What does this even mean?...CD's, a savings account, treasuries, money market account, money market fund, treasury etf's, individual bonds..what? All of the above or none of the above?

In order of liquidity, here's my take:

1. Paper money stuffed under a mattress
2. Checking account
3. Savings account
4. Money market funds
5. CDs
6. Annuity or Life Insurance Cash Value

Most other things are not really cash equivalents -- not gold bullion, treasuries, bonds, bitcoin, commercial paper, etc. They all have enough market risk, credit risk, liquidity risk, or interest rate risk to make them VERY poor cash substitutes (although they might be very good investments).

That said, I'd generally stick to options 4 and 5 above to get the best current risk/reward tradeoff on cash positions you choose to maintain. Specifically, I'd say half in money market and half in laddered CDs would be a good starting point to begin your analysis.

Please explain the difference in risk between buying a CD vs buying a treasury note/bond.

With the bank weirdness going on in Australia, cashless banking, "going cash" means something entirely different.

"Customers have five days until Macquarie Bank goes cashless"

Quote:

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From November 1, Australia's fifth-largest bank will become completely cashless.

Customers will be unable to write or deposit personal cheques, deposit or request bank cheques, deposit cash or cheques over the counter at NAB branches and make a super contribution or payment via cheque.

Any cheques received after October 31 will be returned to the sender.

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Globalists demand cashless societies. All digital means tighter controls on people's spending. I don't like it...not one bit.

GasAg90 said:

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Please explain the difference in risk between buying a CD vs buying a treasury note/bond.

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That is a very involved question, but maybe if I give a few examples, it will help. They really are quite different. One of our banker posters could do a much better job than I.

An attempt to explain interest rate risk and reinvestment risk: First: If you could buy a 30 year CD (you can't) to match the timeframe of a newly issued 30 year treasury, the differences might be small, and they might be large. The timing of semi-annual T-bond interest payments (coupons) vs. the internal reinvestment of the CD's interest crediting method and compounding (daily, monthly, quarterly, annual?) of a particular CD is a big factor. How do you reinvest the first treasury coupon? In a new 30-year bond? In a 29.5 year maturity bond? In a 6 month CD? Who knows? Obviously, interest rates are changing every day, so it is virtually impossible that you will get the same result. So, at any time, the CD or the Treasury will be "riskier", but you never know which direction rates will go, or how the future you personally decides to reinvest the income.

As I understand it, the idea of "moving to cash" involves staying liquid, to invest elsewhere on some future "better day". We're generally looking at a pretty short time horizon, right? A CD does a pretty good job of this when you buy short term (3-12 months?) instruments. Worst case, you cash out early and pay a small penalty. A T-bond is quite different, as you're very dependent on the future interest rate environment. Bonds lost significant value in the last couple of years as the Fed hiked interest rates (as you were locked into long term lower interest coupons than what is currently available). In fact, it probably erased the value of all interest paid on the bonds if you bought in early 2022, for example. If you need the money now and liquidate, you'll be taking quite a hit. So, CDs probably win if your start date was Jan. '22. If you invest today, and rates plummet back to where they were in 2021, your t-bond will be quite a bit more valuable, and probably wins over a short-term CD. Timing is everything.

Bottom line - - treasuries are not a good place to hold short-term cash. Fit the solution to the problem, and I stand by my statement that money market and maybe laddered CDs are a good place to stash cash for future investment needs. If you want to get exotic and hedge the interest rate risk of treasuries, you might get closer to something optimal, but I doubt the results are worth the effort and frictional costs.

I bleed maroon said:

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GasAg90 said:

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Please explain the difference in risk between buying a CD vs buying a treasury note/bond.

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That is a very involved question, but maybe if I give a few examples, it will help. They really are quite different. One of our banker posters could do a much better job than I.

An attempt to explain interest rate risk and reinvestment risk: First: If you could buy a 30 year CD (you can't) to match the timeframe of a newly issued 30 year treasury, the differences might be small, and they might be large. The timing of semi-annual T-bond interest payments (coupons) vs. the internal reinvestment of the CD's interest crediting method and compounding (daily, monthly, quarterly, annual?) of a particular CD is a big factor. How do you reinvest the first treasury coupon? In a new 30-year bond? In a 29.5 year maturity bond? In a 6 month CD? Who knows? Obviously, interest rates are changing every day, so it is virtually impossible that you will get the same result. So, at any time, the CD or the Treasury will be "riskier", but you never know which direction rates will go, or how the future you personally decides to reinvest the income.

