4 ms·

I'm getting 4.25% from Vanguard's "Cash Plus" account[0], which is also FDIC-insured (up to $1.25M). I don't use Apple Pay so can't comment on 3, but I'll happi

by scubbo 4y ago

I'm getting 4.25% from Vanguard's "Cash Plus" account[0], which is also FDIC-insured (up to $1.25M). I don't use Apple Pay so can't comment on 3, but I'll happily take an extra 0.10% interest at the cost of only being able to use it as a savings account - though I do recognize that others might disagree! [0] https://investor.vanguard.com/investment-products/cash-investments https://investor.vanguard.com/investment-products/cash-inves...

latchkey 4y ago
Compared with inflation, you're still losing money holding dollars.
- scubbo 4y ago
  This is a factual but unhelpful comment. I (and many many other people) have a need for an emergency fund that is liquid at short notice. Storing _all_ my wealth in investment vehicles (and possibly needing to liquidate it at an inopportune time) would be foolish. The devaluation due to inflation can be considered the "convenience cost" of such a fund. (There's also the consideration - and, to be clear, I'm not supporting this myself, particularly since "timing the market" is often a fool's errand; but it's worth considering to recognize how your first-order reaction misses many nuances - that if you have a strong conviction that a stock market crash is imminent, then holding dollars that devalue due to inflation to then be able to buy in after the crash is still profitable)
  - latchkey 4y ago
    It is a helpful comment because a lot of people don't think about things in the terms that I'm outlying. In the same way that people don't think about how getting paid a salary in USD is the same as buying dollars. Your response suggests that the only way to protect yourself is by holding cash and taking the loss as some sort of convenience cost. I'd say that there are other ways to hold liquid funds that try to combat inflation beyond just gambling in the stock market. To preempt a request for an example, gold is a popular method. And I know HN hates this, but the current bull market in crypto, is another. For that, I'd suggest more than just buy/hold and really delve into the lending/borrowing markets in DeFi.
    - archagon 4y ago
      This sounds a lot like becoming a professional investor. Most people don't have time for that (and there are no financial guarantees in any case).
      - latchkey 4y ago
        As soon as you get a 'real job', you're immediately pushed on the concept that you're supposed to stuff money into a 401k and let other people manage it for you because you're too busy or this stuff is too hard and others can do a better job at it for you. Sure, that's something that you can do, or you can decide to put the time and effort into learning more about finance and control what you do with your money a bit more. The choice is yours and yes, everything has some level or risk. Even ETF's have buckets of risk/reward.
        scubbo 4y ago
        Absolutely right, and I salute the impulse to educate folks that taking financial responsibility and autonomy is something that is possible and profitable! (While still disagreeing with you that crypto fits the requirement-profile of an emergency fund :P )
        latchkey 4y ago
        I just wish I had realized it earlier. I'd have never put any money into a 401k or the stock market. Worst performing asset class that I can imagine. Maybe some people are happy with the results they've gotten, but there is really a lot more you can do if you are willing to put the energy/time into it.
        archagon 4y ago
        On the other hand, I'm reminded of this article I recently read: https://www.theguardian.com/technology/2022/nov/04/how-i-lost-1m-during-the-pandemic https://www.theguardian.com/technology/2022/nov/04/how-i-los... You could easily argue that this guy made poor decisions with his money, but it's also all too easy for investors to attribute their success to skill, not just a few lucky bets. In the long run, my understanding is that few things will consistently outperform plain old index funds.
- ska 4y ago
  Yup, but the point is that you are losing less than other options with a similar risk and liquidity profile.
- olliej 4y ago
  Yup, but you're losing less than most other liquid options.
- tootie 4y ago
  Probably not anymore. Rates are up, CPI is down. 4.25% is probably close to break even now or will be very soon. Vanguard treasury money markets are paying a bit higher without FDIC backing but they are pretty risk free.

by scubbo 4y ago

latchkey 4y ago

Compared with inflation, you're still losing money holding dollars.

scubbo 4y ago
This is a factual but unhelpful comment. I (and many many other people) have a need for an emergency fund that is liquid at short notice. Storing _all_ my wealth in investment vehicles (and possibly needing to liquidate it at an inopportune time) would be foolish. The devaluation due to inflation can be considered the "convenience cost" of such a fund. (There's also the consideration - and, to be clear, I'm not supporting this myself, particularly since "timing the market" is often a fool's errand; but it's worth considering to recognize how your first-order reaction misses many nuances - that if you have a strong conviction that a stock market crash is imminent, then holding dollars that devalue due to inflation to then be able to buy in after the crash is still profitable)
- latchkey 4y ago
  It is a helpful comment because a lot of people don't think about things in the terms that I'm outlying. In the same way that people don't think about how getting paid a salary in USD is the same as buying dollars. Your response suggests that the only way to protect yourself is by holding cash and taking the loss as some sort of convenience cost. I'd say that there are other ways to hold liquid funds that try to combat inflation beyond just gambling in the stock market. To preempt a request for an example, gold is a popular method. And I know HN hates this, but the current bull market in crypto, is another. For that, I'd suggest more than just buy/hold and really delve into the lending/borrowing markets in DeFi.
  - archagon 4y ago
    This sounds a lot like becoming a professional investor. Most people don't have time for that (and there are no financial guarantees in any case).
    - latchkey 4y ago
      As soon as you get a 'real job', you're immediately pushed on the concept that you're supposed to stuff money into a 401k and let other people manage it for you because you're too busy or this stuff is too hard and others can do a better job at it for you. Sure, that's something that you can do, or you can decide to put the time and effort into learning more about finance and control what you do with your money a bit more. The choice is yours and yes, everything has some level or risk. Even ETF's have buckets of risk/reward.
      - scubbo 4y ago
        Absolutely right, and I salute the impulse to educate folks that taking financial responsibility and autonomy is something that is possible and profitable! (While still disagreeing with you that crypto fits the requirement-profile of an emergency fund :P )
        latchkey 4y ago
        I just wish I had realized it earlier. I'd have never put any money into a 401k or the stock market. Worst performing asset class that I can imagine. Maybe some people are happy with the results they've gotten, but there is really a lot more you can do if you are willing to put the energy/time into it.
        archagon 4y ago
        On the other hand, I'm reminded of this article I recently read: https://www.theguardian.com/technology/2022/nov/04/how-i-lost-1m-during-the-pandemic https://www.theguardian.com/technology/2022/nov/04/how-i-los... You could easily argue that this guy made poor decisions with his money, but it's also all too easy for investors to attribute their success to skill, not just a few lucky bets. In the long run, my understanding is that few things will consistently outperform plain old index funds.
ska 4y ago
Yup, but the point is that you are losing less than other options with a similar risk and liquidity profile.
olliej 4y ago
Yup, but you're losing less than most other liquid options.
tootie 4y ago
Probably not anymore. Rates are up, CPI is down. 4.25% is probably close to break even now or will be very soon. Vanguard treasury money markets are paying a bit higher without FDIC backing but they are pretty risk free.