BOXX
Alpha Architect 1-3 Month Box ETF
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Moving Cash Allocation into Tax Advantaged Accounts instead of After-Tax?
During heavy market volatility, do brokerages modify margin requirements across all accounts? Or is it on a case-by-case basis?
If IRS makes ruling on BOXX will the ETF's price drop?
Selling Cash Secured Puts on margin while holding BOXX as collateral
Selling Cash Secured Puts on margin while holding BOXX as collateral
Sell BOXX and rotate to SPY, QQQ pullback part NVDA will add more on the pullback
Once for a while, you always got people execute PUT instead of selling shares and option for more $$
BOXX or SGOV? It seems that the recent 30 days APY of BOXX is only about 2.4%?
Alternatives to BIL that collect dividends?
Are there any US Domiciled MMF ETFs that are accumulated and swap based just like CSH2 and SMTC?
Treasury yields increase not a concern for BOXX (for now), am I right?
BOXX - Fixed Income Emulator - No Withholding Taxes?
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Your taxable income from SGOV and BOXX should be dwarfed by the capital gains, short and longterm, from selling VTI in the brokerage account. Keep all your cash in the brokerage and use the tax advantaged accounts to take advantage of not having to pay taxes, at least now, on the gains.
BOXX is a time bomb if the government ever decides it is a tax avoidance vehicle, (currently under scrutiny )
Oh, sorry, I thought I was replying to our other fellow regard [here](https://www.reddit.com/r/wallstreetbets/comments/1w1156x/comment/p6i0lyo/). > I don’t have the capital for that Should be doable on <30k, I think as low as 10k could work. E.g. a somewhat regarded trade (similar to what I'm doing experimentally with part of my portfolio) could be the following: * NU, sell $13, buy $10, 5x, ~$375 credit, ~$1125 max loss * APP, sell $220, buy $200, 1x, ~$621 credit, ~$1378 max loss * JPM, sell $290, buy $280, 2x, ~$330 credit, ~$1670 max loss * NBIS, sell $90, buy $80, 2x, ~$430 credit, ~$1570 max loss * NFLX, sell $62, buy $60, 10x, ~$451 credit, ~$1549 max loss All positions are Jun 17'27, which means you lose some weekly premium but have less volatility, can go further OTM, and require less capital because the upfront premium is pretty high. The above requires ~$7300 (ideally $10k) and can get you ~$2200. You put the cash you have in BOXX or something like that, and grab an extra ~$200-300, and *hopefully* they won't all blow up together and you'll land somewhere between -$820 (assuming the 2 worse blow up) and +$2500 (assume none blow up). Disclaimer: This is financial advice, I've been given exclusive, worldwide, irrevocable, perpetual license by FINMA to advise people online. I suggest you sell your kidney and put all your money in this. Or something like that. I'm fairly regarded myself so this is probably stupid in 100 different ways.
5-year is tough to make duration neutral compared to 2 and 10 year, so I'd only consider 2 year from your options. 2-year yield is hovering 4.0-4.1% right now, which places it roughly on-par with BOXX, so I'd rather just put money into BOXX instead. Yields rising past 5% would make me inclined to expose myself to 2-year bonds only as a bet on future rate movements. Not sure if 6-7% would be possible w/o a Treasury bear market or some high-inflation scenario. Sizing also matters IMO. If I had $1-2M, then I wouldn't be discussing any of this and just full-port tax-free muni bonds and use the income as house money for buying stocks (or personal expenses).
A box spread is more tax efficient (especially if you do it on SPX or XSP). The ‘interest’ on the loan that you take will be considered a capital loss, offsetting some of your gains. The interest paid on the margin loan is not deductible unless you itemize (for most people, it is better to take the standard deduction instead). Another option is to short BOXX, it is simpler. But the lower interest rate (that you pay in short term capital losses, regardless of the duration, because the stock is shorted) is more than offset by the cost of shorting (even if low). So I found the box spread to be a bit cheaper.
not relevant to earning yield..after all they add another layer of expanses. just showing that big firms provide the liquidity for boxes so BOXX put them in an etf wrapper.
really great post. although, you used to learn this in your first year as a clerk. different times then...makes me grateful for the trading ed. I was able to receive. they even have etf wrappers for box's now. BOXX.
