With online savings accounts still paying pretty good interest rates and with Fidelity’s money market SPAXX paying good rates as well, why bother with bonds?
We do the same thing as Olin re SPAXX and FZDXX. However I’m likely to move some to a short term treasuries fund in a taxable account. Over time, the bond fund should return more with similar safety and tax impact and only mild volatility.
Currently by far the bulk of our cash allocation is in a 401(k) Common Assets fund, and all our bonds are currently in tax-advantages accounts; the above move would change the second part of that statement.
We’re also likely to move some to another institution – a high yield savings account/CDs at a bank, or a money market fund at a different brokerage – to have instantly reachable cash in another institution for purposes of cyber-diversification.
Or maybe the VG Treasury Money Market Fund – VUSXX. Current 7 day yield at 3.64%. Not subject to state income tax.
Very short-term bond funds are very important.
I use VMFXX and ICSH for bonds in my asset allocation.
My favorites
Money Market: VMFXX
Half year duration bond: ICSH
One year duration bond: VUSB (or VUSFX)
Select SPAXX for your CMA checking with Fidelity.
What’s a savings account? : )
In 2022 I took a bath with my highly rated Vanguard intermediate term bond. For now on it’s short term bonds for my bond exposure.
We do the same thing as Olin re SPAXX and FZDXX. However I’m likely to move some to a short term treasuries fund in a taxable account. Over time, the bond fund should return more with similar safety and tax impact and only mild volatility.
Currently by far the bulk of our cash allocation is in a 401(k) Common Assets fund, and all our bonds are currently in tax-advantages accounts; the above move would change the second part of that statement.
We’re also likely to move some to another institution – a high yield savings account/CDs at a bank, or a money market fund at a different brokerage – to have instantly reachable cash in another institution for purposes of cyber-diversification.
Michael1, could you elaborate a little more what a Common Assets fund is? Is that a Target Date or Asset Manager type fund?