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I only recently discovered this. Are there any practical advantages to high yield savings account, then? Or do they only exist for people who don't understand
by bryceneal 3y ago
I only recently discovered this.
Are there any practical advantages to high yield savings account, then? Or do they only exist for people who don't understand how to buy money market funds?
- nytesky 3y agoTechnically not FDIC insured. I personally like CDs since the rate is locked and everyday someone is calling for a rate cut.
- bradfa 3y agoAgreed. I've been building CD ladders for the past year or so with shorter term CDs which are all paying higher interest than the money market accounts. CDs also have FDIC insurance. Many CD brokers allow you to buy and sell CDs on a market, so they have some liquidity now.
- kjellsbells 3y agoThe simplicity of CDs draws me to them. Sure I can eke out another 0.5%, but if it takes me three hours a year to figure out what the hell is happening, and it would be hard or risky to unwind if I'm incapacitated and my survivors need to pick it up, it's not worth my time. If the spread was 5%, the calculation would be different, of course.
- bradfa 3y agoMoney market funds are not protected by FDIC. Savings accounts or CDs from banks are protected by FDIC. Your choice is likely to be made around risk. Granted, I don't think money market funds actually losing value or going to 0 is very common, but with FDIC insurance you have true 0 risk for <$250k per bank.
- naniwaduni 3y agoWell, some people pay <4% investment income tax at the state/local level too.