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High yield savings, money markets, CDs, or T bills? (lemmy.ml)

submitted 1 year ago by bytor9@lemmy.ml to c/personalfinance@lemmy.ml

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Where all my cash hoarders at and where do you park your savings?

Also, how do you decide how much cash to hold vs invest?

Personally I enrolled in Robinhood Gold for the 4.9% APY. It costs $5/month.

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[–] sugar_in_your_tea@sh.itjust.works 9 points 1 year ago* (last edited 1 year ago)

That really depends on your local state tax situation. Fidelity has a great tool to compare yields of differently taxed fixed income options here. Basically:

t-bills are not taxable at the state level
municipal bonds are generally not taxable at the federal or state level
CDs are taxable at the federal and state level

So that's why I park my savings in t-bills, I pay state income tax, and t-bills have a higher after tax return than CDs, and are more reliable than municipal bonds. The money that needs to be a little more liquid is in a money market fund.

How much cash

I don't hoard cash, so it's only my efund and my slush fund (i.e. the money that I've charged on my credit card or expect to pay in bills this month).

My money market fund yields 4.97% last I checked, and I think t-bills are >5% right now.

My total portfolio is almost entirely stocks, outside that efund, with any 75% US stocks and 25% internal stocks. My target is 70% US, 30% international, but I haven't bothered rebalancing yet this year so it's a bit lopsided.