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221 pointscainxinth216 comments

HYSA are great but even better are buying money market funds or tbills.

Money market funds restrictions are they can be bought/sold during market hours and tbills have a specified lock up period, like a month or more. Both can be bought from your broker, it’s intimidating but actually quite simple.

For example buying money market vusxx fund today is giving an equivalent 6.25% apy for high tax earners in California - this is because much of it is tax exempt whereas hysa is not.

This google sheet has all of the current rates and is useful: https://docs.google.com/spreadsheets/d/1v3fn3sZRvkSgqb-RnN2g...

I'm just seeing a bunch of #NAME errors.

Same

Click on the "Instructions" tab at the bottom of the page, you have to create a copy for your personal use. The #NAME errors is caused by the table trying to get data from a tab called "My RateSet" which doesn't exists yet.

TTTXX at BoA/Merrill is another one.

Although, in a shit hits the fan scenario, I would expect to be able to access my FDIC insured account money more reliably than a money market fund.

I don't see any reasons not to put everything into diversified ETFs. Low risk, reliably comparatively high returns unless the world economy or the entire US economy crash (which would ruin the value of almost every asset anyways).

Your emergency fund shouldn’t be in stocks.

What you suggest is comparatively high risk vs tbills and MM funds.

T-bills are literally the safest possible investment bar none.

"T-bills are literally the safest possible investment bar none."

Wouldn't I bonds be safest? They protect against inflation.

You can only buy $10k worth of I-bonds per year. But you're correct that I-bonds are designed to prevent you from losing money.

Most people don't have $10k a year to invest anyways.

You're still taxed on nominal gains on I bonds, so in principle you're still exposed to potential downside up to your tax rate. The way rates are set on I bonds is also unusually subject to tracking error.

“Safe” in this context generally refers only to downside risk. T-bills are safer than I-bonds because T-bills are short-term investments. I-bonds have an early-withdrawal penalty. (I-bonds also have a $10,000 annual purchase limit, but that’s less-relevant.)

You're missing that Tbills have inflationary risk.

You also have TIPS available, but I-bonds are better than TIPS (you can tell because I-bonds are limited per person, TIPS are not).

If you bought (or even buy) I-bonds at the right time, it can be a spectacularly good deal.

T-bills have short duration so their inflationary risk is minimal.

At the lower end, sure. 52 weeks can still be an issue.

No, I am not. Inflation risk is not downside risk.

Inflationary risk is the risk that inflation will undermine an investment's returns through a decline in purchasing power. Downside risk is the risk of loss in value of an investment due to a decline in the price of the security.

Decline in value of an investment because of a decline in the price of the security is not the same as decline in value of the investment because of inflation. Even if the practical consequence is the same.

Inflationary risk matters, and it should not be ignored. But it doesn’t factor into whether an investment is considered “safe,” as that term is typically used in this context.

"Inflation risk is not downside risk."

"But it doesn’t factor into whether an investment is considered “safe,” as that term is typically used in this context."

If you ignore real terms and don't care about actual value (the entire goal of investing), sure. I guess is cash is "safe" too if your ok with losing double digit percentages of your valve over the past 3 years.

This conversation is about the meaning of specific terms, not about whether I care about real investment returns. Of course I care about real returns.

Aren't semantics considered off-topic or not contributing to the conversation at HN?

Part of that diversification is the money markets, no?

If you have a high likelihood of needing the cash in the next 0-24 months, that risk isn't so low.

What low-volatility ETFs strategy would you recommend? let say my goal is to survive inflations and market crash such as 2008 for instance. Personally, I have a very hard time putting all my hard-earned savings on ETFs which can lose a lot of their value overnight.

I wouldn't recommend using stock ETFs for an emergency fund.

SGOV is a reasonable option, it's basically just doing a 1-3 month Treasury ladder for a charge of 0.2%, and slightly less frustrating liquidity.

(So right now you'd get like 5.2% with SGOV, vs 5.4% with treasuries)

BOXX is more tax advantaged.

Frankly I do this as well. I think it depends on your personal financial situation and how often you expect to be withdrawing from your emergency fund. By increasing levels of "emergency", do you use your emergency fund to pay for:

* Gas because you forget to plan properly for road trips? Keep your funds in cash.

* Your vehicle's regular oil change which happens every couple years and you should be able to plan for? Maybe a HYSA

* Your transmission goes out and you need a new car? Diversified ETFs probably fine

Many "emergencies" can in fact be saved for, which leaves only the truly rare and uncommon ones, which usually don't require that you have all of the emergency fund available as cash at a moment's notice. Also because they inherently only happen on a time scale of YEARS, then in the long run you're just self-insuring yourself and it's a bummer if the transmission goes out in a down year and you have to exit a position, but statistically speaking you'll come out ahead.

Aren't money market funds only good today because of the high fed interest rate? If/when that comes back down so will the money market rates.

Higher than 0% yes. Historically rates are still on the low side. And yes they move with the fed rate.

Yes. When they start cutting rates that would be good time to buy Treasury Notes/Bonds or longer term CDs so you can lock in the interest rate for a period of time.

Expected rate cuts are generally already priced into longer-term bond prices, so trying to get in just before rates go down is basically exactly as hard as market timing.

And so will HYSA rates.

It's my understanding that high yield savings accounts are still the best place for an emergency fund. A tbill might net you more money, but if you're still 8 months from maturity, how does that help you at all?

