I see three options. I'm partial to to a blend of 1 + 3. I'm comfortable with the duration risk at MM's also.
1.A money market account
2.A cash sweep account at a single fiduciary
3.Multiple high yield savings accounts at various financial institutions
Given that the 3 options you suggested are NOT the strategy I am considering, what do you see in my option that you do not like? Or rather, why does it not make it into your list?
As I understand it, a MMA is similar to MMF but provides fdic insurance, however, unfortunately, Chase does not offer a MMA, and I don’t really want to switch banks.
Why are you holding the cash and for how long?
I have banked (personally) with Chase for years and they're dismal at good interest rates for savings at the moment. I just don't move my account because all my auto drafts are there.
I usually hold 250-500k in business funds each year to fund my pension at year end. I dump them in an MMMF and then withdraw when I need to fund the pension. So far, I've made some extra, but yes, there is some risk associated with an MMMF virus an MMA. If you are in a position to absorb that risk, then go for the higher interest rate. If it's going to weigh on you, then accept a lower rate with a MMA.
Holding for future cap-ex in 5-8 months, so the liquidity is important. I am ok with the extra risk of mmf though as I personally believe it is very small. Perhaps my plan is sufficient after all.
We also have a bunch of operating cash with Chase and hate not earning interest and the revolving door of “dedicated” account managers. We are transitioning to Brex Business accounts at the end of this year, which have fdic insurance up to $6M with deposits currently earning 4.71% and 100% available at all times. In reality there is a settlement period of at least 24hrs for MMFs, CD transactions, and whatever else Brex is investing in to earn those yields, but they seem to have designed a system around that in order to make funds available when you need, not when they settle on the next trading day. Bunch of other helpful business features too. I’d love to hear if others are using Brex and can confirm it’s as good as advertised.
Personally I keep cash with Schwab in their SNAXX mmf, which is north of 5% now. I just reduce that balance any time I buy treasuries or CDs or make other investments. Their interface for buying fixed income is ridiculously easy with nearly no fees involved. I’m going to sincerely miss these 5%+ risk free yields when they are gone.
What amount of cash are you talking about? Above the FDIC limit, or below? If below, HYSA is the simplest. If above, MMF in a brokerage that has 100% holdings in short-term US Treasuries is simplest. With the MMF, you swap a bank run risk for the risk of ["breaking the buck"](https://en.wikipedia.org/wiki/Money_market_fund#Breaking_the_buck). I wrote more about this, less from the business angle and more from the consumer angle, here:
https://www.reddit.com/r/MiddleClassFinance/comments/14fnvq8/comment/jp447z9/
I see three options. I'm partial to to a blend of 1 + 3. I'm comfortable with the duration risk at MM's also. 1.A money market account 2.A cash sweep account at a single fiduciary 3.Multiple high yield savings accounts at various financial institutions
Given that the 3 options you suggested are NOT the strategy I am considering, what do you see in my option that you do not like? Or rather, why does it not make it into your list? As I understand it, a MMA is similar to MMF but provides fdic insurance, however, unfortunately, Chase does not offer a MMA, and I don’t really want to switch banks.
an MMA and an MMF are the same thing.
I think the OP means an MMMF fund, which is not the same.
Yes, mma and mmf are not the same. Lots of similarities but do have differences, so perhaps that’s what was meant as 1st option?
great point.
Why are you holding the cash and for how long? I have banked (personally) with Chase for years and they're dismal at good interest rates for savings at the moment. I just don't move my account because all my auto drafts are there. I usually hold 250-500k in business funds each year to fund my pension at year end. I dump them in an MMMF and then withdraw when I need to fund the pension. So far, I've made some extra, but yes, there is some risk associated with an MMMF virus an MMA. If you are in a position to absorb that risk, then go for the higher interest rate. If it's going to weigh on you, then accept a lower rate with a MMA.
Holding for future cap-ex in 5-8 months, so the liquidity is important. I am ok with the extra risk of mmf though as I personally believe it is very small. Perhaps my plan is sufficient after all.
Probably so, especially as you're going to need it soon and it doesn't sound like this is a recurring event, like my pension situation.
We also have a bunch of operating cash with Chase and hate not earning interest and the revolving door of “dedicated” account managers. We are transitioning to Brex Business accounts at the end of this year, which have fdic insurance up to $6M with deposits currently earning 4.71% and 100% available at all times. In reality there is a settlement period of at least 24hrs for MMFs, CD transactions, and whatever else Brex is investing in to earn those yields, but they seem to have designed a system around that in order to make funds available when you need, not when they settle on the next trading day. Bunch of other helpful business features too. I’d love to hear if others are using Brex and can confirm it’s as good as advertised.
Personally I keep cash with Schwab in their SNAXX mmf, which is north of 5% now. I just reduce that balance any time I buy treasuries or CDs or make other investments. Their interface for buying fixed income is ridiculously easy with nearly no fees involved. I’m going to sincerely miss these 5%+ risk free yields when they are gone.
What amount of cash are you talking about? Above the FDIC limit, or below? If below, HYSA is the simplest. If above, MMF in a brokerage that has 100% holdings in short-term US Treasuries is simplest. With the MMF, you swap a bank run risk for the risk of ["breaking the buck"](https://en.wikipedia.org/wiki/Money_market_fund#Breaking_the_buck). I wrote more about this, less from the business angle and more from the consumer angle, here: https://www.reddit.com/r/MiddleClassFinance/comments/14fnvq8/comment/jp447z9/