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I have some individual CDs maturing this year that I purchased opportunistically towards the end of 2023. Because of this thread https://www.shrewdm.com/MB?pid=47122102&wholeThrea... this thread on the Berkshire Hathaway board I've ended up parking some in iShares 0-3 Month Treasury Bond ETF (SGOV) and Vanguard Federal Market Fund (VMFXX). I might leave a portion there that I'd like to be liquid and not worry about actively managing.

Fidelity lets you set up FZFXX or SPAXX as a core cash position, and I'm taking advantage of that. I was looking at a few additional options, too.

* inflation indexed bonds like I-Bonds or TIPS. The I-Bonds seem relatively attractive now, from the perspective of the fixed portion of the coupon. Not historically attractive, but near multi-decade highs at 1.2%. The downsides are the annual cap at $10-15k, having to manage them through TreasureDirect, and the small penalty on selling them before holding them for 5 years. I know less about TIPS.

* A high yield equity ETF or mutual fund like SDY, SPYD, DVY, or others.

I could split the difference and use a mix short/medium term CDs, inflation indexed bonds, money market/short term treasure funds/etfs, or a high yield equity low fee fund. That feels like a cop-out.

I was curious if others had this problem or had suggestions.

I know a lot of people moving money into TIPS where you can get 2%+ real return on them. I've slowly been adding to them. I have mostly treasuries for my fixed income. When I was younger I was mostly all stocks but now in retirement I have one account to cover me until I'm 70 and that is 80%+ in fixed income so 2%+ real return is solid.

TIPs are best used in tax deferred accounts otherwise I you have to pay taxes on interest you won't see until maturity.

I would strongly suggest you signing up for a free account at bogleheads.org. A web site named after Jack Bogle the founder of Vanguard. They are mostly index investors but cover a lot of subjects especially TIPS and you can get a lot of good advice although they are mostly anti-individual stocks but that isn't your question.

You don't mention your age or what you might need this money for (retirement?).

There is also a TIPS ladder site at https://www.tipsladder.com/
Also discussed at bogleheads at https://www.bogleheads.org/forum/viewtopic.php?t=3...

Personally I've never really invested in bond funds. I prefer actual treasuries for my fixed income where I plan to keep until maturity barring an extreme emergency.

good luck
Rich

Thank you so much, Rich. I have been aware of bogleheads forever but never created an account. Without too many details, I'm middle aged, about 2 decades from retirement which will likely be on the standard timelines, unless there are major changes to retirement programs in the US or I see an unexpected windfall.

I am lucky to be ahead on my targets and use a well known asset manager to manage the tax deferred accounts. I'm not constructive on the equity market and while available funds are increasing I'd just like to preserve their purchasing power.

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Bond Investing FAQ

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