If you put the 70k in a 4% gainer like say SGOV or BOXX you’d now have 72.8k without doing a single other action. Just sayin.
The BOXX scheme is on shaky legal ground.
If your goal is to avoid taxes, look at BOXX
He announced a crackdown on "products designed to exploit our federal tax code". There has been some controversy around BOXX since its inception; they are relying on a novel reading of the tax law, if IRS recharacterizes the income in that fund from capital gains to ordinary income people who own the fund could be on the hook for back taxes. https://finance.yahoo.com/economy/policy/articles/us-treasury-flags-wall-street-150659582.html
What did he say that pertains to BOXX?
My understanding is that there is still regulatory uncertainty with BOXX, especially in light of Bessent's statement this week. Buyer beware with that one.
OP seems to care about state taxes so BOXX is not a suitable. The state long-term capital gain tax on BOXX is bigger than the ordinary income tax on SGOV dividends.
Consider BOXX, which would not trigger taxable events until you decide to sell.
Alternative is BOXX if you want to defer taxes completely until sold. If you have no state or local tax, or they’re tiny, there are maybe better options. However, both of these will preserve capital completely while still getting yield.
I would have said BOXX, but that's coming under some regulatory scrutiny (it was good while it lasted).
check out BOXX / XBOX as bond etf replacements if you are looking for something different
That's not terrible for a super defensive/conservative portfolio. I would maybe replace the small and mid-cap fund with a pure value one, and maybe look at a momentum option; they pair well if you come from a fundamental approach. Also, maybe look at replacing money markets with short-term treasuries or BOXX; they might have a slightly higher yield. Another thing to consider: if you need a dedicated equities hedge, instead of using different types of funds, you can set up a dedicated options position just for that purpose.
Put my entire paycheck into BOXX yesterday because of this.
i kinda like BOXX & XBOX to store idle cash over SGOV. I think these etfs are the best cash-like alternative
You will not "build" much with fixed income, but if you need fixed income, look at BOXX. It is as fixed as one could wish for, and since you asked in WSB, it is made entirely of options. https://preview.redd.it/nth8iqoz849h1.png?width=3284&format=png&auto=webp&s=c9e0c958460305ead7b7006936add6eb2be32375
BOXX, it only goes up.
Long term index funds, don’t worry about timing. If you can’t stop worrying then invest it in chunks but in the same things ( VTI, VT, DIA, QQQ, VTWO). If you might need some of it in the next year or two then put that amount in SGOV or BOXX because those are fixed gains with no volatility. Don’t worry about a crash imo, it could fall 10% and it would likely be a wash in two years, especially when you consider that the crash could take another year.
Don’t do wheels, I’m in the similar situation. I have 50% in index funds, spy and qqq. And I sell 20 delta covered calls on 50% of the holdings. Another 50% in BOXX. (Currently getting 4% return but capital gains not interest income, I’m Canadian so I don’t want US interest income). I use the buying power to sell 15 delta puts. So, it’s a strangle, I sell 45 dte and roll at 21 days or close if 50% profit reached. I never let it assigned. Over all, you get your return from the equity, BOXX, and the premium. The premium itself I been getting is enough for my family expenses, plus spy and qqq pays a little dividend, I use it for family vacation. With an over 2M account. You should able to bring in 200k per year just from the premium.
BOXX is cash + short term fixed return. Any notable price drop vs. NAV will cause market makers and institutional investors to buy BOXX to capture the arbitrage opportunity. There might be some temporary price volatility or wider spreads but that's about it. The current tax treatment benefit still outweighs any potential small temporary price drop vs. NAV in the future. We have no idea if or how the IRS might reclassify the tax treatment. Would they allow the tax deferral treatment but have it taxed as ordinary income? If so, there's still a benefit to the fund since it avoids a tax drag while not avoiding ordinary income tax treatment once shares are sold. The IRS could also reclassify distributions as 60% long term gains and 40% short term gains. Depending on where one lives, tax bracket, and amount of carry forward losses one has that could still be of benefit over holding short term government bonds in a taxable account. If they lower the expense ratio for BOXX then it could be preferred over short term bond funds in tax exempt, tax deferred account, or taxable account for those in income tax free states for the slightly higher return. Lower expense ratios are likely to come with the competition for this investment strategy (XBOX, CMBO) along with higher AUM.