Sell the bill? Market is very liquid.

If you have to wait 2-3 days to get money your money its not an emergency fund.

So putting my money into a HYSA isn't a good place for an emergency fund? It will take 2-3 days to transfer (without fees).

I've never understood this mentality. I've got a credit card with nearly 6 months of expenses as a limit, most of it not used because I pay it off month to month.

I'd be more worried about the tax implications of selling ETFs and such than the 2-3 days of wait to transfer.

Maybe I lack imagination, but I can't think of anything that I'd need my entire emergency fund immediately. Throw the emergency cost onto a credit card, and transfer the money from the emergency fund to pay off the bill. I guess that doesn't work in some other countries where credit cards aren't as prolific as the US.

> It will take 2-3 days to transfer (without fees).

This depends on the bank. If you have a checking account with the same bank, the funds can be available right away. The standard withdrawal frequency limits still apply.

Withdrawal limits on savings accounts were suspended for COVID, and at least in my experience, hasn't come back - but ymmv

I think this is one of those places where mass-market financial advice is aimed at people who are bad with money and might not be able to float a month of expenses on credit.

I'm not sure I've ever had a nontrivial expense in the US that simultaneously couldn't be paid on credit and wasn't known for weeks in advance either. I would expect any no-credit charge in excess of about a dinner bill to be announced at least a week in advance, implicitly through an invoicing process at the very least, and I would frankly have reservations about whether any vendor who didn't have a way to handle this was really a legitimate business.

Even if that's not an option, your broker is probably fine with floating you a sum of cash matching your recent MMF sale amount as overdraft or margin at a price of somewhere between "we've already factored it into our fees as a cost of doing business" and <0.05%/day of the loan amount anyway, because overnight loan alchemy is a well-understood problem and the bread and butter of retail banking.

For what it's worth, Wealthfront's HYSA offers free same-day transfers, at least to major banks (they just need to support RTP transfers, which many do). But I agree with your point that an emergency fund is fine as long as you can access it within a few days.

Want emergencies can you think of which would require such fast access to cash? For example if you need to replace a big ticket item (car, house...) which has been destroyed it will take longer than that to find a replacement. Most short term emergencies requiring something like rent car, rent living space, flying somewhere can be handled by putting the cost on a credit card.

I don't think buying a car or house qualifies as an emergency. Having access to one might be, but your emergency fund generally shouldn't be "buy a spare house" large - that's what insurance is for.

HYSA are also FDIC insured which is no joke. Money market funds are vulnerable to "bank runs" the same way a bank is. There have been times, like in 2008, where you were not able to actually pull all your money out. https://www.investopedia.com/articles/economics/09/money-mar...

I guess technically there is always a risk of 100% loss but in the case of the HYSA that would happen if the United States dissolves. With a money market all you need is a bank run.

Yep. I was unfortunate enough to get stuck in a money market fund that “broke the buck” during the financial crisis. It took over a year to liquidate, and I think I still lost around 2% of the principal.

Definitely not a place to stick money you absolutely need to be able to pull out soon.

I use SPAXX at Fidelity. It is mostly government paper, and while not explicitly FDIC insured, I am confident of it's solvency in almost all situations due to new money market regs (that should prevent the most common MMF products from "breaking the buck").

If you are incredibly conservative, you could keep enough cash for 30-90 days in an FDIC deposit account, with the rest in money market funds that will take time to resolve solvency issues.

https://www.sec.gov/news/statement/crenshaw-statement-adopti...

https://institutional.fidelity.com/app/proxy/content?literat...

https://fundresearch.fidelity.com/mutual-funds/summary/31617...

Post-GFC, that's not a real risk for retail MMFs. They're de facto narrow banks now.

Vanguard money-market funds can be exited at the close of business any day: bonds may comprise the underlying assets, but you don't actually have to wait for maturity. The main risk with these funds is that you don't get FDIC insurance. Historically this has not been a problem (for Vanguard), but past results etc.

ETA: in 2008 there was an instance where one fund "broke the buck", but the Fed stepped in and backstopped it.

It depends on what your emergency fund is for.

Most people posting here have enough unused credit card "headroom" to get them through a month; so the main thing for an emergency fund is that you can get the cash out of it with low or no cost within that month.

Some use bond funds to do it, some use bond or CD "ladders" - buy a bond expiring in 12 months that is 1/12 your emergency fund each month, and in a year you'll have a rolling "self built fund" that you can get 1/12 of every month with no penalties.

Bogleheads forum has tons of discussion around these kinds of things.

Credit cards are the best place for an emergency fund. You still all your cash in US-Treasuries, gaining 5+ % interest with no federal tax, and as secure as anything in the world. Then if an emergency comes up, use your credit cards, and you have 30 days to pull money out and pay for it, without losing any of your interest.

Unless your emergency comes during an economic downturn or credit crunch, or the issuer gets wind that you've lost your job, or really anything that lets them change the terms underneath you. And they'e inevitably reserved the right to do so.

It's rare to find a revolving credit line that you can actually know will be there when an emergency comes -- canceled cards, reduced limits, suddenly prohibited cash advances, exploitative rate changes, etc are all things that do happen during tighter economic times and just haven't been widespread in the last decade or so because money was cheap. Be careful not to be conditioned strictly on those freewheeling days that are now ending!

