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Posted: 5/1/2024 6:26:35 AM EDT
[Last Edit: PA-Minuteman]
So I have a question, At the start of this month I moved a small some of money into a Brokerage account with fidelity to use as a savings account. I moved $500 into the account as a start to test the waters and see how this works, it's held in the Fidelity Money Market (SPAXX). I know at the end of every month you get paid Dividends, well today I only got paid $1.90 for $500.00 in the account which is 0.38%
The account says it's yield is currently at 4.96% Am I missing something here or is this normal and I'm just stupid? |
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Posted: 5/1/2024 6:33:13 AM EDT
[#1]
Without looking too deeply, did you amortize your payments over a year? Is that the way the payments work?
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Posted: 5/1/2024 6:34:54 AM EDT
[#2]
Quote HistoryOriginally Posted By 1245xx: Without looking too deeply, did you amortize your payments over a year? Is that the way the payments work? |
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Posted: 5/1/2024 6:36:43 AM EDT
[#3]
Annual?
$1.90x12/500=0.0456. Which is close to your listed percent. Add the dividends back in with interest and it’s probably there. The money market should only be a parking spot for your funds between investing. Put them into a mutual fund or whatever your preference is. When you need to make some cash available, move it to the money market. But you want to have the money really invested, not in a money market. |
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Posted: 5/1/2024 6:37:58 AM EDT
[#4]
The rate is for a year.
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Posted: 5/1/2024 6:43:00 AM EDT
[#5]
Quote HistoryOriginally Posted By BuddyChryst: Annual? $1.90x12/500=0.0456. Which is close to your listed percent. Add the dividends back in with interest and it's probably there. The money market should only be a parking spot for your funds between investing. Put them into a mutual fund or whatever your preference is. When you need to make some cash available, move it to the money market. But you want to have the money really invested, not in a money market. That is my fault, I'm still learning how investing works. So if I'm only earning 0.0456 per year on that $500. Is there a better mutual fund that is safer that has a better percentage/payout? |
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Posted: 5/1/2024 6:45:37 AM EDT
[#6]
SPAXX currently pays a seven day average yield of 4.96% paid monthly.
Annual earnings = principal x yield $500 x 0.0496 = $24.80 monthly earning = $24.80/12 = $2.06 ( approximately) Keep in mine the annual fee is .42 % so $4.20 for every $1000 in SPAXX |
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Posted: 5/1/2024 6:48:19 AM EDT
[#7]
So kinda a second question,
Where should I park my Emergency savings that will be safe (no lose any balance) while also getting the best return possible? Or is that even a thing? |
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Posted: 5/1/2024 6:50:47 AM EDT
[#8]
Quote HistoryOriginally Posted By Willz: SPAXX currently pays a seven day average yield of 4.96% paid monthly. Annual earnings = principal x yield $500 x 0.0496 = $24.80 monthly earning = $24.80/12 = $2.06 ( approximately) Keep in mine the annual fee is .42 % so $4.20 for every $1000 in SPAXX 
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Posted: 5/1/2024 8:52:36 AM EDT
[Last Edit: AeroE]
[#9]
Originally Posted By PA-Minuteman: So I have a question, At the start of this month I moved a small some of money into a Brokerage account with fidelity to use as a savings account. I moved $500 into the account as a start to test the waters and see how this works, it's held in the Fidelity Money Market (SPAXX). I know at the end of every month you get paid Dividends, well today I only got paid $1.90 for $500.00 in the account which is 0.38% The account says it's yield is currently at 4.96% Am I missing something here or is this normal and I'm just stupid? 4.96% is the annual percentage rate. 4.96%/12 = 0.41% per month. You're saving money. That is the best investment strategy. |
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Posted: 5/1/2024 8:55:19 AM EDT
[#10]
Quote HistoryOriginally Posted By PA-Minuteman: So kinda a second question, Where should I park my Emergency savings that will be safe (no lose any balance) while also getting the best return possible? Or is that even a thing? Money market should be readily accessible. Do you have an emergency fund? If not, I really wouldn’t be concerned with making money at this point. Safe? Yes. As a risk taking investment? No. Get your baseline financial house in order and then go from there. If you have an investment/retirement account and are contributing to it, you’re ahead of a lot of people in this country. Slowly, consistently, and over time. But yeah, I wouldn’t really wouldn’t be all that concerned about a return at this point. |
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Posted: 5/1/2024 11:38:52 AM EDT
[Last Edit: Morgan321]
[#11]
