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put 100k at 4% vs what a savings account at a bank gives you thats a grocery bill a month in profit.
by blinded 3y ago
put 100k at 4% vs what a savings account at a bank gives you thats a grocery bill a month in profit.
- dustincoates 3y agoBut why would you put $100k in savings? There are so many better places that are going to get you more than a monthly grocery bill over time.
- frumper 3y agoIf you're looking to use that 100k soon, maybe for a new house, or saving to start a business, then you want very safe and liquid options. 4% is close enough to other safe options that if it's easy then that's good enough for some people.
- gumby 3y agoMoney market is completely liquid.
- frumper 3y ago> But why would you put $100k in savings? There are so many better places that are going to get you more than a monthly grocery bill over time. If someone is sitting on 100k in savings, there isn't much of a practical difference to moving it to a money market. The rates aren't significantly different. Some banks have higher savings rates, some higher money market rates. That makes other things your deciding factors such as the trust in a brand, quality of life, ease of use.
- astrange 3y agoSavings accounts are tax-disadvantaged; interest is taxed like ordinary income. I'm not sure about money market funds, but municipal/treasury bonds don't have that problem. Remember, taxes are designed to benefit rich passive investors, so you gotta act like one.
- armitron 3y agoIncome from treasury bonds is taxed by the federal government.
- astrange 3y agoPretty good deal in a high tax state. I think it should be taxed as capital gains though, it's all pretty arbitrary.
- frumper 3y agoMoney market interest income is taxed as income. So replying to the commenter to use money market accounts over savings, there isn’t a big difference. People go with what’s easiest and convenient when rates aren’t significantly different.
- fshbbdssbbgdd 3y agoTreasury bills are a great option. A 3 month treasury pays over 5% and they are exempt from state income tax. There is not meaningful interest rate risk in a bond that matures in a few months, but you can still sell before maturity if you need the money. So in almost any scenario you can come up with, it’s better than the savings account.
- paul_grisham 3y agoThe average person has no idea what a treasury bond is. Everyone knows what a savings account is.
- fshbbdssbbgdd 3y agoSure, they sound scary and complicated, but I’m here to tell you that if you have a need to store a six-figure sum of money in a cash equivalent, it’s worth figuring out how to buy a treasury bill from your brokerage to get the most out of your money.
- deleted 3y ago[deleted]
- gedy 3y agoAnd not lose money unpredictably? Do tell. (I realize 4% is less than inflation)
- gumby 3y agoMoney market
- gedy 3y agoAre the rates much higher? Didn't seem so at the online banks.
- gumby 3y agoFirst think I looked at was vio, more than 50 bps higher.
- blinded 3y agoAny docs or how-tos youd recommend?
- GreedClarifies 3y agoLooks like vanguard (vmfxx) is offering 4.78 and apple is offering 4.15. That's about 60 bps, it's not world changing, but vmfxx is a better deal but it may be a little more cumbersome for some.
- nickfromseattle 3y agoThe stock market has been declining for a while. 4% is better than a 10 - 50% loss.
- eek2121 3y agoEmergency savings should NEVER be put anywhere where it would be at risk or inaccessible when you need it most.
- dustincoates 3y agoSure, but $100k is very high for emergency savings. Most recommendations point to 3 months. Even if you are very risk adverse, most people do not need $100k for 6 or even 12 months of expenses.