You can live the way you describe, and many of us have gone through periods of needing to rationalize it and do so, but with a clear head it's not something I would characterize as "the best blace for an emergency fund" because you just can't really trust it.

I think you’re technically right, but having been a student been unemployed etc. I’ve never seen my credit card limits change negatively

> with no federal tax

I thought it was only federal tax, not no federal tax?

If you buy T-bills through a brokerage, you can easily resell them on the secondary market using the same brokerage. The market price climbs as maturity approaches, so you typically capture yield in proportion to how long you held the T-bill.

You can get the best of both worlds with short term tbill etfs; liquidity and tax advantages, and the raw rate.

> but even better

This is highly dependent on what the intended purpose of the money is.

There comes a point where you are optimizing finances beyond what is necessary, in my opinion.

Have a decent plan for your cash so it's earning good interest, then go out and focus your time on the rest of life. Automate as much as possible. Don't worry about a few $10s of extra interest!

There are times when you need to have a ton of money in cash or near-cash (e.g. saving for a down payment for a first home), and then it makes a lot of sense to optimize.

For a normal emergency savings fund, it does not make sense (unless you legitimately enjoy doing it!)

If your bank account is also at your broker (ex. Schwab, Fidelity) then money market funds are actually more convenient than a HYSA. My money market fund money is available the day after I sell and there is no waiting period to transfer between my accounts at Schwab. Also I can use the money market fund to underwrite cash secured puts or for other investment activities.

Transferring between institutions I have had take 3-5 days before funds clear. Wires can be faster but come with fees and a whole bunch of questions to make sure you aren’t a scammer trying to empty an account.

So, it is good to know about all your options. I keep my 6month emergency fund in SNOXX money market fund. With Fidelity you can set a sweep to go into their short term treasury fund and not even have to sell anything to transfer the money out.

I did some cursory reading on money market funds (MMFs) and I don't quite get the advantage if rates are roughly the same?

For instance, if there is a high-yield savings account (HYSA) option that gives 5.3% interest and a MMF that gives 5.4% (with a 0.1% expense ratio), would I not receive the same amount of interest in practice?

Not trying to disagree with you or anything, just making sure I understand the vehicle.

Usually, taxation differences. Also, MMF yields are generally quoted net of expense ratios already, you don't subtract them out a second time.

5.3% https://www.viobank.com/cornerstone-money-market-savings

From a practical standpoint they’re the same - it’s the at the margin (MMF is likely to “reset” more quickly than a high yield savings account, you’re also risking it “breaking the buck” in times of extreme stress, + a lot of the income in a MMF you won’t pay state tax on, on the other hand an HYSA is FDIC insured)

> tbills have a specified lock up period, like a month or more

What is this referring to? I've bought and sold T-Bills in the same week, and have never encountered anything about a lockup.

I think they may be confusing it with savings bonds

You’re right you can but/sell on the secondary markets easily. If you buy it directly on treasurydirect.gov, then you might have a lockup depending on the time interval you pick.

And there is a way to pay no taxes on the growth. You need to have

1) a tax advantaged account and 2) a regular brokerage with 2x your savings

Technically tax is deferred or literally not paid if tax advantaged account is a Roth.

https://www.bogleheads.org/wiki/Placing_cash_needs_in_a_tax-...

For the Canadians in the audience:

* https://www.highinterestsavings.ca/chart/

* https://www.ratehub.ca/savings-accounts/accounts/high-intere...

There are also 'HISA ETFs' like CASH.TO:

* https://moneyguynow.com/best-canadian-high-interest-savings-...

However note:

> The biggest difference between HISA mutual funds and HISA ETFs is that ETFs are not CDIC-insured. This occurs because HISA mutual funds allow investors to be registered with the deposit institution as individual depositors, whereas a HISA ETF bundles the sums provided by all investors and invests the proceeds in the ETF’s name. However, HISA ETFs mostly invest with systemically important financial institutions (SIFIs), which are subject to greater regulatory requirements than non-systemically important ones. In Canada, we have three types of SIFIs.

* https://www.pwlcapital.com/high-interest-savings-account-etf...

A Canadian Tire TFSA ??? WTF? lol

You can get a bank account at the grocer, PC Financial at Loblaws, so why not.

* https://en.wikipedia.org/wiki/President%27s_Choice_Financial

> There are also 'HISA ETFs' like CASH.TO

FYI, I tried to buy this in my TD Direct Investing Account and it wouldn’t let me. I called in and found out TD had blocked trading for any clients in CASH and there was another similar ETF, the #1 and #2 most liquid high interest savings ETFs around. I was told that to trade in these I had to open up a managed account (and pay fees to TD, negating part of the benefit of these ETFs).

I thought this seemed highly unethical and inappropriate and so I contacted a variety of regulators (even trying to find which regulator had oversight of this was a major pain!) only to be told that there is no requirement for investing platforms to be neutral conduits to the markets and that they have full authority to block trading to help their other competing businesses.

Canada: where corrupt self dealing by the oligopolies is the name of the game.

/endrant

Not to overcomplicate things, but anyone planning to save money for >12 months should be using the BOXX ETF (https://etfsite.alphaarchitect.com/boxx/) to convert the interest income into a long-term capital gain. Even if you end up cashing out before the 12 months, you are still going to pay the same taxes as with a savings account, so there is truly no downside.

