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Comment by koolba | Hacker News Reader

> I’m moving a bunch of cash over once I set it up

US 3-month Treasuries are paying 5.125% and are State tax free so if you're not planning on touching the money in the near term that's an even better position. They're about as liquid as securities get so if you do need to sell them for cash there's not going to be any meaningful hit to their valuation. At most it'll be a couple bucks of transaction fees (if that) which would easily be made up by the additional interest and tax savings.

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Can just put money in SGOV for a minimal fee (0.05%) which invests in T-Bills for you. Slightly lower yield due to timing issues, but close enough and no micromanaging individual treasuries.

Nobody should be moving money around different savings accounts for yield... use products designed to make it easy.

https://www.blackrock.com/us/individual/products/314116/isha...

bond funds have principal risk. If you buy an individual bond and hold the duration, you don't care about rate changes, you just sell and don't buy again.

This fund owns 3 month or less T-Bills. There's zero credit risk and effectively zero duration risk. It's an automated Bond ladder of US T-Bills. Though you can save 0.05% in management fees by laddering them yourself

This is a dumb question, but how does an individual buy those? Through any regular brokerage?

You can buy direct from treasurydirect.gov . The process is a little clumsy, but still something an individual can figure out.

Super easy, you buy direct:

https://www.treasurydirect.gov/

yep - just pop over to fidelity/schwab/etc. and you can buy treasuries, you can also buy directly with treasury direct (but its pretty clunky), you just need to do a little management (e.g. buy treasuries, reinvest when they mature)

example: https://fixedincome.fidelity.com/ftgw/fi/FILanding#tbindivid...

TreasuryDirect's website is pretty horrible, but for what it's worth they actually have the option for automatic reinvestment of T-Bills built in. You can even set the number of reinvestments you want to do, or just have it automatically re-deposit into your bank account when the T-Bill is mature.

I just buy shares of VUSXX from Vanguard. Currently 4.63%. But really, if you have money to invest, you should have a real stock and bond portfolio that's going to beat any savings account.

It comes down to time frame. If you need the money in a short time frame, stocks/bonds are not going to have a high confidence interval in having the same or more value at the time you need it. So, say, saving for a car 3-5 years from now, probably better off putting it in high-yield savings.

But a retirement dream home 20 years from now, throw it in stocks and bonds according to an asset allocation[0] you're comfortable with.

[0] https://investor.vanguard.com/tools-calculators/investor-que...

https://treasurydirect.gov/

Got two weeks on the current rate for the I bonds at 6.89% - https://www.treasurydirect.gov/savings-bonds/i-bonds/

They are also illiquid for 3 months. A savings account is for more liquid savings

I could be wrong, but I thought you could sell T-Bills fairly easily on the secondary market. You might take a bit of a haircut, so it's obviously better to hold onto until maturity, but I think in a pinch you can get most of the money back.

Or you can be SVB and take a lot of a haircut. Putting money you "need in a pinch" in an asset where you could take a haircut to get an extra percent or two of interest is a risk. A risk you can mitigate but still a risk.

SVB's haircut was from LONG TERM bonds. Not T-Bills.

I was about to say; if the bonds were going to mature in less than three months, I doubt that the haircut would have been nearly as substantial; I don't know that it would have been enough to save them but at it wouldn't be as cartoonishly awful as it was.

Short term rates are still rising, and you will lose money if you sell early. There is risk. There is no risk in a US savings account under $250k

Oh, no argument there; it's about risk management in my mind. How often do financial emergencies happen? How often do I need to dip into long term savings? If I do have to dip into long term savings, how much of a haircut am I willing to take?

The answer to these questions are going to be different for each person and I obviously cannot answer them. What I'm trying to say is the money isn't wholly illiquid.

Sure there's some interest rate risk to short term treasuries but the real world risk rounds pretty close to zero. Plus it lessens as it matures.

In the current situation with the 3m at 5.125%, if you were the most unlucky investor in the world and bought it today, and the Fed immediately announced they're raising target rates by %1, and the market actually immediately responded with a commensurate %1 increase in the market rate, and you had to liquidate your position immediately for cash, you'd be down about 0.2375%.

A more realistic 25bps (i.e. .25%) rate hike would be .0605%. And again that's if it happens at exactly the moment after you've acquired the treasury. For every day that passes, the time to maturity shortens even further, so the current price impact to any interest rate change would lessen as well.

If you know you need the cash then yes keep it in a savings account. But if you're unsure, you could a lot worse than buying 3-month T-bills.

US treasuries are marketable securities. The 1-month and 3-month ones the most liquid asset on the planet. Also US treasuries have the unique property of being explicitly 100% guaranteed by the US government so no $250K limit to worry about.

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