Hacker News Reader

Comment by neilv | Hacker News Reader

Fidelity also offers an alternative, to its automated FDIC-insured deposit sweep, of keeping a brokerage/retirement account's cash in SPAXX, which is currently yielding 4.22%. (Both options are mostly transparent to the UX, and happen automatically -- you normally only see the dollar total, and a monthly interest/dividend transactions.)

SPAXX is riskier than FDIC-insured sweep, but I don't know how much riskier.

Rates for the FDIC-insured and SPAXX: https://accountopening.fidelity.com/ftgw/aong/aongapp/intere...

View on HN

Thanks for the tip. I’m at Schwab and it appears they have a rough equivalent called SWVXX. I’ve been considering going more into CD/bond ladders for the rates lately, but it sure would be nice to have the flexibility to pull money out whenever.

I looked into this sort of thing a while back. And, while I have bonds including tax exempt ones, I came to the conclusion that it made sense to keep a 10% or so holding in my brokerage's sweep fund. The difference between that and messing with CDs and high grade bonds just wasn't that much. I series bonds from TreasuryDirect probably do make sense at the moment but you can only invest relatively modest amounts.

Every month I put enough to buy groceries into Series I bonds, with the thought that no matter what they should still be worth that much when they mature. Probably better ways to achieve that, but it is simple.

As a super-safe simple probably don't need to access for a few years but could if I had to investment, I series bonds make a lot of sense to me as part of a portfolio.

> I don't know how much riskier.

Read the prospectus, they are required by law to list all of the known risk(s) in that document.

In general, MMF's are mostly identical to cash, but they do have some quirk(s) that might cause problems, and it should be noted that none of them are FDIC insured, and SIPC insurance(which they will qualify under) is drastically different than FDIC. https://www.sipc.org/for-investors/

One problem with SPAXX (which I realized when doing my state taxes last week) is that the monthly dividends it pays aren't exempt from state income tax. I expected that they would be, since SPAXX invests in federal-level government bonds, but they aren't.

You probably need to buy bonds issued by your state, although that may increase risk

Treasuries are exempt from state taxes, at least when held directly

Reply on news.ycombinator.com