As I understand it, the idea of "moving to cash" involves staying liquid, to invest elsewhere on some future "better day". We're generally looking at a pretty short time horizon, right? A CD does a pretty good job of this when you buy short term (3-12 months?) instruments. Worst case, you cash out early and pay a small penalty. A T-bond is quite different, as you're very dependent on the future interest rate environment. Bonds lost significant value in the last couple of years as the Fed hiked interest rates (as you were locked into long term lower interest coupons than what is currently available). In fact, it probably erased the value of all interest paid on the bonds if you bought in early 2022, for example. If you need the money now and liquidate, you'll be taking quite a hit. So, CDs probably win if your start date was Jan. '22. If you invest today, and rates plummet back to where they were in 2021, your t-bond will be quite a bit more valuable, and probably wins over a short-term CD. Timing is everything.

Bottom line - - treasuries are not a good place to hold short-term cash. Fit the solution to the problem, and I stand by my statement that money market and maybe laddered CDs are a good place to stash cash for future investment needs. If you want to get exotic and hedge the interest rate risk of treasuries, you might get closer to something optimal, but I doubt the results are worth the effort and frictional costs.

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For short-term "cash" needs, a T-bill is better than a CD right now.

BTHOB said:

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For short-term "cash" needs, a T-bill is better than a CD right now.

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If you live somewhere with a state income tax, that's likely true. For others, it's close to a wash. You can't really go wrong with either for short term needs in the current inverted yield curve environment.

My statements above were in response to the poster's question about longer term t-bonds and T-notes, not short-term T-bills.

I bleed maroon said:

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In order of liquidity, here's my take:

1. Paper money stuffed under a mattress
2. Checking account
3. Savings account
4. Money market funds
5. CDs
6. Annuity or Life Insurance Cash Value

Most other things are not really cash equivalents -- not gold bullion, treasuries, bonds, bitcoin, commercial paper, etc. They all have enough market risk, credit risk, liquidity risk, or interest rate risk to make them VERY poor cash substitutes (although they might be very good investments).

That said, I'd generally stick to options 4 and 5 above to get the best current risk/reward tradeoff on cash positions you choose to maintain. Specifically, I'd say half in money market and half in laddered CDs would be a good starting point to begin your analysis.

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Paper money really isn't liquid anymore unless you are talking amounts under $10k. It is very hard to move large sums of cash.

The most liquid thing is a checking account by far. you can write a check for 100k and no one blinks, I can transfer 100k online in seconds. Leaves a trail, but by far the easiest way to move money.

knoxtom said:

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I bleed maroon said:

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In order of liquidity, here's my take:

1. Paper money stuffed under a mattress
2. Checking account
3. Savings account
4. Money market funds
5. CDs
6. Annuity or Life Insurance Cash Value

Most other things are not really cash equivalents -- not gold bullion, treasuries, bonds, bitcoin, commercial paper, etc. They all have enough market risk, credit risk, liquidity risk, or interest rate risk to make them VERY poor cash substitutes (although they might be very good investments).

That said, I'd generally stick to options 4 and 5 above to get the best current risk/reward tradeoff on cash positions you choose to maintain. Specifically, I'd say half in money market and half in laddered CDs would be a good starting point to begin your analysis.

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Paper money really isn't liquid anymore unless you are talking amounts under $10k. It is very hard to move large sums of cash.

The most liquid thing is a checking account by far. you can write a check for 100k and no one blinks, I can transfer 100k online in seconds. Leaves a trail, but by far the easiest way to move money.

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Disagree completely. You introduced new information (who was talking about $100k+?). Checks are not cleared immediately - money is held at the receiving bank until cleared, and any number of verification processes happen (especially for larger checks) which can slow the process down. Cash is transferred physically, and immediately, in almost all cases (regulatory reporting of transactions over $10k is a separate issue to consider).

While I in no way recommend it, cash is king.