What's the rate of return that way? The 5% coming from the bank is pretty nice and is easily understood. I scrolled to the end of that BOXX page and even watched the video, and I still don't understand it.

The Bloomberg article states 5.07% after fees.

Which is before taxes. Just like the 5% HYSA is before taxes. In the case of BOXX this is going to be 0-20% (depending on your income) whereas the HYSA tax will be 10-37% (depending on your income).

If you are subject to state or other local income taxes, then the HYSA is subject to those also, whereas BOXX would not be.

Great point, I missed that.

The short answer is that if you could answer that question in advance to a high accuracy, you could make billions as bond trader. In theory, you get paid similarly to regularly going out into the bond market and buying US government bonds that expire in the next few months, but with a potential tax savings twist. (I am a random Internet dude, not a tax lawyer.)

The returns supposedly track the short end of the yield curve on US Treasuries. That would make sense, as theoretically, the net premium of a box spread is equal to the net present value of the payout (under the no arbitrage assumption). That net present value should be very close to the yield on a zero-risk asset over the same time period. They're using 1 to 3 month options, so in theory, they get yield close to short-term US Treasuries (the market prices a near-zero probability of the US defaulting on its bonds in the next few months).

I haven't looked into the tracking error between SPY box spreads and the short end of the US yield curve. https://en.wikipedia.org/wiki/Box_spread#cite_note-2 says the yield averages about 0.35% above holding equivalent maturity US Treasuries.

Though, it sounds like they're using box spreads composed of American options, so I wonder how they deal with early exercise risk. You only get bond-like performance from a box spread if you don't have early-exercise risk. The further out of the money they place their strikes in the box spread to avoid early exercise risk, the lower the liquidity they get, and higher trading costs.

The tax trick is that they also enter into a delta-neutral trade on a high-value single stock. (They don't use and index for this part because they want the difference between the winning and losing parts of this trade to be as large as possible, so they want volatility in the underlying asset.) At certain points, they realize the losses on the losing half of that trade (reducing tax liability), and perform a tax-free in-kind exchange of units (shares) in their ETF for the winning half of that trade. Of course, they don't know in advance which half will win and which will lose, but it doesn't matter. The brokerage buying their ETF in order to make the tax-free exchange bumps up the price of the ETF, very close to the value of the winning leg of the tax-saving trade.

Note the several caveats above (and probably some I missed) in comparing with US Treasuries yield.

This is not investment or tax advice.

For a detailed report on the mechanics behind the BOXX ETF, Bloomberg just published this article: https://archive.is/8kq0G It is not a perfect solution for everyone. You do need to take into account your income tax rate and your capital gains tax rate.

The universe has come full circle.

For those of us who cannot resolve archive link.

Article https://www.bloomberg.com/news/articles/2024-02-22/this-exch...

Matt Levine's https://www.bloomberg.com/opinion/articles/2024-02-22/put-th...

Does your DNS block archive.is?

i was going to ask this. you can fix it with a static hosts file entry, or dnsmasq config update on your router. See https://www.reddit.com/r/DataHoarder/s/gfH9MFAxcp for more info

Cloudflare has issues with archive.is: https://news.ycombinator.com/item?id=28495204

the opposite is the case. from your link: "Archive.is’s owner is intentionally blocking 1.1.1.1 users"

The archive owner wants takedown requests to be forced to be cross-border, so he wants to know where the request is coming from so he can serve from a server in a different country.

Cloudflare blocks the extension to DNS that allows that. If you don't care, you can set your DNS to bypass Cloudflare for those domains only.

I’ve known this for a while now but it never ceases to amaze me. This must be up there with “no copyright intended” in terms of misguided compliance strategies.

It's always appeared to be a matter of perspective, to me.

That being said, by "Cloudflare has issues with archive.is" I very literally meant that they have issues with the DNS records served to them by Archive.is. (i.e. They do not support EDNS.)

I have had issues in the past. The problem with posting only the archive link is it provides no stable reference link to the actual article.

Can someone explain it a bit better? I am not quite sure why in addition to spx this fund buys options on Bookings? Also, where is the risk in this strategy, besides counter parties risk.

The Bookings options are explained in the Bloomberg article. They use offsetting bets so that one generates a large gain and the other generates a large loss (either way the stock moves). Then the gain is offloaded through an in-kind redemption (not a taxable event for an ETF) and the loss is kept on the books to offset any other taxable gains in the fund. I guess you could worry what happens if the stock doesn't move, but since they get to pick the timing, that seems unlikely to be an issue in practice.

I can think of at least a few risks that one would not have with T-bills besides counterparty risk. You have management risk: they have said what their strategy is and what they will do, but what if they don't? I would also ask who is on the other side of these trades and how big that market is or can be. Alpha Architect's own explainer implies that box spreads can also be used to borrow money and that this might be cheaper for the borrowers than margin loans, which makes some sense, but it seems like a pretty esoteric instrument to use for that. Most of their argument is an appeal to the efficiency of markets, which might be true until it isn't. Finally, there's regulatory risk. They think this works under the current rules, but a regulator might disagree with that. If someone does not like it a sufficient amount the rules could be changed, just like there's already an exception for "original issue discount" that makes zero-coupon bond income like Treasuries count as interest income, not capital gains, even though no interest payments are ever made.

I'm not in finance, though, I'm just some guy, so take all of the above with a grain of salt.

