Unless something very different in the US is available to what I can get in the UK, I think this is very dangerous advice.<p>If I put £100 in a savings account with 4% interest, I can withdraw that £100 (plus interest) at any time.<p>If I buy put £100 into government bonds with 4% yield and I check back in a year's time, if bond yields have increased (say, due to increased base rate) then the "balance" I can withdraw is _less_ than £100, since the underlying bond is less valuable!<p>Putting money in bonds exposes you to market volatility, which banks shield you from (which is why they get to take a cut)<p>Edit: a money market fund appears to absorb this volatility for you by balancing their bond portfolio, but ultimately you are still relying on the fund being well managed. The failure mode here isn't the govt not paying the coupon on the bond - it's the fund not having the liquidity to pay you if you withdraw. I don't understand enough how money markets are regulated to understand the risk, whereas banks are required to have deposit insurance in UK & US.
I only started parking my money at Vanguard/Fidelity in my mid 20’s. The familiarity penalty was very real: I felt like I could trust Chase since national brand, brick and mortar stable. I wish I had moved sooner.
Depositors lost trillions since the last few years in purchasing power due to low interest on deposits at the banks and high inflation: <a href="https://blog.maxint.com/purchasing-power-loss/" rel="nofollow">https://blog.maxint.com/purchasing-power-loss/</a><p>Be careful with treasuries, during times when the Government is heading towards default otherwise pick the highest yield and lowest fee option, SGOV offers the highest yield right now, here are the latest rankings, based on yield and fees: <a href="https://blog.maxint.com/treasury-bill-etf/" rel="nofollow">https://blog.maxint.com/treasury-bill-etf/</a> unless you don't want to pay any fee and do it yourself via <a href="https://www.treasurydirect.gov/" rel="nofollow">https://www.treasurydirect.gov/</a><p>There are a lot of money market funds, make sure you read their prospectus to understand where they invest your money. VMRXX offers the highest yield right now, here are a few more: <a href="https://blog.maxint.com/best-money-market-funds/" rel="nofollow">https://blog.maxint.com/best-money-market-funds/</a> which are also a good alternative when the Government is heading towards default.<p>Prioritize based on your needs and financial circumstances, starting with MMFs, treasury ETFs and lastly consider bank accounts for a small % that you need to have available on-sight. This is not financial advice.
I want to mention that, typically, if you are a new immigrant, most US brokerages won't serve you because you are not considered a US person in tax; of course, smaller banks won't either, mostly because they won't bother to prepare a different tax form for you; you can only use a bank within that period. But after you become a US person, you have far more choices.<p>Usually, transfer is also more difficult with a brokerage than a bank; correct me if I was wrong: a) brokerage follows a previous T+3 settlement, now T+1, some banks offer a faster settlement, especially if Zelle is directly available; and b) while doing international wire, the bank is considered a viable target, but brokerage don't, a broker has to use their account opened at a bank, it could be cheaper, but there is more hassle (e.g., some government would allow this for non-business purpose).<p>But if you are just parking money, these brokerages offer a much better deal; many even offer to reimburse your ATM cost.
I might use Money Market Funds if moving money between accounts wasn't such a pain. Until then the HYSA will be the default place to stick money that might be needed with 24 hours notice. Maybe this will change when FedNow has fully rolled out.<p>For longer term investments I hold my nose and suffer through the Treasury Direct website.
What's the highest yield account that can be used to easily pay your credit card / debit card balances? Because having even just $20k sitting in a checking account ready to pay bills you're losing out on $1,000/yr.
One issue I have with this article is that it doesn't discuss the distinction between Government money market funds that invest in US Treasury debt and repurchase agreements, and Prime money market funds, that also invest in riskier assets like corporate paper.<p>I'm comfortable with holding significant amounts in a Government MM fund, but less so with Prime MM funds.
An even better strategy is to park you savings as redraw in your debt account (like housing loan), since the interest you are likely to pay on your debt is always more than the interest you are likely to make on your assets. Further, its completely tax free.
yeah but if I get a 4.25% FDIC insured I’ll prefer that and take the 0.75% loss.
<a href="https://www.crisesnotes.com/i-got-the-fed-to-release-its-2011-treasury-default-playbook-heres-what-it-says-and-why-it-matters/?ref=notes-on-the-crises-newsletter" rel="nofollow">https://www.crisesnotes.com/i-got-the-fed-to-release-its-201...</a>
Complete avoidance of FIDC insurance after one mention. So, it's predicated on being able to afford to lose all of the savings.<p>Whats that about a fool and their money easily parted? Why yes, chasing the highest return IS a good way to come unstuck. What do you think those extra points of interest were held back for in the first place?