Okay...those in heavy cash (I'm sort of one of them) when does the FOMO win vs the patience to wait for a better buying opportunity?

my cash has been slowly 'building up' close to 3% (I'm typically <1%) mainly due to my increasing hesitancy in buying into broader market at ATH's
401K still auto DCA's $2K monthly into S&P, but the 60% of take home getting saved has been mainly getting shoveled into money market and used to buy occasional individual dips now (TSLA/ENPH/SOFI/SMCI/POWL most recently)

portfolio gains ytd is approaching 1.5x annual income already so suppose keeping a bit of cash on hand isn't terrible

El Chupacabra said:

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Okay...those in heavy cash (I'm sort of one of them) when does the FOMO win vs the patience to wait for a better buying opportunity?

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I went from like 80% cash in March/April to slightly less than 50%, buying metals, promising energy stock setups, and recently, TLT. I have less than 10% exposure to broader equities with TSLA being the bulk of it.

when was your initial move into majority cash?

Speaking of moving to cash...

Is anyone concerned about the market valuation right now? Shiller is at 36.21, highest since the 2000 bubble.

Im not sure we can ever match that 2000 bubble again because of program trading and day traders. We didn't have that back then. The ability to panic trade at high speed did not exist.

Surely we are in correction territory?

To me "moving to cash" involves staying liquid and also preserving principle.

We have 2 years of cash all in our online savings account earning around 5.3% last I looked. We keep another 2 months of cash (equal to monthly expenses) in our checking account. To clarify, my two, current month paychecks cover the month we are in and then I keep another equivalent month of cash in checking on top of that.

We have another portion of our portfolio in a muni bond ladder that spins off cash every quarter equal to about $50k per year, currently. We usually reinvest that right back into the ladder as long as the rates are staying at 5-6%. We can take that quarterly pay out as cash if we need to but have only done that once to cover some house reno we did when we moved.

When/if the munis stop paying what they are paying, we will divert all that money elsewhere to some other semi-conservative vehicle.

EliteZags said:

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when was your initial move into majority cash?

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Big chunk in late last year, with goal of moving into metals if the setups formed. They did and I've been layering in for half a year. Another chunk when bonds looked to be making a bullish setup earlier. Bond setup failed on first go around as it chopped around a bit, but is taking hold now. Another chunk when oil and energy started showing a good setup. Started layering in two months ago and will layer a little more over the next month or so.

My thesis is to align with the bull markets as they form, not to catch the high in the ones that have already happened.

What's your bond setup?

I've been buying bonds for the first time over the last year or so when the yields got better

I assume prices on what I have will be better too when the rates come down

jamey said:

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What's your bond setup?

I've been buying bonds for the first time over the last year or so when the yields got better

I assume prices on what I have will be better too when the rates come down

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My "tradeable" money is in TLT. My 401k is in bond funds. I see TLT going to $105 this year and possibly $120 over the next 1-2 years as rates come down, setting up a crash heading into 2026-2028 period.

Heineken-Ashi said:

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jamey said:

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What's your bond setup?

I've been buying bonds for the first time over the last year or so when the yields got better

I assume prices on what I have will be better too when the rates come down

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My "tradeable" money is in TLT. My 401k is in bond funds. I see TLT going to $105 this year and possibly $120 over the next 1-2 years as rates come down, setting up a crash heading into 2026-2028 period.

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All mine is in my 401K bond fund which replicates the Bloomberg US Aggregate Bond Index. I hope that's good enough


Everything in the self managed account is pretty small potatos, and mostly AI and other rate plays like XBI

jamey said:

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Heineken-Ashi said:

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jamey said:

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What's your bond setup?

I've been buying bonds for the first time over the last year or so when the yields got better

I assume prices on what I have will be better too when the rates come down

---

My "tradeable" money is in TLT. My 401k is in bond funds. I see TLT going to $105 this year and possibly $120 over the next 1-2 years as rates come down, setting up a crash heading into 2026-2028 period.

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All mine is in my 401K bond fund which replicates the Bloomberg US Aggregate Bond Index. I hope that's good enough


Everything in the self managed account is pretty small potatos, and mostly AI and other rate plays like XBI

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That's probably the same fund I'm in. Should do well for a while.