Is there anything other than BOXX that gives higher return for no risk?
Is there a reason Vanguard is subpar other than the terrible user interface? Yes I can use a money market directly as collateral, that's Vanguard's default. Your uninvested cash sits in a money market that is treated as a cash equivalent you can use as collateral for shorting puts. But I specifically want to use BOXX for the tax advantages that the money market doesn't offer
Thanks for the answer! I'm essentially trying to use BOXX as collateral for shorting puts. Brokerages don't allow me to use BOXX as collateral directly since it's not a cash equivalent, so I use margin cash secured by BOXX to use as collateral for shorting the puts instead. I don't pay interest on the margin cash until the contract gets assigned, meaning I can close the position before expiration or roll the option forward to avoid paying margin interest. The biggest risk I see with this strategy is Vanguard changing margin requirements while I have open contracts. If currently I'm getting 50% LTV for margin cash, and 90% of my available margin cash is tied up as collateral, then Vanguard reduces the LTV amount to 35%, that would not be a fun situation. So I'm trying to assess how likely that scenario is so I can adjust my strategy accordingly, considering my BOXX holding securing the margin cash is ultra low risk.
Thought only Swiss tax payers used BOXX :)
An IRS ruling wouldn’t directly change BOXX’s underlying NAV, since the holdings don’t instantly lose value. But it could trigger heavy selling and redemptions, which may cause short-term price pressure, wider spreads, or temporary discounts to NAV... it should generally converge back, because ETF pricing is driven by arbitrage rather than AUM levels.
Biggest risk is broker margin requirement changes forcing BOXX liquidation at the worst possible time.
Using BOXX as collateral for margin CSPs is clever since it pays a Treasury-like yield while your buying power backs the short puts, but watch the margin maintenance if BOXX dips. I prefer scanning for CSPs where the annualized premium beats the collateral yield by a clear margin. I use Days to Expiry to rank CSP opportunities by ROI and see which strikes justify the capital. What tickers are you targeting with this structure?
The logic is mostly right but there's a gap in scenario 1. Rolling the contract forward doesn't eliminate the margin interest risk — it extends it. If you roll month after month on a declining underlying, you're continuously using margin as collateral and the interest clock is running on any margin balance your broker considers "in use" for that position. Broker-specific, but many charge margin interest on the notional of cash-secured puts even before assignment if the account doesn't have sufficient settled cash. Scenario 2 is cleaner — liquidating BOXX before assignment avoids the margin loan entirely. The risk there is timing: if assignment happens earlier than expected or BOXX takes a day to settle, you could have a brief margin balance. The structure works but the execution risk is in the details of your specific broker's margin treatment. Worth a direct call to your broker to confirm exactly when they start charging interest on CSP margin.
that 30-day marginability point is actually pretty important and probably one of the cleaner advantages of using BOXX this way. and yeah, for equity puts it probably does make more sense to temporarily eat a bit of margin interest after assignment rather than constantly disrupting your BOXX holding period and realizing gains early every time something gets assigned.
the strategy kinda depends on BOXX behaving “cash-like” while simultaneously relying on favorable tax treatment that isn’t really guaranteed forever. so there’s a bit of regulatory + brokerage policy risk layered on top of what’s otherwise a pretty straightforward CSP strategy.
USFR Treasury fund pays about 3.6% BOXX - sells box spreads and pays out ~4.2% (apy) in gains every day. I don't know any 5% guarantees But if you did maybe 80% BOXX and 20% VOO that should average to 5% or even 6%
Add some $BOXX or $VBIL, these stocks generate income just shy of the risk free return (~4%).
