Bank is offering 4.6% APY - should I park $220k my savings in there?

[bucky88]

@mommajulesberry It all depends on your taste for risk. I am thinking that usually people plan to retire in their 60s but most people never make it as long as they plan to. A lot of people are let go and can't find another good job in their 50s, or they become disabled. So I am a little more conservative there. But really, everyone has to think about their own personal situation and tolerance for risk. Higher could be OK then.

 

[mommajulesberry]

@bucky88 That makes sense. Thanks

 

[pastorgregg]

@jespy Buy USFR. Short term treasury bills. 5.40%. Dividends every month. No state and local income tax. Better than HYSA (safer and higher yield and no state income tax).

But honest answer is a AAA CLO ETF like JAAA which is 6.5% yield. Dividends every month. Fully taxed, but should be higher yield than USFR in most cases. In last 30 years, there has been zero defaults of AAA CLO. People in the business consider it safer than US treasuries since it cannot be downgraded.

 

[matos]

@pastorgregg What is Fidelity’s version of USFR called?

 

[pastorgregg]

@matos The only floating rate treasury ETFs are USFR (17b AUM) and TFLO (6.5b). There is “Fidelity version” or “Vanguard version”.

 

[dayboivietnam]

@jespy Put it in index funds, you don’t need to pick individual stocks. 220k in savings is a huge waste, you’re losing money.

 

[roann]

@dayboivietnam What if he needs it in 12 months for a large purchase?

 

[jlchoa]

@roann All of it? Unlikely. If large portion (for example 50%), there are ways to hedge that.

 

[roann]

@jlchoa Why is it unlikely he'll use a large sum of money not in a retirement fund?

 

[jlchoa]

@roann People usually don't have expenses with this exact amount. In most cases expenses are either smaller or larger than that.

OP also mentioned that 12 months comes from promotional email and not because they NEED money in 12 months.

 

[roann]

@jlchoa Yes, larger... So it would be the most common of expenses... Down payment

 

[jlchoa]

@roann OP hasn't said that they are planning to get mortgage soon. If so, they should definitely use HISA.

But on the other hand, houses correlate with stock market, so if snp500 decreases, houses will likely also decrease. So risk is actually smaller than it looks at first glance.

 

[vanjonti]

@jespy That's not good since it's only a year promotional and you can do better at other banks like Lending Club is 5%.

But if these are your savings for long term and you won't be using the money for at least 5-10 years then you're better off investing it in an S&P 500 index fund. Yes it's volatile but earns an average of 10% over a longer term so it's ideal for retirement savings.

 

[anlytcphil]

@jespy It’s usually the things that you don’t understand that make the most money and sense. Coming from a financial planner-

 

[jjsu1991]

@jespy I'd give it to Fidelity and forget about it. Making money is their job, and they'll handle it for a small fee, and you'll make more.

 

[eng12042]

@jespy No, I would park it in TFLO or VUSXX. Both yield over 5.25% and mostly state tax exempt.

You can also find 1 year CDs yielding over 5%.

 

[internetimm564]

@jespy Money should have been in a money market fund like a year ago, have you been living under a rock?