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Thread: Where to park short term savings

  1. #1
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    Where to park short term savings

    Now that the Feds have hiked interest rates, where is the best place for short term savings? I get 0% at my bank and have some CDs that earn .30 - .70%. I purchased my first short term treasury bond with a 2% yield to maturity. I would like to start laddering these treasury bonds so one or two come due a month. I'm not sure how much to keep in savings at 0%.

    What does everyone here do?

  2. #2
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    1 Year Treasury Securities were yielding 2.08% as of 5/6/22

    Bank 12 month CDs at the same time topped out in the 1.7% - 1.75% range. A handful of online banks are more competitive with interest rates.

    Either of the above can fit into a ladder of maturities.

    The number of times per year a series would turnover is a matter of personal choice.

    Molly you mentioned one or two per month (turnover of 12x to 24x per year).

    At "the other extreme" would be turnover of 3x per year... for example maturities in February, June, and October. Compared to 24x per year, positions likely would be larger and record-keeping would be simpler. Say you want to compute total assets every Sunday... running the numbers with 3 CDs or Treasuries would be simpler than with 24.

    Personally I would not be interested in savings at zero when 0.6% is readily available. The bank where I get 0.6% for online savings frequently tries to encourage account holders to leave funds on deposit for say, 60 days, with "bonus interest" promotions.

  3. #3
    Senior Member bae's Avatar
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    I confess that I just keep short-term cash in my cash account at my brokerage, which pays next to nothing.

    When I calculate the value of my time, vs the small gains, I don't fuss with it overly much.

  4. #4
    Senior Member rosarugosa's Avatar
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    If you are willing to tie your money up for at least a year, it would be hard to beat I bonds.

  5. #5
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    Thank you all! You are a wealth of information and a wonderful support group!

  6. #6
    Senior Member Rogar's Avatar
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    I have a couple of short term bond funds including one called an ultra short term. Plus a time deposit. I honestly think the best bet right now is money market until the fed settles down on rate hikes. Opinion, not advice. I-bonds, too. I'm the basic buy and hold sort, but have considered changes.

  7. #7
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    Quote Originally Posted by Rogar View Post
    I have a couple of short term bond funds including one called an ultra short term. Plus a time deposit. I honestly think the best bet right now is money market until the fed settles down on rate hikes. Opinion, not advice. I-bonds, too. I'm the basic buy and hold sort, but have considered changes.
    Iím very similar to you. Cash reserves in a short term government fund, and the rest in an oh-so-boring. (I hope) 60/40 portfolio. No market timing, no individual issues, no tricky trading strategies. My financial empire isnít so vast that squeezing out another 15-20 basis points is worth the effort.

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