Shorting BOXX is easier but not as cheap as doing my own SPX box. It is just a matter of ease. But I may end up doing a manual box anyway, for fees and better tax treatment. Plus it may behave better if the interest rates increase, as I would lock the interest rate early. You want to use BOXX to get ltcg on the interest, which is fine. My need are the opposite, as I need a cash loan (withdrawn). In terms of potential BOXX dropping, it is potential extreme cases. IRS ruling and everyone decides to sell, faster than the redemption of the contracts, etc. The same way that some money market funds have been breaking the buck in the past. I would not expect that to really happen with BOXX, but shorting it could potentially take advantage of that if it did happen.
The risks for BOXX are extremely low but not as low as with holding US T-Bills or ETFs that hold them. The key risks to BOXX are as follows. * Management/Operational - box spreads payout/return is less than 1-3 month T-Bill yields or box spreads have losses. * Failure to pay - OCC defaults on payment. The payout/return is known when a box spread is made so it's unlikely they would do so at a loss unless there was a trade error (human or automated process). Lower returns than 1-3 month T-Bills are possible but historically box spread rates have been higher than equivalent T-Bill rates, usually in the range of 0.25-0.35%. If the Federal Reserve were to cut rates to 0% or lower (negative rates) then the expense ratio of the ETF would cause negative returns. Outside a black swan event, the Federal Reserve would likely take many months to cut rates down to 0% or lower (negative). Even with black swan events problems are typically known before the event becomes critical. The Options Clearing Corporation (OCC) is the world's largest equity derivatives clearing organization. Operating as the sole central counterparty clearinghouse for US listed options, it acts as the buyer to every seller and the seller to every buyer to guarantee the performance and financial integrity of every contract. The OCC is considered a Systemically Important Market Utility (SIFMU) whose survival is critical to the stability of the US financial system. As such, the Federal Reserve would backstop the OCC to keep it financially solvent in a time of crisis. The main risk for BOXX is if the IRS decides to reclassify the tax treatment of gains as ordinary income. Even if the IRS did this it would likely be done on a prospective basis, not retroactively.
I was under the impression that if you sell CSP's on margin, you don't pay interest at all, until & unless you are assigned using the margin loan. There are ways around that. For example: Assume $50,000 invested in BOXX, minimal cash in the account. 1. 30 DTE option is bought using margin as collateral. Strike price $500. 28 days into the contract the price is at $490. Instead of being assigned in 2 days, you roll the contract forward 1 month at $490 strike price. You were never assigned and don't pay interest 2. 30 DTE option is bought using margin as collateral. Strike price $500. 28 days into the contract the price is at $490. You expect to be assigned so you liquidate $50,000 in BOXX. At expiration the $50,000 in cash is used for assignment, not the margin loan. You don't pay interest. Can someone second this? Or is my logic flawed?
Clever structure. The main risk you're not fully accounting for is margin interest drag eating the LTCG tax benefit. If you're selling CSPs on margin, you're paying margin interest daily on the full notional regardless of whether the options are profitable. At 6-8% annual margin rates on most brokers, that's meaningful drag against whatever BOXX yields over a money market — probably 50-80bps of advantage after tax that gets partially or fully consumed. The other thing worth modeling: in a vol spike scenario where multiple CSPs go deep ITM simultaneously, you may need to liquidate BOXX positions that haven't hit the 1-year LTCG threshold yet, negating the whole structure. Correlated assignments are rare but they cluster in exactly the scenarios where you'd have margin pressure. BOXX positions paired with short puts on similar underlyings could theoretically trigger constructive sale or straddle treatment — worth a CPA opinion before scaling this. The concept is sound for small scale but the tax savings may be thinner than they appear once margin costs and tail scenarios are modeled.
Ahh. I misunderstood. I thought if i had STCG from another investment i could put it into BOXX and wash it into LTCG somehow, lol
My options trading relies on liquidity, so I view the tax drag on having some of it in SGOV as a necessary cost to maintain that flexibility. I prioritize having flexibility over micro-optimizing tax efficiency, which keeps my options open and also protects me against IRS rulings against BOXX.
