Then will likely do a 13-Week one

(I'm currently in a review / catch up on financial stuff mode after over a year of parental care giving -- landscape has changed a bit.)
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