[Justin]

My wife will be taking a mini retirement next summer for at least three months. We have saved nearly half of what we will need to cover our expenses during this time.

My question is where should we put this money.

We currently have it in Fidelity’s money market account SPAXX making 4.95%. However, it’s likely that the Fed will cut rates 25 or possibly even 50 basis points on Wednesday.

If that happens all if our HYSAs will drop.

Considering we won’t need this money for nine months, I’m considering putting it into a seven month CD locking in the 5% before the cuts.

Is there a better place for it that I’m not thinking about such as T-bills or a bond fund?

What are your thoughts on my plan?

[Bill]

I think you are over thinking this. A small interest difference for a couple of months on a fairly small balance is not going to be much $$$.

A half a percent on $10k for 6 months is $25.

If you want to lock in a cd, that’s fine.

I wouldn’t worry much about it though. Enjoy your mini-retirement!

[Marty]

Don’t do anything with it. Keep it in HYSA. You are putting way to much thought into an insanely miniscule amount of money

[Scott]

Aligning your fixed income maturity with when you need is sensible and logical, Dr Spock would approve.

The banks selling you the CD are likely even better informed about future Fed moves by their teams of MBA’s and literal rocket scientists than you are and they have factored this in the rate they will offer.

Whether you stay in the MMF or buy the CD is not a terribly consequential decision, do whatever you think is sensible/easiest for you and move on.

[Rick]

Recency bias on HYSA is real. This happened long long time ago (read that as back in my day) when it seemed everyone was so mad at ING Direct and HSBC bank when their beloved high rates evaporated over about 12 months.

don’t let it bother you for such a short term need. The juice isn’t worth the squeeze.

If your time frame was longer like 18-24 months, yes you could try to market time (gasp) rates and go with a short term treasury fund (this will track lower over the time though so benefit would be somewhat muted) or a mid term treasury fund with a 3-5 year average duration (more risk potentially more reward).

[Christopher]

If you’re worried about these small changes in rates, why are use using Fidelity’s money market funds instead of vanguards (vmfxx is currently yielding 5.19%, so ~25 basis points above your current savings _today_).

This is a micro-optimization that probably produces minimal difference in the long run.

[Su]

Put it in IJR and withdraw it 2 weeks before the trip. IJR will explode with rate cuts. (Small cap index funds)

[Mark]

ur lamenting over literally a few bucks. leave it where it is so its liquid

[Author]

Posts