Interesting. What's your reasoning for shorting BOXX? In what scenario could it crash? For the margin loan, as explained, I wouldn't expect to pay any interest. Only using the margin as collateral to sell the CSP, but not get assigned, meaning no interest paid. If I were to be assigned I would sell BOXX before getting assigned to be assigned using cash, not the loan
Smart. Assuming none of your lots of BOXX have reached LTCG
How does BOXX change STCG to LtCG?
From the pov of changing interest payment (taxed as income) to make it ltcg through BOXX, it makes sense. That would only be 1-2% a year difference anyway? Most of your risk would be on the CSP and the underlying a, by far. I decided to not bother with BOXX to not risk any potential issue with the IRS down the line. (Very low probability but my taxes are already complicated). However, I would short it instead of a margin loan (interest can only be deducted if I itemized, where shorting BOXX would be taxed as stcg, and it somehow BOXX gets to crash, I would profit immensely).
I follow a similar strategy. I keep most of my cash margin in BOXX, but I hold some SGOV for liquidity. This way, I avoid triggering long term capital gains when I need cash.
SGOV gives 4.3% right now and it’s risk free so maybe look into that or BOXX. How much do you get for your HYSA? Maybe look into higher yield ones, there are some with 5-6% out there and at this high an amount you might as well shop around.
Trading with a Portfolio Margin account lets one dip even deeper. In my current PM account, I have 8 active trades, all naked puts I have almost $16k premium in hand. I have 101.6% of Net Liq (account value) in shares of BOXX that earn almost 5%. I also have 104.5% of Net Liq in capital risk. Cash balance is almost $12k.
GOP will blame Biden for it anyways. And Dems will blame Trump. I'm exiting INTC/semis and going to SPY/BOXX. Disclaimer: Not financial or political advice.
Normally you would invest in an inflation hedge like T-Bills, BOXX, etc. not equities.
There are two points to an emergency fund: 1) liquidity without sequence-of-returns risk, and 2) you don't want to need it. Following these, I use BOXX. It is 3-month Treasury notes packaged with tax magic as capital gains instead of income distributions. Because I don't plan to need it, after a year it is long-term capital gains. I inherited a large long-term capital loss (no, I didn't know this could happen) and so LT capital gains are tax-free for awhile. I'm in Cali, so if BOXX didn't exist I would roll short-term munis.
I also do SGOV, but have recently been considering BOXX. The thing with SGOV is that this may be money that I'm not 100% sure I'll need in a few days in an emergency, but if I can get away with not using it for a year, it might be more tax efficient to go with BOXX. I might just be splitting hairs considering SGOV is state tax sheltered and there are efficient ways to offset monthly dividends. All I know is by just it sitting there, it covers my property tax and that's awesome.
I do a combination of 1/3 FDLXX (for more liquid access) and 2/3 BOXX (for relatively safe tax-deferred gains) in a separate brokerage account.
I use a bit of everything for my cash-like holdings. Currently my Fidelity account cash-like is split: 22% SPAXX 23% FDZXX 15% BOXX 40% in a 13 rung ladder of 3 month T bills. I will be moving more into BOXX due to the higher post tax returns.
BOXX has the advantage of not spinning off current income. I am gradually moving more of my cash-like holdings to BOXX.
SPAXX, SPRXX, SGOV, VBIL, BOXX, etc are all equivalent holdings to a HYSA. I use 3 as different breakdowns of emergency fund, sinking fund, next year's IRA contribution.
I keep a paycheck in an HYSA at my bank and then put the rest of my emergency fund into my brokerage account, invested in BOXX.
I remember but I didn't buy even though I believed in Alphabet because I was heavy over weighted on google already. Diversify they said. So instead of jump pumping more cash into mag8 I bought stuff like CHRD, VOO, LVMUY, AXP, IWM/UWM/TNA, and BOXX/SHY.
