OT - Money / Investing Thread (aka financial no stupid questions)

[MikeDeTiger]

Where would you stash short-term holdings (<1 year) for potentially planned expenses?

Assume it's a taxable account and you're in a state with high income tax (which applies to capital gains / dividends) like CA.

I've been stashing things short term (1-3 months) in SGOV when I've sold stock and needed to hold back for cap gains estimated tax payments. Figure it's a fine way to get a 3.5-4% annualized yield with basically zero risk. Better than a HYSA because the dividends are shielded from CA income tax.

But I'm looking at next summer being the optimal time to buy a house. And I'll have a decent chunk of vesting RSUs over the next 4 quarters (which if sold at vest aren't going to have material cap gains) between now and then. I've been thinking of just rolling those into a safe yielding investment until I decide what I'm going to do house-wise. It's more about recession protection, because if I weren't worried about that, I'd just drop it in VTI.

SGOV is easy, gives that 3.5-4% yield, is safe, and at least avoids the CA income tax (possibly 12.3% this year). I see other vehicles, like JAAA/JBBB/CLOZ, which have higher yields (5.34%6.95%/7.2%, respectively). But I don't know what the risk profile is, and I know they're not tax-advantaged like SGOV. Will the principal value markedly decline in a recession? I don't really know, but that would make them no better than VTI. I have some risk tolerance, but it's like the 5-10% level, not the 50% level.

Thoughts? Is there anything better than SGOV in this situation?

The annoying answer (or opinion, input, whatever) is "it depends."  I keep funds like what you're describing in a high yield savings account.  I could do slightly better in some of the options you and Marq mention, but I view those as emergency funds.  I save for specific categories, some of which I know when they are coming around, but some are SHTF categories and I needed the $ rightnow.  It's quicker for me to get it out of the savings account than any other source.  If I knew for sure when I'd need those funds, then as mentioned, I know I could do a tad better with some CD's at a local credit union, or a short term bond.  But I think Marq is on the right track....admittedly I'm not used to factoring in state taxes because I don't have them.....MarqH is likely far ahead of me in thinking through that off the top of his head.  And it sounds like you don't anticipate needing them emergently.  

[Cincydawg]

I stash "cash" in a money market called SWVXX.  This money is available in a day if needed.  My checking account is with Schwab also, so it's very easy to shift funds to pay bills.  The money I have in SWVXX is in my IRA so the tax issue is not relevant.

One of my goals when I retired was to get all my accounts in "one basket", which I managed.  I have a Roth, an IRA, a brokerage account, and a checking account all with Schwab.  My wife also has accounts there which I manage.

[MikeDeTiger]

Not sure if this goes here or in the Retirement thread, but....

I'm helping my mom sort through some annuity contracts she purchased some years ago.  

People seem to either love annuities or hate them.  I hate them.  I think they're garbage and only benefit the brokers who sell you the contracts.  They can have their place as a small part of a portfolio, but on the whole, they don't pay out nearly enough imo to be worth the time and hassle, and they force you to bet on your own life expectancy.  I know everything does that to some degree, but not like annuities.  I can envision some niche scenarios where a person would be attracted to an annuity, but in general, you can do way more with your money by investing it in the market.  

To summarize, I hate annuities and I hate that mom put a substantial chunk into them.  I'd like to wring that broker's neck for some of the things I now realize he did.  Except I can't, because he's dead, and some woman somewhere in Pennsylvania now "owns" the contracts.  

[Cincydawg]

The only annuity I'd puchase is where I'm on the side of the insurance company.

[847badgerfan]

My dad had an annuity, and it was a pain in the ass to inherit.

[MikeDeTiger]

The only annuity I'd puchase is where I'm on the side of the insurance company.

S'really the only people who benefit, for the most part.  And the brokers who sell them.  I would've thought that was obsolete now, but my stepdad has one in Memphis who's still trying to pedal both of them annuities.  And that with some other stuff going on that he knows full well about, which I won't elaborate on here, but it makes him unethical and shady as hell.  

Another guy whose neck is due for a wringing, if I ever catch him sniffing around.  

[Cincydawg]

"Brokers" have an incentive to push investments with high up front costs.  Duh, so they do.  Everyone should have "money managers/advisors" who are fiduciary.  

I asked mine about annuities a while back, as in "Should I put 5% in an annuity?"  Their answer was "no."  It's a good question to ask a prospective money manager.