I keep thinking about parking cash in box spreads on SPX directly -- pay net $98,000 in option premium now and earn $100,000 in a few months, effectively lending to the market at the rate implied by highly liquid option prices.

The section 1256 tax treatment is especially cool not so much because of the 60/40 taxation but because if you have several consecutive years of 60/40 gains you can edit your past year's income by incurring a current year loss and having a carryback loss.

I've borrowed money using SPX box spreads. You can get data on the recent trades and build a box spread at https://www.boxtrades.com/

There's a long thread on the Bogleheads forums about Box Spreads here: https://www.bogleheads.org/forum/viewtopic.php?t=344667

I only just learned about this in Matt Levine's newsletter [1], and assuming they don't get regulated out of existence, it seems almost too good to be true. The effective tax-discounted rate of return on a 5.6% interest-bearing account is really only 3.5% because it's ordinary income (paying taxes of .37 * 5.6). But as long-term gains it becomes 4.3% (paying taxes of .238 * 5.6). And while it is compounding you pay no taxes at all.

[1] https://www.bloomberg.com/opinion/articles/2024-02-22/put-th...

This is hilarious. It's not as risk-free as an FDIC insured HYSA account though. I don't care what the ETF tracks - being an ETF that tracks something comes with some additional risk.

Yes to that. And this may be my own risk-averseness, but I don't have complete confidence in all these derivative instruments anyway. I don't have time or sufficient interest to look into the construction of ETFs and how their holdings are managed, so I will opt for a mixture of stock-picking, index funds, bonds, ETFs, and just plain old savings accounts at banks I can see on the cold hard cement of the city. I try to be diversified in which financial instruments I choose. It seems most people have blind faith that X or Y instrument are constructed, managed and regulated in a reliable and trustworthy way. They entrust their money into weird mechanisms where they believe they own AAPL stock but actually it's just a derivative slice on precarious terms (fractional shares or other slimey broker-made nonsense).

You can certainly over-engineer your solution, but just watch the world and see how "you would have fared" in situations that affect others.

For example, everything goes to shit if Rogers goes down so hard that no electronic payments of anything works; so maybe some percentage of an emergency fund should be literal cash on hand.

> there is truly no downside

What about FDIC?

For someone like myself who is only sophisticated enough to fund an IRA, CD, or savings account, how does one start out with BOXX ETF?

Open a brokerage account, and buy it just like a stock. If you have an IRA you likely already have an account at a brokerage.

Go to https://www.bogleheads.org and read until you start to feel the ability to answer questions.

While it may be tempting to pick whatever is on top of the list, you should make your decision after factoring in bank locations, reputation, customer service, online tools, ATMs, fees etc. rather than just go for the extra 0.04% in interest.

Marcus recently locked my account for unspecified reasons and it took a couple weeks to unlock simply because they weren’t allowed to send a verification code to my phone since it was on a prepaid plan (?!?). Quite nerve-wracking to have all of your “safety” funds inaccessible and stuck behind fairly helpless front line agents that offer no escalation path.

> for unspecified reasons

> my phone since it was on a prepaid plan

That is likely your reason (burner phone). Did they ask you for hard evidence of your identity before unlocking your account?

My family has three phone lines and 2 are on "prepaid" Verizon phone lines, and one is on a regular AT&T line. The fact the prepaid lines are considered inferior is ridiculous and causes stupid problems.

It's a regular Verizon line but because it's prepaid some websites don't like it.

My prepaid phone isn't a burner phone. Not everyone uses their phone enough to like getting screwed on post paid plans.

I'm using a standard T-Mobile prepaid plan with my name on it, auto-paid monthly using a CC with my name on it. The silly part is that this same phone is what they: a) registered my account with a few years ago, b) send their 2FA codes to for normal account login. But it is unacceptable to their support system, I guess.

The "unspecified reason" turned out to be me trying to transfer some money to a business checking acct that I have. That's against their ToS and could have probably been a quick reversal (when I finally got through to the right person it took about 5 minutes), but the phone verification thing gummed stuff up for a few weeks.

Looking up your cell phone number in a several-months-out-of-date database is not the KYC process for bank accounts in the US.

Theres a much more comprehensive list here: https://www.doctorofcredit.com/high-interest-savings-to-get/

Also, I believe doctor of credit is not funded by affiliate links like most sites that list this stuff are (including the GP link, I believe)

If you can handle not being FDIC insured, check out Ford Interest Advantage. This is the money that Ford uses to fund auto loans. In practice, it works like a checking account with ACH deposits/withdrawals.

5.5%

https://www.ford.com/finance/investor-center/ford-interest-a...

Top of market interest rates are a signal that the bank needs capital (yours).

Be careful with more than $250k in any one regional bank right now.

This seems like a fair assessment. Especially for all these tiny banks that are absolutely not too big to fail.

That's a good rule of thumb for anyone (but if you have a quarter million in cash equivalents you're probably a business or super-wealthy).

I wonder if anyone has done a correlation study with bank failures vs CD/HYSA rates. The ones I know of that "everyone" flowed into have survived.

Kaupthing [1] was offering very attractive interest rates in 2007.

[1] https://en.wikipedia.org/wiki/Kaupthing_Bank

I've been using depositaccounts for years to check rates for savings and CDs https://www.depositaccounts.com/

If you're a US citizen, don't sleep on I-bonds for your emergency fund.