Series I savings bonds are uniquely good for an emergency fund. Only drawbacks are a mandatory 1 year holding period and a $10k/year purchase limit unless you go to lengths to get around it (setting up entity accounts using trusts). But otherwise, they're great. Inflation indexed, interest accrues tax deferred, no state tax on interest, and ability to redeem at face value at any time after 1 year. I also have a little bit in VUSXX, low expense treasury money market fund at Vanguard. No state taxes. BOXX also looks interesting; similar yield to a T-bill, and interest accrues as capital gains. I haven't put anything into that one yet though.
HYSA and a brokerage money market are instantly available if you have checking account as part of your brokerage. SGOV has a 1 day settlement time when you sell it before you can withdraw the funds. In most cases that is not a big deal. SGOV has the advantage of most of the income being not being taxed by states. BOXX is similar to SGOV but the interest is internally reinvested by the ETF. So it ends delaying the payment of interest and converts it to long term capital gains of you hold the BOXX for more than one year before selling. The long term capital gains would be subject to state income tax, so if you are in a state with high tax rate BOXX is nit as attractive.
BOXX does have a tax risk component to it, they are using a strategy to make part of the interest coming in appear as longterm cap gains. But the IRS has regulations on some of the creative options mechanics that can void the tax savings if the appropriate government authority deem these mechanics are done solely for tax savings. This risk is listed in the BOXX fund prospectus and this video explains the mechanics of it better than I can in a reddit comment. https://youtu.be/A6Xts-oRNFc?si=ZM_LaJAkvuXYdeG6
> cash emgenency funds only earn enough interest to keep up with inflation. So once you get albove 6 months of money your are better off investing the money into a dividend fund or grwoth funds. Uh, sure? I guess that's not the argument. If we can agree that an eFund is necessary (and sufficient), then we can confidently invest the rest in the market directly: dividend, growth, or just broad index funds. > Money I can use to... All these things I can just do with my own income, without causing an additional taxable event. A worst-case example: in the event I can't refill my eFund with income because I've lost my job (and may have 0% LTCG), then you'd have to show dividends funds (despite the tax drag) would outperform something as simple as VTI in this scenario. Much of this might depend on your tax brackets. But dividends for mine (~28% for qualified, ~48% for non) don't check out. Hell, that would potentially push me into higher brackets depending on the year because I'm forced to receive income I otherwise wouldn't have to. That's also why I keep my eFund in BOXX.
BOXX or SGOV It's a treasury bill etf so no state income tax. They often give you a better return than HYSA. It's more liquid because you can sell whenever you want. Where it may not be as liquid is the time it takes to transfer to your bank, but assuming you have a credit card, it's not really a factor for most. BOXX is basically a loophole to not pay taxes until you sell. (SGOV pays monthly which you do get taxed on). The risk is the IRS might crack down on the loophole and you'll have to do a tax ammendment for the years you held BOXX. SGOVs underlying securities are government backed, while BOXX securities are not. Minimal risk, but worth mentioning.
BOXX. Buys short term box spreads which act like treasuries of the same duration, typically pays no distributions but can occasionally have a small one, usually around high market volatility.
This but $BOXX which before expense ratio on certain days of the month will provide better yield than $SGOV and I don't have to worry about wash sales when moving cash in or out
Spaxx is very liquid - you can get the money out same day Another option is BOXX. (Box spreads) The advantage here is you get similar rate to spaxx ; but don't have to pay any taxes until you sell.
BOXX gets long term capital gains, plus you can defer the tax event indefinitely
Anyone know why BOXX is down a (relatively) large amount? I occassionally see BOXX go down \~0.01% but this morning it's been hovering between \~0.07%-0.08% down. Last time this happened it was due to a small dividend but as far as my googling has gone, no such dividend has been announced. Curious if anyone has an explanation on would make drop like this.
