Cash bucket options (short term needs). CD tents, Bond tents etc. dynamic situation.

[Tangler]

I basically have a very large allocation to stock index funds (most of my $), plus a small amount in bonds, and a cash bucket.

Cash bucket has two parts: EF part (liquid cash) + SORR antidote part (plan to retire in next 1-5 years)

total cash = 150-300k (will increase over next 1-3 years to 200-500k, for retirement)

Well, with rates rising I am looking at where / how to invest money that I might need in the next 1-5 years.

I looked at this in Jan and went with HY savings account because there was no 1 CD yielding anything.

Before the rates on CDs were similar to the rates on HY savings accounts (both negligible) thus I went with cash at Ally bank, since it was liquid.

Now realize that a one year CD is now paying much more than it was just 6 months ago.

Question: Do any of you have a CD ladder? Bond ladder?

I have purchased some I-bonds in my wife's name and in my name but here is another thought: I have a small business: LLC. I have a tax ID number with this LLC.

Can I buy I-bonds with this LLC? Tax implications?

That is only 10k. I want to have a cash bucket of around 200k so I need some other place to put this money. Currently 150k is with Ally (making almost nothing but totally liquid) I am considering some into 1 year CDs.

Thoughts? Does anyone go into the local bank / Credit union and show them the online rates and ask if they can match them? (Is that really old school?)

What online banks do you trust? What are you doing with short term $?

Sorry to ramble. Thanks for the help!

[Random1]

Did you look at Vanguard ?

Vanguard Brokered CD	Minimum Deposit	APY
1 - 3 Months	$10,000	0.45%
4 - 6 Months	$10,000	0.90%
7 - 9 Months	$10,000	1.00%
10 - 12 Months	$10,000	1.25%
13 - 18 Months	$10,000	1.50%
2 Year	$10,000	2.25%
3 Year	$10,000	2.55%
4 Year	$10,000	2.55%
5 Year	$10,000	2.65%

[Dewangski1]

I’m not that close to retirement, but I do like to have 5-10% cash. I’m a lump sum dip buyer, even though I know I shouldn’t be, but the flexibility of cash on hand outweighs cash drag for me personally.

My previous cash position was in a cd ladder at synchrony with maturity across 3 years and staggered about every 6 months. Those all matured as of 6 months ago. I paid off my house and the rest is sitting in HYS. I’m keeping 2/5 of cash as dry powder for the dips. The other 3/5 is to restart my cd ladder. I plan on starting with 3 CDs, focusing on shorter term CDs, 2-3 years. I recently opened a 16 month for 1.7% with synchrony. If rates shoot up fast, I’ll open 2 other CDs that straddle my 16 month maturity. If rates gradually rise, I’ll build the ladder with longer maturities. My goal with these first 3 is to split them into 6 upon maturity to capture better rates with longer term holding.

[Lithium]

I switched from Ally to Sofi bank after I saw they were paying 1.25% with direct deposit.

[Larry Ragman]

I simplify where I can, so I keep my true cash in Vanguard's money market fund. However, CDs are theoretically a good idea. Harry Sit writes about them a lot. Here is one background article, but you can search his site for some good answers. Why Investors Don't Realize CDs Are a Better Deal Than Bonds (thefinancebuff.com)

[Lithium]

I also don’t see any reason you can’t buy ibonds as a sole proprietor with a separate EIN. I bought them with an SP entity account and also opened a RLT (great tool for estate planning).

[Tangler]

I also don’t see any reason you can’t buy ibonds as a sole proprietor with a separate EIN. I bought them with an SP entity account and also opened a RLT (great tool for estate planning).

Awesome! Yes! My CPA just confirmed (I double check stuff with him because I am a paranoid person regarding the KGB (I mean IRS). I will buy today!

[Tangler]

I simplify where I can, so I keep my true cash in Vanguard's money market fund. However, CDs are theoretically a good idea. Harry Sit writes about them a lot. Here is one background article, but you can search his site for some good answers. Why Investors Don't Realize CDs Are a Better Deal Than Bonds (thefinancebuff.com)

Awesomeness! I will nerd out on this later this afternoon. Thank you!

[Tangler]

I switched from Ally to Sofi bank after I saw they were paying 1.25% with direct deposit.

Yes! Ally seems to be advertising a lot and that annoys me. I want them to spend money on giving me a good rate, not on advertising during the NFL draft.

[Tangler]

Did you look at Vanguard ?

Vanguard Brokered CD	Minimum Deposit	APY
1 - 3 Months	$10,000	0.45%
4 - 6 Months	$10,000	0.90%
7 - 9 Months	$10,000	1.00%
10 - 12 Months	$10,000	1.25%
13 - 18 Months	$10,000	1.50%
2 Year	$10,000	2.25%
3 Year	$10,000	2.55%
4 Year	$10,000	2.55%
5 Year	$10,000	2.65%

Wow, love it. Will check this out. VG is where most of our money is and this might simplify things for me. Might make a ladder there and that would be easy. Thanks

[JBME]

I'm frustrated Ally hasn't raised their rates for HYSA once the fed raised rates in March. I remember they decreased rates when they (correctly) anticipated that the fed would be lowering rates. We've known for a long time the fed would raise rates so why aren't Ally rates going up? Hopefully after today considering we're expecting a 50 point increase from the fed.

I would personally prioritize ibonds over CDs and HYSA at this point. I know you're restricted to how much you can buy. Can't use that cash for one year. But the penalty for using it before 5 years is up is so minimal in my view that ibonds are a good almost cash bucket with very good rates right now.

[jacoavlu]

could put a small portion in stablecoin interest account

[jz-]

Best CD Rates for May 2022 | Bankrate

Bankrate.com is a useful resource.
Currently, bank CDs are lagging treasuries.

[Harry Sit]

I am considering some into 1 year CDs.

If you're considering CDs, also consider Treasuries. You can buy Treasuries in your Vanguard account for free. Here are the rates:

https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_yield_curve&field_tdr_date_value_month=202205

Rates are higher than CDs at this moment and they're also exempt from state and local taxes.

[Hatton]

Welcome to the group Harry Sit. I love your blog