High interest savings accounts

[TOGIE]

looks like SPAXX is up to 4.47 now

 

[TheTone]

Not super high but my local bank has got pretty good rates currently on cd’s. I dumped the majority of my kids savings into one and plan to basically just make good safe investments with his savings until he’s an adult.

 

[Butcher]

Honestly its really not for anything in particular other than have a savings and earn a better interest than a standard savings. It could be for retirement, I have a 401k thru my employer but I would like having something else I can throw x amount of cash into a month and not worry about losing it. I would rather not “play” the market, I prefer a steady forsure growth. It would also be ice knowing if I needed to access I could too. I really appreciate the help and advice.

 

[Southern Elk]

I’ve seen CDs over 5%.

 

[SAJ-99]

Some of those HY savings accounts might have constraints/fees on getting money from ATMs, if that matters. CDs typically have break fees if you want your money early. If the CD yields a higher rate than the US treasury of the same length, you can assume your bank is adding on credit risk, which is usually what blows a bank up, so make sure it is under FDIC limits.

 

[Edwin]

Vanguard Money Market 4.75%

 

[88man]

Vanguard Money Market 4.75%

Is it a MM fund or a MM ?

 

[88man]

Fall 2007 MM and cd s paid in the high sixes % and NY prime was at 7.5%. NY prime is at 8% now and cds and MM paying 4ish%. Why?

 

[Baerman]

Great safe way to earn decent rates on your cash while keeping it 100% ready for something else. Lending Club is at 4.25% right now.

 

[SAJ-99]

Fall 2007 MM and cd s paid in the high sixes % and NY prime was at 7.5%. NY prime is at 8% now and cds and MM paying 4ish%. Why?

Banks could and did take a lot more balance sheet risk in 2007 than they do now. The result...The Global Financial Crisis.

 

[Edwin]

Is it a MM fund or a MM ?

Fund. VMFXX It's the cash fund of my personal brokerage account. Can move it to and from the bank with one click, or purchase other mutual funds or etfs with it. $3k minimum, as most vanguard funds are.

 

[Brittany Chukarman]

Vanguard also has an invitation only cash deposit settlement fund that's FDIC insured currently paying 3.25.

 

[Arcola]

Honestly its really not for anything in particular other than have a savings and earn a better interest than a standard savings. It could be for retirement, I have a 401k thru my employer but I would like having something else I can throw x amount of cash into a month and not worry about losing it. I would rather not “play” the market, I prefer a steady forsure growth. It would also be ice knowing if I needed to access I could too. I really appreciate the help and advice.

Many financial institutions are currently offering 1-3 year cd’s in the 4% range. Usually interest is paid to you quarterly. If you need to access for an emergency, you just forfeit the future gains. Read the fine print on your specific case though. Talk to a local bank or credit union and see what they have to offer. One of my banks is offering 5% through the end of 2024 on “new money”. Moved my .02% account from another bank there to make a few extras bucks.

 

[rogerthat]

What’s the risk with a money market fund? I know they are not fdic guaranteed. I remember a long time ago one of the major funds seems like the reserve fund or something like that “broke the buck” and went under but if I remember right the losses were pretty minimal.

 

[SAJ-99]

What’s the risk with a money market fund? I know they are not fdic guaranteed. I remember a long time ago one of the major funds seems like the reserve fund or something like that “broke the buck” and went under but if I remember right the losses were pretty minimal.

Not much really, but it depends on what is under the hood. VMFXX is all Fed Res repos, treasuries and agencies. Downside (there is always a downside) is I think the fee is 11bps. It also is a mutual fund, and I think it still has those constraints. deposits go in at end of day price and withdrawal requests have to be in by midmorning. Not sure if this has changed since it was created or if there is an etf that replicates. Your problem occurs when banks start to get cute and throw in some credit risk, like Reserve Fund did. They owned a bunch of Lehman CP I think.

One of my banks is offering 5% through the end of 2024 on “new money”. Moved my .02% account from another bank there to make a few extras bucks.

This is what I mean by getting cute. 2yr treasury is 4.15% and they offer 5%. This “bidding for deposits” is what leads to bank failures. Either the winner takes on more credit risk to get to 5% which eventually does them in when the loans go bad or the loser sees deposits run out the door and blows up their balance sheet.

 

[antelopedundee]

The fidelity money market is like 4.4%

Not fdic insured but I’m not worried

I split our savings cash between the bank and that. The money market is seeing more of it these days though

Both SPAXX and FDRXX are paying about 4.5%, but FDRXX has a slightly lower expense ratio. Not sure if the most recent Fed rate hike has been incorporated into either one yet.

 

[antelopedundee]

What’s the risk with a money market fund? I know they are not fdic guaranteed. I remember a long time ago one of the major funds seems like the reserve fund or something like that “broke the buck” and went under but if I remember right the losses were pretty minimal.

IIRC Strong Funds [now defunct] was reportedly the only MMF where depositors lost money.

 

[antelopedundee]

More info..

If you withdraw the money early and suffer an interest penalty they've effectively used your money very cheaply or maybe even for free would be one reason.

 

[Nick87]

They are using it for virtually free evey day in our regular savings account. Should take all of it out and put it in the safe for the. 0.5% interest it gains. Borrow some though and it'll cost you 7.

 

[Nick87]

I remember around the time I graduated high school thinking man if I could just make 1 million I could live off the interest lol.