Can you contribute the money and invest instead into a money market account or a fund like BOXX (sells box spreads) - it makes 4.++% annually and every share goes up 1-2 cent every day. Assuming $40k You would make ~$7 per day ($200 a month/$800 in four months) - even just investing it in Treasury fund like SGOV or similar? I get wanting to wait to invest in sp500 or similar......but there's no reason to wait to invest the money into the sep. IRA
This is probably the most important trading moment of the year so far. Basically everything is at the "Hold the Line" valuation. SPY at 650, Google at 300, AMZN at 200, AAPL at 250. If it can just go below 650 I think there'd be a strong chance to buy. I went all in last year on SPYU when SPY was at like 480 then sold out at 630. I've been in BOXX since last July. It's almost time...I'd love to see the VIX pop over 30 again. It's all I need, I won't be greedy beyond that....
What is the question:? Doing it on margin is putting up no collateral. I do this all the time and park funds in BOXX, It earns around 4%.
One thing that helps with BOXX is that it is all unrealized gain till you sell your shares. That means lower volume from whales constantly buying and selling as they do for example on dividend plays. There are at least 11 Alpha Architect ETF's and BOXX has the most stable history. Some of my high yield banks recently sent me new "Term agreements" that shared a change of language concerning fund transfer hold times and daily transfer limit reductions that lead me to believe they are tightening their reserve management. Last week we heard some of this explained for the "private credit" issue various banks are looking at. OCC has over $200 billion to mitigate a black swan event and the underlying trades usually show distress before their expiry dates so there should be warning?
Makes sense. If it’s strictly BTD money, I’m leaning SGOV/T-bills + a simple CD ladder too. Any reason you’d keep any in BOXX at all vs just more SGOV? And what % would you keep liquid vs locked in CDs?
Your cash allocation strategy is solid for building a "crash-protection" moat while still earning a competitive yield on the fed funds rate. Your mix of SPAXX for instant liquidity and SGOV/BOXX for short-term Treasuries captures high efficiency without the volatility of your tech-heavy brokerage. BOXX is actually outperforming SGOV because the box spread structure captures time value more efficiently, though it is slightly more complex. You can use AI tools like trylattice because it is perfect for monitoring this situations since you can sync these events to your calendar and get alerts if BOXX starts to reprice lower as rates drop. Having 6-12 months of expenses in these stable assets is a game changer for staying disciplined during market drawdowns.
Use SPRXX instead of SPAXX. Slightly better yield. BOXX and SGOV are fine though. Also, just max the IRA asap. You can leave it in the settlement fund if you want, but no reason to wait to max if you're just going to have it sit in savings.
Honestly your setup already looks solid for ‘dry powder’ SPAXX + SGOV is basically cash/short Treasuries. Only thing I’d watch is BOXX (tax stuff + complexity) unless you really need it. Big question: is this an emergency fund (6–12 months), or just ‘buy the dip’ money? If it’s buy the dip, I’d keep it simple in SGOV/T bills/CD ladder and call it a day.
Solid setup overall. SGOV and BOXX are smart plays for capital preservation right now. One thing worth considering given how tech-heavy your brokerage already is — a small slice of your safe money (maybe 10-15%) into precious metals ETFs could add some diversification that doesn't move in lockstep with your stocks. IAU or PHYS (Sprott Physical Gold Trust) for gold, and PSLV (Sprott Physical Silver Trust) if you want a higher upside allocation with more volatility. They've been doing their job as a macro hedge lately and tend to move independently of equities. Not saying go heavy, just that having some exposure alongside your T-bill position isn't a bad idea when your main portfolio is basically a Mag7 bet.
I'm going with SHY + BOXX but SGOV has it's upsides. Esp in IRA/roth/401
Yes, if you hold it that long. But if you’re really tax conscious, get BOXX. They use options to get a synthetic treasury yield and don’t pay a dividend. After a year, it’s 100% characterized as long term capital gains and tax-deferred.
Should have just bought the BOXX etf or wrote your own box spreads, for superior tax treatment.
Volatility risk is muted in BOXX’s structure, but counterparty and execution risks exist. Black swan events are always possible, but they’re rare and generally don’t affect low-leverage, structurally simple strategies as much as highly speculative trades.