The current rate for I-bonds is 5.27%. It adjusts up or down automatically with inflation. The only catch is you can't put in more than $10k per calendar year, and if you withdraw before 5 years you give up 3 months of interest. Much, much better than a CD.

https://treasurydirect.gov/savings-bonds/i-bonds/i-bonds-int...

afaik it includes more than citizens such as Permanent Residents (Green card).

but i cant find a definitive place that says who's eligible

Optimizing one's savings rates always seemed to me to be high effort, low reward. Like coupon clipping or credit card churning. You either live with convenience and low returns or you get a slightly better return by making "opening new accounts" your entire life.

I already have a credit union account for checking, multiple brokerages, an HSA account, a 401(k) account (different from my brokerages), a Roth IRA account, a 529 account, an account at TreasuryDirect, and probably others I'm not thinking of. Now if I want the best yield savings, I need to open yet another bank account? If I want the best CD rates, I'll need further another account? Yuck!

And when I want to move funds from one asset class to another, it's a ACH transfer or some other needlessly multi-day transfer from one institution to another. It's exhausting.

The value of optimizing here is really easy to estimate.

You know how big your emergency fund is, your current interest rate, and the interest rate you could get.

If you have $5000 in BOA (0.01% APY), switching to one of the listed HYSA (~5% APY) nets you ~$250 a year.

Is the convenience worth the opportunity cost? That's up to you to decide.

There is some missing nuance if you just look at the list.

Orion FCU is listed at 0.01%, but you can get 6% (on the first $10K) if you open a premium checking acct.

Although you have to deposit at least $500/month and use the atm card as much.

Not exactly what people with large amounts outside their network are looking for, but still.

These sorts of accounts are just not worth the hassle. The interest rate seems spectacular but it's contingent on satisfying conditions that are easy to miss each month. Plus, the fallback rate is punishingly low. When looking at the effort required compared to a "normal" savings account, it's a terrible deal.

This is cool! I'd love to also see the leaders' rates over time, rather than a point-in-time snapshot. Switching banks is relatively time consuming. I'd prefer to choose a bank with the highest rate over the last 1yr, 2yr, 3yr+ periods.

HYSA may not be the absolute best thing, but they're simple enough for dumb laymen like me.

At some point I might transfer some, or all, funds out of my HYSA but for now it's good enough to park things in while I do some more research on what options I have.

The list is missing American Express HYSA. It's at 4.35% APY.

Using a convenient bank is more important than squeezing a few more basis points in yield.

Great idea. Would love to have the same for the UK!

https://bankaccountsavings.co.uk/

Where is the pretty chart and table showing me the interest rates offered?

My accountant directed me to https://moneyfactscompare.co.uk/savings-accounts/ which I've used quite a bit over the years. Haven't compared it to other comparison sites, but it seems to be pretty good for most basic financial stuff like mortgages too.

Here you go: https://www.moneysavingexpert.com/savings/savings-accounts-b...

Raisin: really easy mobile app: https://www.raisin.co.uk/

Flagstone: 10k minimum, old-school but well-trusted, great rates for higher deposits: https://www.flagstoneim.com/

E.g. on flagstone you can get over 5% instant access if you're prepared to put £10k or more away.

Monzo gives me 4.6% instant-access and I manage it from the same app I manage my current account in. My savings are fairly modest so it really doesn't seem worth the bother to shop around for an extra ~0.4%.

Trading212 is giving 5% interest for uninvested cash. I started using trading212 and it’s been solid so far.

I really miss how Vanguard used to allow writing checks from its brokerage account;[1] it combined the best of savings and checking accounts (complete with a six transactions-per-month limit, back when that was a thing). Is there something like it elsewhere? I have accounts at Vanguard and Schwab; I think I've heard that there is something like it at Fidelity but don't know anything about it.

[1] I am not talking about <https://personal.vanguard.com/us/whatweoffer/accountservices...>

VIO Bank is classified wrong and should be at the top of the list.

https://www.viobank.com/cornerstone-money-market-savings

I opened a Sofi account when interest rates started rising after having only a Truist account paying 10 bps. Sofi paid $300 bonus and that was what actually got me to actually make the switch (their average cac must be over $400!). Its so interesting how the switching costs are very low but still feel high enough that it is tough to actually open new accounts even when you can easily earn $500 extra per year per $10k in balance. I wonder if fedNow adoption will make it more common to bank hop without the delays of the ach network

Figuring out how to shit up outgoing transfers is a core competency of any financial institution, so I wouldn't count on fedNow to save us without additional standards forcing good behavior.

For folks who don't know: In these HYSA, every time the interest pays (monthly), it triggers a taxable event. This might be important for you to consider. If you invest longer term in bonds and good securities instead, you could time your tax better (i.e.: sell when your income tax is lower; retirement).

In the US, you can get "lifetime/permanent insurance," which has a cash component that can be invested in bonds and enjoyed on much better tax terms (eating less into your bond's return).

This is not financial advice.

There are many tax-advantaged accounts and methods that would likely come in before "perm life insurance" unless you're an insurance salesman ;)

So I hear! Which ones would you recommend?

This is really cool! Any reason Apple savings isn’t included?

