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Time to Get Rid of the Money Market

September 5th, 2013 at 06:32 pm

Today was a pretty productive day.

I spent some time investigating alternatives to my Vanguard money market fund. While only about 9% of my investable assets are in cash, the bulk of that is a hefty $40,000 in the Vanguard fund. It's meant to give my overall portfolio some stability, yet that seems like a lot of money to just languish at a miserly 0.16%.

I'd gotten interested in I bonds cus they have a few things going for them. Issued by the US government, they're highly unlikely to default. They're exempt from state tax and offer an interest rate higher than most savings accounts. You need to hold them for 5 years, or you lose 3 months of interest with an early redemption.

Which all sounded pretty good, until I found they're currently only paying 1.18%. I soon found I can do better with a comparable 5-year CD paying 2% APY with State Farm. I'm not a fan of State Farm, but the rate is good for money that's been earning practically nothing. I'm also not a fan of locking up money in bank savings accounts, but in this case, it's portfolio money that needs to stay in a cash account, as ballast for my portfolio. Don't need to touch it, just need to keep it safe.

I'd like to do some CD laddering to take advantage of rising interest rates over time, so I'm thinking of buying 5 CDs of $8,000 each over the coming year or so.

I also mowed the front lawn and went to the landfill with some recycling for electronics that didn't sell in the tag sale and some early hypertufa creations that also didn't sell, so they went in the concrete/brick recycling pile, and while there, I found about 25 perfectly good stone blocks. Dropped them in the trunk for edging.

I must have good karma, cus whenever a job ends, little freelance assignments always pop up out of the blue. I wrapped up a sales brochure/website content for a new active adult community, got some legal editing from a court-appointed guardian ad litem done today and got a query from The Author about editing just 25 pages of another book so she can send it as a sample to book publishers. I'm waiting to hear back from her what the word count is.

I often fall in love with the communities I write about. The active adult community of which I wrote was quite interesting to me. Because the complex has septic systems, the town wouldn't allow anything but one bedrooms. So the builder created units with the master bedroom on the main level with a huge loft and equally huge storage area (about 12 x 13') on the upper level. The loft lacks a bathroom (both baths are on main level) and a closet, and it can't be marketed at all as a possible 2nd bedroom, just a space that could be used as an office, art studio, gym, theater room, you name it. The total square footage of these units is 1700 to 2400 sf, so they're not small, yet the price for this NEW CONSTRUCTION is just $229,900. That’s very low for Fairfield County. And taxes and common charges are also very low, partly becus they can only be sold as one-bedrooms, even though there's so much more space. Oh, and gas heat and central air.

These are very appealing to me. It doesn't bother me that much that there is no bath on the upper level. The kitchens have granite, s/s appliances, maple cabinetry. Wood flooring on main level, tile in baths, patio or deck outside, 1 car attached garage.
The ONLY thing that doesn't really appeal to me is the way the older units already built on site look. It's one building of about 25 units and it sort of looks institutional, maybe even like a nursing home. UGH. I think the new units will be designed to blend/complement what's already there, but maybe they will be more home-like. The model won't be ready for another 3 months.

I also calculated my third quarter estimated tax payment, which wasn't much, so will mail off the check tomorrow.

Tuesday and Wednesday I helped my mother load up the car with her art and then drove to 2 different galleries to install them for different shows. I've done this from time to time to help her when I can, but this time she offered to pay me ($100), which I gratefully accepted.

On tomorrow's agenda:
1.Start cleaning up the vegetable garden, which is really winding down. Tons of damaged tomatoes on blighted vines.
2.Mow the back yard.
3.Go to State Farm to open up the first CD, fill out forms.
4.Move 2 box fans and AC into the attic.
5.Make some time for a country walk.

5 Responses to “Time to Get Rid of the Money Market”

  1. baselle Says:

    I have 10K I-bonds myself - the rate changes every 6 months, based on the inflation rate as determined by the CPU. The big thing for you is that you can only deposit 5K/yr/type - you used to be able to get 5K in paper bonds and 5K electronically. Best ones are when you can get a constant rate in addition to the variable rate. Lately those have been flat at 0%. Mostly I've been holding them as both diversity and as an IQ test. Smile

  2. PatientSaver Says:

    If I read it correctly, their website says you can get up to $10K per calendar year, PLUS up to another $5K if you use IRS refund money to do so, and indicate that on your return.

  3. creditcardfree Says:

    The State Farm CDs do sound like a better deal than your Vanguard MM.

  4. baselle Says:

    This tells me how long its been - US Treasury increased the limit to 10K a few days after they stopped issuing paper bonds in January 2012. Sorry I led you astray!

  5. PatientSaver Says:

    No problem....I had done my research beforehand. And I decided to go with a 2% CD for 5 years, which I just got back from doing.Pathetic return, but not as pathetic as the 0.16% it was earning parked in a money market.

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