High Yield Savings Rates on the Decline
AMEX high yield savings just lowered their rate to 0.6%, PenFed is down to 0.7%. It seems like a race to the bottom. I may look into laddering CD's now as I think these rates will be low for a couple of years. Any other ideas?
I checked cd rates recently and they're down several times below where they were 2 years ago. Not much better than high yield savings unless you're putting a lot into them or saving over many years.
I think ultimately it depends what the money is for. Laddering suggests an emergency fund, so if that's the use, you'll likely lose to inflation over the next few years.
I'd love to hear if anyone knows of another investment vehicle that can keep up with inflation while also having some measure of security and the ability to access it on relatively short notice.
I think ultimately it depends what the money is for. Laddering suggests an emergency fund
To me, laddering merely suggests the expected drawdown over the next few years would not take you below $X. Don't forget, categories don't come due at the same time. With N True Expenses, it's likely that N-1 of them still have money any given month. What the money is "for" doesn't even figure into it as I see it, because money that's not in the ladder is just as good as the money that is in the ladder (again, assuming sufficient quantity such that drawdown is acceptable).
However, I do share the desire for something that can keep up with inflation. I-Bonds should, but I think they have a no-access period. nolesrule ?
One thing I did was move some cash into a commercial real estate REIT that's historically returning approximately 10% called Streitwise. This is a long-term investment in the vein of a CD. You can't take any out in the first year and there are penalties for taking funds until 5 years have passed. However, unlike a CD, it's not guaranteed. There's always more risk, the higher the return.
I'd like to pick nolesrule brain about tax-free bonds versus a dividend producing stock in a taxable account. I'm in California so I'm currently invested in VCADX (Vanguard California Intermediate-Term Tax-Exempt Fund Admiral Shares). Any thoughts on this versus a high dividend producing stock like 3M? I suppose it comes down to risk versus reward like most things.