High yield savings, money markets, CDs, or T bills?

sugar_in_your_tea , 10 months ago (edited 10 months ago)

That really depends on your local state tax situation. Fidelity has a great tool to compare yields of differently taxed fixed income options here. Basically:

• t-bills are not taxable at the state level
• municipal bonds are generally not taxable at the federal or state level
• CDs are taxable at the federal and state level

So that’s why I park my savings in t-bills, I pay state income tax, and t-bills have a higher after tax return than CDs, and are more reliable than municipal bonds. The money that needs to be a little more liquid is in a money market fund.

How much cash

I don’t hoard cash, so it’s only my efund and my slush fund (i.e. the money that I’ve charged on my credit card or expect to pay in bills this month).

My money market fund yields 4.97% last I checked, and I think t-bills are >5% right now.

My total portfolio is almost entirely stocks, outside that efund, with any 75% US stocks and 25% internal stocks. My target is 70% US, 30% international, but I haven’t bothered rebalancing yet this year so it’s a bit lopsided.