How To Earn More on Your Cash — Safely

The genesis of this post was wanting to sketch where I keep my “Cash & Equivalents.”

Meaning: the money I want to keep as safe as possible, while earning the best yield, that I will need in two years or less.

Before I get to the nitty-gritty on that, I want to begin by laying out the “life-cycle” of my (day job) paycheck and why it’s so, so important make as much as possible automatic.

Besides paying taxes, there are a few things that happen every single pay period:

  1. 401(k) Contribution
  2. Small Direct Deposit to my “brick-and-mortar” bank
  3. Direct Deposit Investment to my Roth IRA (at Fidelity)
  4. Direct Deposit (remainder) to an online High-Yield Savings Account (HYSA)

The 401(k) contribution is straight-forward: every two weeks, money gets transferred to my work-place retirement account

The “small direct deposit” is to a local bank that 1) provides the funds for my Cumberland Farms SmartRewards gas card and 2) gives me “place I can go” if I need to talk to someone, in-person.

The Roth IRA money is something I setup at Fidelity: I was able to choose the amount, day, and frequency. I also have recurring investments that then move that money into whatever ETFs I want (or Fidelity mutual funds, if I want… ).

The fourth place the money goes is my HYSA – that’s where I manage my money month-to-month.

I have been with CapitalOne for a while now. They may not offer the highest yield, but they are competitive (and they absolutely smoke anything my brick-and-mortar offers: 4.25% vs. 0.2%).

Within CapitalOne I have multiple savings account and one checking – they’re all free, have no minimum deposit, I can move money amongst all accounts on-line or on my phone, pay bills and I can open accounts anytime I want.

The checking account is linked to my Venmo account and is used mainly for paying rent.

The CapitalOne checking also has a huge fee-free ATM network, so I can get cash quickly and easily.

But, while 4.25% is decent, some HYSAs offer better rates, some in the low fives?

Well, that’s what my brokerage account is for; it’s currently at Vanguard, but if I were do it all over again, I’d go with Fidelity (I rolled both my Roth IRAs from Vanguard to Fidelity (for a few key features… )).

Even including the money in my HYSA, I get 5.45% on my “Cash & Equivalents,” and it’s all rock-solid, investment-grade.








What is all that? “CD”s are Certificates of Deposit (three to six month… ), the “T-Bill” is a Treasury Bill (three-month, I believe), JAAA is a Collaterized Loan Obligation ETF and the HYSA is the CapitalOne account(s).

I can get money out of either CapitalOne or the brokerage account in less than five days.

As the CDs and T-Bill mature I will increase my allocation to JAAA, likely to 25% Overall.

One thing that isn’t automatic is the transfer of money to (or allocation therein) the brokerage account.

Although I could easily automate that, I enjoy looking my cash level in my HYSA each quarter or so and transferring what I’m comfortable with .

I see the JAAA money as a kicker to goose returns a bit and believe it’s a very stable investment type with the only real risk being (slightly) lower future yields.

I use another CLO ETF (CLOZ) in my (active) Roth IRA, and it’s SEC Yield is 9.24%, but it’s not appropriate for this purpose/allocation (i.e. my risk tolerance for Cash & Equivalents).

If I wanted to simplify things I could just use a short-term US Treasury fund like SGOV, but I enjoy “browsing” for the best CD/Treasury available. (And I only have to do it every few months…. )

So, there you go, hope it was helpful.

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