Apple savings is a frontend for Marcus by Goldman Sachs, which is listed there

Marcus and Apple Savings aren't always in sync, they've reached 4.5% at much different paces

For the Dominicans in the audience: I made a tool like this one one for our market.

http://crecepesos.com

This warrant's a little caution, there may well be some negative selection bias here. The banks most likely to go bust are the ones most desperate for cash so they offer the highest interest rates... If it's FDIC insured you are good up to $250k but I don't know exactly how much inconvenience is associated with your bank going bust and potentially collecting FDIC insurance.

This might not be the norm, but when SVB went bust FDIC insured money was paid out in a matter of days.

I’ve been using https://apy.fyi/ since it’s Show HN (https://news.ycombinator.com/item?id=33058601). I haven’t checked it in a while but there are significantly less entries on it now compared to this one

6 month treasuries through XHLF... 3bps management fee, yielding above 5% can be traded in any brokerage account: https://bondbloxxetf.com/bondbloxx-bloomberg-six-month-targe...

In the UK banks will create a new high interest savings account and then after a few years quietly reduce the interest rate and launch a new one. So you waste lots of time applying to open new savings accounts every few years. Not sure its worth the hassle unless you're loaded enough that the interest will offset the wasted time.

Can someone clarify for me what the other pros and cons would be for these different banks aside from interest rate? Should I perhaps not go for an extra 0.05 - 0.15% if there are unusual rules around withdrawals, or are some known to have shady data privacy practices?

There's a an etf USFR that tracks the treasury notes all these companies buy anyways. Buying it you can use your favorite brokerage and sell whenever you want, without having to deal with another bank or the interest rate at your bank becoming less competitive.

There are some Credit Unions that are offering even higher rates, I saw for a time 6 or 7%, but they sometimes had limitations for either joining the CU or upper limits on how much each account could have (though you could spread money across multiple CDs)

VUSXX - 5.29%

ETF?

Money market fund.

Treasury Money Market Fund seeks to provide current income while maintaining liquidity and a stable share price of $1 per share.

Tagging into the sibling that said it's a money market, Vanguard ends money market funds in "XX" as a nice rule of thumb

And, crucially, last year 80% of VUSXX's interest was state tax exempt.

Unless you specifically need the features of a savings account (eg ACH), money market funds are the way to go.

TTTXX is 100% exempt from state and local income taxes, as far as I know.

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?

Technically not FDIC insured.

I personally like CDs since the rate is locked and everyday someone is calling for a rate cut.

Agreed. 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.

The 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.

Money 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.

Well, some people pay <4% investment income tax at the state/local level too.

As long as you don’t put more than the fdic insured amount in those highest ones

I'm pretty surprised to see notable differences between Wealthfront, Betterment and SoFi. I'd assume these types of services would be in a dead heat in terms of the interest offered.

4.97% in Fidelity for money just sitting in the account. No need to buy, sell, lock, transfer or do anything. Not FDIC insured but I somehow trust Fidelity not going under.

Interesting that Evergreen Bank Group went straight from 0.35% to 5% in a little over a month. Every other bank had gradual rate increases. Anybody have any info on this?

I noticed that too, and significantly behind the market. It makes me wonder if they would be behind the market when rates fall too.

Bank of America still paying a cool 0.01% interest, incredible.

Because BoA sees no benefit from giving a competitive interest rate to people with little money. Anyone with decent savings will have a Merrill account (owned by Bank of America), where they can get an FDIC insured savings rate of 4.92% in “Preferred Deposit”, or 5.2% in TTTXX, which are US treasuries, so also exempt from state and local income taxes.

https://olui2.fs.ml.com/Publish/Content/application/pdf/GWMO...

Preferred Deposit has a minimum balance of $100k: https://www.ml.com/solutions/preferred-deposit.html

(which might be fine, but most HYSAs don't have that.)

It’s minimum $100k to open it, but you can draw down all the way to $1 after that and increase or decrease any time you want. I presume if you withdraw all the money, then it closes and you need $100k to open it again, but I just leave mine at a few dollars.

But that gets back to my point that BoA does not want to pay interest to people with less than $100k cash.

$100k is a decent approximation of "just about enough for BofA to consider caring about your retaining your custom", yeah.

I’m sure they’ll eventually fix the sign mistake there…

In Switzerland we can't hope for anything more than 1%.

I think it's the same in most of Europe.

Switzerland has lower inflation, a lower reference rate (1.75%) and an appreciating currency. Over the past year, you would have still been better off putting your CHF in a 1% account than to transfer to USD, put in a 5.5% account and transfer back, even ignoring fees.

There are also a couple of places offering around 1.5% fwiw.

Impressive rates. I have been using a ultra-short bond ETF (VUSB or similar) for storing excess cash rather than a savings account. Maybe I should reconsider.

It should be noted this is specific to the United States.

Missing Apple Card Savings, which yes is currently the same as Marcus by Goldman Sachs but hasn't always been

Best in Sweden seem to be SBAB 4.25% (3 or 6 months lock). Or, anything better?

In the Netherlands best we can get is 2.85% or so.

Not listed: 5.1% on USDC at Coinbase

Does this APY not apply to USDC set to buy in limit orders?

Id like this same thing but for cds!

Most CD brokers will let you see all the CDs on offer and give you sorting and searching abilities. I buy CDs through Vanguard (they're my broker) and it's easy to get a table of CDs which match my search terms of duration, amount, and minimum return.

https://www.bankrate.com/banking/cds/cd-rates/

Read the fine print here... this is definitely not an exhaustive list

Neither is OP's list. There are thousands of banks in the world.

https://fixedincome.fidelity.com/ftgw/fi/FILanding?bar=p

Who created this?