Originally Posted By PA-Minuteman: ...... a Brokerage account with fidelity to use as a savings account. The account says it's yield is currently at 4.96% That's 5% per year paid monthly, so roughly 5%/12 per month in interest. It's actually 4.96 annual yield, so you're getting less than that in interest because the 1 month interest you just got will earn interest for 11 more months. ie. the interest is compounding. Since it's a brokerage account that interest is capital gains and taxable by both federal and state. You can buy treasury bills on fidelity very easily, they are paying 5-5.3% for terms in the 1-6 month range. The interest you earn on them is exempt from state income tax which will save you a few pennies. Anything better than roughly 5% will require you to accept some risk. ETA: Right now you can get 1 and 2 month treasury bills at about 5.3% and avoid state income tax on the interest. That's not a huge jump, but that 5.35 for the 1-month is 8% more than the spaxx yield. And you don't pay PA income tax on the profit. Again, that 5.35% is annual yield, not 5.35% per month.  Attached File |
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Posted: 5/1/2024 1:10:15 PM EDT
[Last Edit: wildearp]
[#12]
Quote HistoryOriginally Posted By PA-Minuteman: So kinda a second question, Where should I park my Emergency savings that will be safe (no lose any balance) while also getting the best return possible? Or is that even a thing? My current 401K is in Fidelity. I have half of my HSA in VFIAX --Vanguard 500 Index Fund Admiral shares. |
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Posted: 5/1/2024 2:58:13 PM EDT
[#13]
Quote HistoryOriginally Posted By PA-Minuteman: So kinda a second question, Where should I park my Emergency savings that will be safe (no lose any balance) while also getting the best return possible? Or is that even a thing? At Fidelity? SPAXX At Vanguard? VMFXX |
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Posted: 5/1/2024 2:59:09 PM EDT
[#14]
Quote HistoryOriginally Posted By wildearp: Ally Savings. Why settle for less? |
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Posted: 5/1/2024 4:06:44 PM EDT
[#15]
Quote HistoryOriginally Posted By 1245xx: Money market should be readily accessible. Do you have an emergency fund? If not, I really wouldn't be concerned with making money at this point. Safe? Yes. As a risk taking investment? No. Get your baseline financial house in order and then go from there. If you have an investment/retirement account and are contributing to it, you're ahead of a lot of people in this country. Slowly, consistently, and over time. But yeah, I wouldn't really wouldn't be all that concerned about a return at this point. I have 3 months worth of expenses & my max OOPs saved in a checking account. I am trying to move my emergency funds into an account that will earn some interest and "try" to keep pace with inflation while being safe |
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Posted: 5/1/2024 4:08:22 PM EDT
[Last Edit: PA-Minuteman]
[#16]
Quote HistoryOriginally Posted By FALARAK: At Fidelity? SPAXX At Vanguard? VMFXX |
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Posted: 5/1/2024 4:37:54 PM EDT
[#17]
Quote HistoryOriginally Posted By PA-Minuteman: So just park it at SPAXX and forgot it? Quote HistoryOriginally Posted By PA-Minuteman: Originally Posted By FALARAK: At Fidelity? SPAXX At Vanguard? VMFXX That's where my emergency fund and any additional cash reserves go. |
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Posted: 5/1/2024 5:43:31 PM EDT
[#18]
Quote HistoryOriginally Posted By PA-Minuteman: So just park it at SPAXX and forget it? Again, without accepting any risk there’s only so much you can earn. The treasury bills via fidelity are easy, but only fractionally better than spaxx. For small dollar amounts the effort may just not be worth it. |
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Posted: 5/1/2024 6:22:34 PM EDT
[#19]
Originally Posted By FALARAK: That's where my emergency fund and any additional cash reserves go. Originally Posted By Morgan321: Again, without accepting any risk there's only so much you can earn. The treasury bills via fidelity are easy, but only fractionally better than spaxx. For small dollar amounts the effort may just not be worth it. I'll read up on the Treasury bills but I'm only going to be parking around $10k or so in this fund, I don't know if it's worth going that route just to save a small amount of PA taxes |
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Posted: 5/1/2024 10:54:47 PM EDT
[#20]
Quote HistoryOriginally Posted By PA-Minuteman: … going to be parking around $10k or so in this fund, I don't know if it's worth going that route just to save a small amount of PA taxes So spaxx will earn you about $500/year and a treasury bill will earn you around $540. PA is 3% income tax so you’d make an extra $40 and avoid about $16 in state tax for a net difference of +$56/year in favor of treasury bills. I do lots of 1-3 month treasury bills but with more taxable cash and 5% state tax. The net difference for me is about $950/year. |
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Posted: 5/2/2024 9:29:08 AM EDT
[#21]
Quote HistoryOriginally Posted By Morgan321: So spaxx will earn you about $500/year and a treasury bill will earn you around $540. PA is 3% income tax so you’d make an extra $40 and avoid about $16 in state tax for a net difference of +$56/year in favor of treasury bills. I do lots of 1-3 month treasury bills but with more taxable cash and 5% state tax. The net difference for me is about $950/year. Well done Morgan321! |
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