Holding cash around intermediate term bond yields is easy when we've had an inverted yield curve for over two years which is really anomalous versus history.Vanguard MM funds are yielding around 4.5%. Vanguard Total Bond Market is yielding around 4.4% I'm not seeing how keeping funds earmarked for short term needs in a Vanguard MM fund is suboptimal.Well the OP had admitted that it is suboptimal and inefficient but they enjoys the sense of control and looking at all the balances in all these various accounts. Ally has been mentioned frequently which pays 3.8% taxable and supports all the these little buckets to gaze at which is significantly worse than optimized cash flow management.
When that comparison changes, my hope is that my credit union will once again be able to offer an interest rate comparable to the midterm bond fund yields. If not, I'll have to rethink my sinking fund strategy. But it seems like it's been a very long time that my short term holdings have had yields very similar to those of the typical total bond market fund.
My criticism is more along the lines of heavily managing numerous separate accounts of cash for managing what is really very shallow risk (for most Bogleheads). Do we "need" dedicated financial accounts for a vacation or a car insurance bill to avoid a crisis?
We don't even have a savings account. But we do have some more liquid fixed income holdings in a brokerage account along with other less liquid things. But that more liquid fixed income is a miniscule % of overall fixed income. It's also counted part of our overall FI holdings with nothing fenced off and no specific expenditures are assigned to it. Average expenses including the averaged out effect of lumpy things are deposited into checking to pay the bills. If checking is short, funds are moved in only when needed but usually funds are moved out to brokerage. All but the largest lumpy expenses are just usually cash flowed.
Statistics: Posted by MnD — Fri Dec 20, 2024 12:06 pm — Replies 44 — Views 2450