Eh, please include banks that don’t offer an affiliate link.

I use VIO, which offers 5.3% on all balances.

I hovered over a few links and they didn't seem to be affiliate links.

Don't keep cash or cash-based assets. Only what you need for personal liquidity and emergencies. The govt will steal your money through inflation. If you don't wanna mess with or don't have enough money saved to buy real estate, buy an index ETF or a real estate fund.

It's good to keep at least 1 year of salary in savings.

Investing it in other assets can be problematic when the global macro environment falters because you won't be the only one trying to liquidate!

It's not hard to imagine a scenario where the stock market and risk assets in general crash, and then you get laid off.

A 90/10 stocks/bonds portfolio will outperform a 100/0 portfolio over the long term.

During a market downturn money flees to safety, bonds appreciate, stocks fall, and when you rebalance back to 90/10 you'll effectively be buying stocks at a discount.

The 100/0 guy has no such option and misses out entirely.

> The 100/0 guy has no such option and misses out entirely.

Not true. The 100/0 guy can buy stocks during a downturn just as well as the 90/10 guy. If we're really talking long term, that is, if neither person is selling, and if both are investing the same amounts regularly, then on average the 100/0 portfolio will outperform the 90/10 portfolio. Looking at history, the reason to go with anything besides 100/0 over the long term has to do with risk tolerance, not performance.

https://investor.vanguard.com/investor-resources-education/e...

Most people can't do 100/0 because they're structurally overweighted on a single weird illiquid asset that pays out more distributions than the rest of their assets combined.

There are many banks which give you far better rates. [0] has 47% for example

Clearly it's not talking about Lira then, but it doesn't mention currency or country

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And not one intelligent person is asking, how is the bank giving me a return for seemingly nothing?

HYSA investments are wildly irresponsible and risky. They degrade the financial system and support horrible practices and institutions.

I challenge anyone to find ONE financial instution which discloses what HYSA is invested in.

These aren't even good investments. VTI is up 25% y/y. With these "high interest" investments below the prime rate, you're literally guaranteed to lose money, all while taking a massive and unncessary risk.

Where's the risk. It's FDIC insured, no?

Since when are High Yield Savings Accounts investments? They're FDIC insured bank accounts and inherently (essentially!) zero risk.

The point is they're not zero risk. You are safer investing your money into an index fund ETF.

And if you consider them safe, then accept my challenge to find a bank which discloses what HYSA is invested in.

Or better yet, do the research yourself and prepare to be amazed and disgusted to see how the proverbial sausage is made.

And to the person clamoring on about FDIC insurance, I also invite to look up how many deposits it actually covers, while reiterating that they still have not yet found a single bank which discloses what HYSA investments are in.

The Wealthfront reply is on to something, by finding an article which alludes to mysterious "banks" your money is lent to. Do more research about those "banks" are, though. It's not at all what you think.

Lol what? A HYSA is lower risk than an index fund because it's FDIC insured.

Challenge accepted. Wealthfront:

https://www.wealthfront.com/blog/cash-account-apy/

https://www.wealthfront.com/blog/wealthfront-isnt-a-bank/ (See section #2)

> Because we broker our deposits, we’re able to offer you access to wholesale interest rates — the interest rates that banks offer to broker-dealers like Wealthfront for deposits, which can be higher than the rates banks offer individual customers. When our partner banks pay a high rate on your deposits, we pass along a high rate to you.

TLDR: Wealthfront gives your money to other banks who pay Wealthfront interest which is passed on to you. All FDIC insured.

How many times has the stock market seen major losses over the past 90 years?

How many times have FDIC-insured accounts seen major losses over the past 90 years?

HYSA has always been the place for emergency funds for me. Very different from an investment. Do people use HYSAs for investing?

They lend your money out to other people paying a higher interest. In fact, they lend your money out several times.

Even if your bank pays 0% interest, they are lending your money out many times over to people who pay the bank interest.

Reply to the poster below me, who was censored for some reason: AFAIK the money that people have in their bank accounts are used as reserves for all loans the banks give. I don't know of any separation of funds.

> These aren't even good investments. VTI is up 25% y/y.

It's easy to say this today, but a year ago today the majority of "experts" were saying we were heading for a recession (which never materialized). It was anyone's guess whether VTI would have been higher or lower y/y.

Haha, you do you, man. And good luck to you.

The bank gets 5.4% from the federal government.[1] HYSA rates closely track the federal funds rate, because the banks are essentially passing on the fed funds rate to consumers (minus a cut for themselves). The bank can also get 5.3% from short term treasuries right now. So the answer is basically that the federal reserve is giving the return.

1. https://www.federalreserve.gov/monetarypolicy/reserve-balanc...

This is hilarious. You actually think the Fed is paying everyone's HYSA yields?

So, let me get this straight, you actually believe "Customers Bank", for example, which is currently offering 5.32%, is going through all the trouble of investing your money to get a 0.08% return from the same?

Or is it possible these HYSA institutions are investing your money into other, more risky investments, like foreign banks, for example?

Again, I have to wonder and ask, why has no intelligent person done the due dilligence to find out what their money is invested in for such a generous return, as they should for any other financial vehicle?

Literally not one person in this entire post can provide evidence of what their bank invests HYSA funds in. This is how financially illiterate we are.

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