I was going to tell you to look at individual Russell plays, but wait for the market to sort out Monday. Might be crazy.

Heineken-Ashi said:

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jamey said:

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Heineken-Ashi said:

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jamey said:

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What's your bond setup?

I've been buying bonds for the first time over the last year or so when the yields got better

I assume prices on what I have will be better too when the rates come down

---

My "tradeable" money is in TLT. My 401k is in bond funds. I see TLT going to $105 this year and possibly $120 over the next 1-2 years as rates come down, setting up a crash heading into 2026-2028 period.

---

All mine is in my 401K bond fund which replicates the Bloomberg US Aggregate Bond Index. I hope that's good enough


Everything in the self managed account is pretty small potatos, and mostly AI and other rate plays like XBI

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That's probably the same fund I'm in. Should do well for a while.

I was going to tell you to look at individual Russell plays, but wait for the market to sort out Monday. Might be crazy.

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I'm looking at WEC energy, located up north as a combination rate, energy and AI play


I went with the Russell as whole in the 401K fund, probably in on average around 1850 - 1950 and at around 22% of my portfolio and plan to sell it off as it goes up until it's closer to 10 or 12% of portfolio. For now I'm still buying the Russell fund with new money on my weekly paycheck but 75% of new money is going to bonds fund

One of my bigger rate plays in the self managed account is XBI at $70 average

jamey said:

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Heineken-Ashi said:

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jamey said:

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Heineken-Ashi said:

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jamey said:

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What's your bond setup?

I've been buying bonds for the first time over the last year or so when the yields got better

I assume prices on what I have will be better too when the rates come down

---

My "tradeable" money is in TLT. My 401k is in bond funds. I see TLT going to $105 this year and possibly $120 over the next 1-2 years as rates come down, setting up a crash heading into 2026-2028 period.

---

All mine is in my 401K bond fund which replicates the Bloomberg US Aggregate Bond Index. I hope that's good enough


Everything in the self managed account is pretty small potatos, and mostly AI and other rate plays like XBI

---

That's probably the same fund I'm in. Should do well for a while.

I was going to tell you to look at individual Russell plays, but wait for the market to sort out Monday. Might be crazy.

---

I'm looking at WEC energy, located up north as a combination rate, energy and AI play


I went with the Russell as whole in the 401K fund, probably in on average around 1850 - 1950 and at around 22% of my portfolio and plan to sell it off as it goes up until it's closer to 10 or 12% of portfolio. For now I'm still buying the Russell fund with new money on my weekly paycheck but 75% of new money is going to bonds fund

One of my bigger rate plays in the self managed account is XBI at $70 average

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Just be careful. Crazy environment we're in and small caps will be hardest to fall in a bloodbath.

Heineken-Ashi said:

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jamey said:

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Heineken-Ashi said:

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jamey said:

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Heineken-Ashi said:

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jamey said:

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What's your bond setup?

I've been buying bonds for the first time over the last year or so when the yields got better

I assume prices on what I have will be better too when the rates come down

---

My "tradeable" money is in TLT. My 401k is in bond funds. I see TLT going to $105 this year and possibly $120 over the next 1-2 years as rates come down, setting up a crash heading into 2026-2028 period.

---

All mine is in my 401K bond fund which replicates the Bloomberg US Aggregate Bond Index. I hope that's good enough


Everything in the self managed account is pretty small potatos, and mostly AI and other rate plays like XBI

---

That's probably the same fund I'm in. Should do well for a while.

I was going to tell you to look at individual Russell plays, but wait for the market to sort out Monday. Might be crazy.

---

I'm looking at WEC energy, located up north as a combination rate, energy and AI play


I went with the Russell as whole in the 401K fund, probably in on average around 1850 - 1950 and at around 22% of my portfolio and plan to sell it off as it goes up until it's closer to 10 or 12% of portfolio. For now I'm still buying the Russell fund with new money on my weekly paycheck but 75% of new money is going to bonds fund

One of my bigger rate plays in the self managed account is XBI at $70 average

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Just be careful. Crazy environment we're in and small caps will be hardest to fall in a bloodbath.

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Is most or all of your 401K money in the bond fund?