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Over the last few weeks there have been several threads were these types of funds have come up. David has mentioned several, I believe, and there were some in an earlier thread today.
I have been looking for something along those lines myself and thought I would ask again to see what funds others were using, primarily to have the information all together in one thread.
I tend to take a conservative view of cash. Not trying to make money on it, just trying to lose a little less. Some ideas (very little in the way of funds, though):
- Series I savings bonds ("I Bonds") - fully liquid after 1 year (3 months interest lost until you own them for five); guaranteed not to lose money. And interest is tax-deferred, state-tax-exempt.
- "Higher" interest savings accounts/money market bank accounts - these tend to pay around 1% these days. Not much, but safe and about 1% higher than MMFs. One may be able to do slightly better (at higher risk) with corporate "savings accounts", like GE Interest Plus
- Muni short/intermediate bond funds, e.g. Vanguard Ltd-Term (VMLUX), US Global Near Term (NEARX) - SEC yields under 1%, but after tax may still beat the bank/credit union accounts, depending on your bracket.
The latter is about as far out as I'd push "cash" (enhanced or otherwise). After that, it's not part of my cash allocation.
A variant of the savings account is the HSA account. These tend to pay slightly higher interest, so instead of paying off medical bills from the HSA account, one can pay them out of pocket, and keep whatever cash is in the HSA earning slightly higher interest, tax free. Always liquid so long as you can show that you had medical expenses (after the HSA was opened) that you could have applied the HSA money toward.
In retirement accounts, you may have access to a stable value (or traditional annuity) account, e.g. TIAA-CREF Group Retirement (403(b)) traditional annuity (3%).
Reply to @hank: Thanks for the reminder about priority. It's not necessarily true that all the bonds in bank loan funds get higher priority - that was yet another risk factor with Loomis Sayles Senior Floating Rate and Fixed Income Y (LSFYX). It is only required to invest 65% (not the usual 80%) in senior floating rate loans.
Always read prospectuses carefully - don't assume anything simply because of the bucket that M* places it in. (Quiet in the peanut gallery - I hear all of you shouting: see, we told you not to trust M* categories
Comments
- Series I savings bonds ("I Bonds") - fully liquid after 1 year (3 months interest lost until you own them for five); guaranteed not to lose money. And interest is tax-deferred, state-tax-exempt.
- "Higher" interest savings accounts/money market bank accounts - these tend to pay around 1% these days. Not much, but safe and about 1% higher than MMFs. One may be able to do slightly better (at higher risk) with corporate "savings accounts", like GE Interest Plus
- Muni short/intermediate bond funds, e.g. Vanguard Ltd-Term (VMLUX), US Global Near Term (NEARX) - SEC yields under 1%, but after tax may still beat the bank/credit union accounts, depending on your bracket.
The latter is about as far out as I'd push "cash" (enhanced or otherwise). After that, it's not part of my cash allocation.
A variant of the savings account is the HSA account. These tend to pay slightly higher interest, so instead of paying off medical bills from the HSA account, one can pay them out of pocket, and keep whatever cash is in the HSA earning slightly higher interest, tax free. Always liquid so long as you can show that you had medical expenses (after the HSA was opened) that you could have applied the HSA money toward.
In retirement accounts, you may have access to a stable value (or traditional annuity) account, e.g. TIAA-CREF Group Retirement (403(b)) traditional annuity (3%).
Always read prospectuses carefully - don't assume anything simply because of the bucket that M* places it in. (Quiet in the peanut gallery - I hear all of you shouting: see, we told you not to trust M* categories