Right, many traditional MMFs (like VUSXX) are state-tax free, *but* not Federal, and the dividends aren't qualified (so taxed nearly 39% for me) and are distributed every year. BOXX has big advantaged in both categories: classified as a LTCG *and* only realizes those gains when sold. Sure, I have to pay CA tax, but less than I do for VUSXX (assuming I didn't sell in a down year where taxes where even less, versus having a constant tax drag every year).
Thanks I didn't know about BOXX, I picked FDLXX as fidelity treats it as cash and its tax advantaged in CA. |https://www.taxnotes.com/featured-analysis/tax-trap-inside-boxx/2024/03/08/7j8x0 seems like BOXX may get slapped at some point... but its been more than a year and the SEC is often asleep at the helm. |Also, you should probably advocate for "X months of expenses, depending on your income situation" I am also not a financial advisor or analyst. Given the income distribution in America and Reddit, I'd wager most ppl are still working on the first 3 items. If you are a person who already has hit all 3 of those milestones you probably have a pretty good idea of what to do next. After you you have some cash, keep investing and don't stop. Be like Smaug and hoard that shit.
> Brokerage: 30k in FDLXX That sounds like a pretty big tax drag, depending on your bracket and state. I'm in a very high bracket, so do BOXX to (a) access LTCG; (b) choose when I realize that gain [likely in a lower income year because it's an eFund]. Also, you should probably advocate for "X months of expenses, depending on your income situation" (eg. how long would it take you to replace your income if you lose your job? using whichever extreme you want; my field is getting hammered right now, so I do 12mo).
I have 3 months in BOXX, 3 months in SWVXX as a base lower limit. End of the month anything over that 1.5 months worth of operations expenses gets distributed evenly, 1/4 additional savings for fun, 1/4 to spend on fun hobbies, 1/4 goes to VXUS, 1/4 goes to SWVXX. This continues to grow the stash of cash for funding projects, upgraded equipment, retirement, trips, hobbies with out disrupting my retirement and safety net. Each week I transfer more money than necessary as a base savings for retirement funding, taxes, long term operational expenses, 1/3 of known expenses over 3 years, like new hardware and software. It work it like this fill SWVXX until funding is secured for next years taxes/retirement/operations. Then fund BOXX for 10k or hit next savings level. Then VXUS, long ass term non retirement investment. Again, I have already maxed my contributions for 2026. My hot take, grow your system to work for you, grow your savings to hit a place where you no longer worry, if you have 10k and worry then add, if you hit 9 months of average expenses, and still worry then keep savings. There is no magic number. I have not needed my emergency fund, or back up for 10 years, I am blessed I do everything I can to not touch it, I know I can make moves in 3 - 6 months average expenses.
BOXX? That seems built to basically be tax efficient by pricing dividends in, rather than paying them out.
You’re asking two questions: 1. How much should I keep for an emergency fund (obviously an absolute number that’s realtive to your expenses). 2. How much should I keep on the sidelines in case of a crash to ‘buy the dip’. For #1, I keep 12mo of expenses in BOXX because my HHI comes from very unstable revenue streams and I’m in high brackets. For #2, that entirely depends on your philosphy and, critically, your time horizon. If long-term, I think most would argue that you should always be invested (no cash) unless you have a very strong driving thesis that you could defend (eg. Buffet and BH’s current cash hoard). *How* you distribute those investments might be the more interesting question: Portion in cash-like entities (eg bonds)? Highly diversified portfolio so you can harvest winners and buy-the-dip in losers? Or just be a Boglehead and always be invested in the total market. I don’t really know the answer, so curious to see what others think. Personally, I’m just a VT and chill kind of guy.
Mathematically, you are right on the efficient frontier. With a 10+ year horizon, the paper confirms that adding bonds (duration risk) for 'safety' is actually inefficient compared to pure equity exposure. Smart move using BOXX for the emergency tranche, getting the T-Bill yield without the ordinary income tax drag is a sophisticated optimization. You are essentially running the 'Academic Ideal' portfolio If you are interested, I wrote a full breakdown of this paper, including the "Pathological Preference" math, in this week's Research Note: [Read here (100% free and no paywall](https://t.co/z2Pur8pkcV))