Fixed income choices?

Looking to park some spare cash in a fixed income account, already have plenty of exposure to equities in other accounts.

So where are you guys putting your cash? Banks are only paying around 1.15% interest and CDs are not much better at around 2-2.5% short term payouts. I was doing 3% rewards checking before but it's a bit of a hassle. You guys getting anything better than 2%?

Just parking your cash you will lose about 6-15% of buying power every year. Buy commodities.

I have that covered in other investments. Not looking to take on any risks with these funds. Fixed income suggestions please.

Originally Posted by Amoeba

I have that covered in other investments. Not looking to take on any risks with these funds. Fixed income suggestions please.

How liquid does this cash need to be?

Fairly liquid. It's a down payment for future house, so may need to be withdrawn within the next 5 years.

Might want to look intro some municipal revenue bonds in your area. Sometimes you need a good local financial insitution that gets dibs on these issues. These can sometimes pay 4-5% and they are exempt from federal taxes, the issue is liquidity, you need to see what the maturity dates are.

Hmm.. I live in California where municipalities and even the state may declare bankruptcy, lol. I've looked at bonds/bond funds before. Even though they carry relatively low risk there's still a chance of default. Plus we've all seen negative returns on bond funds before.

I have pretty specific goal with this stash and want a risk free return. I'm guessing that leaves laddered CDs, money market, checking/savings and the like. Any similar fixed income instrument that pays out a couple percent or more?

Originally Posted by Amoeba

Hmm.. I live in California where municipalities and even the state may declare bankruptcy, lol. I've looked at bonds/bond funds before. Even though they carry relatively low risk there's still a chance of default. Plus we've all seen negative returns on bond funds before.

I have pretty specific goal with this stash and want a risk free return. I'm guessing that leaves laddered CDs, money market, checking/savings and the like. Any similar fixed income instrument that pays out a couple percent or more?

I think you have pretty much sumed up the risk free items.

go buy bonds, cash them out when you buy the house. Or park your cash in a credit union account. I believe some yield more then 2%.

That's what I'm looking for. Which credit union pays more than 2%?

5 year Treasury notes are yielding 2.1% right now. If interest rates rise and you need to sell early, you'd take a loss but if you stick it out for all five years, you'll still get the stated yield, although inflation will probably eat all of that away.

or do a private loan. lol....

10% in 3 years. <100k

"No risk" returns is the key here. I have money in other assets classes, but looking for the best riskless returns for these cash.

Sounds like you'll want an MMF, or maybe you can find a savings acct with better than average interest. They both give you the most liquidity, if you could potentially withdraw the money any time between now and 5 years from now. There are tax exempt MMFs out there too, if you're worried about taxes.

Originally Posted by sick.boy1986

Sounds like you'll want an MMF, or maybe you can find a savings acct with better than average interest. They both give you the most liquidity, if you could potentially withdraw the money any time between now and 5 years from now. There are tax exempt MMFs out there too, if you're worried about taxes.

Most MMF I've seen pay under 1%. Even tax-free ones would not reach my goal of relative conservative of 2% stable return... Wonder if laddering CDs is the only way to achieve that.

It really depends on what level of liquidity you want, it's true the MMFs don't offer too much yield, and it sounds like they're more liquid than you need. I used to have some money in a tax free MMF, but I actually get more interest in a normal savings acct through USAA as long as I maintain a balance >10k. It's still not the level that you're looking for. Laddering CDs sounds good, probably your best bet for the growth you want.