FDLXX
Fidelity Hereford Street Trust - Fidelity Treasury Only Money Market Fund
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Cash management account at fidelity vs core position in brokerage?
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I have it summarize all my accounts (IRAs, Roth, Brokerages) plus give general inheritance advice and have it give me an overall analysis however I prompt it to tell me the hard facts and not sugar coat anything. I did one big change to my Fidelity account, I was keeping money on hand in SPAXX instead of FDLXX which is exempt from CA state income taxes so I'm saving like $400 in state taxes. I also reduced my REIT exposure since I unfortunately inherited a house (unfortunately because a parent passed) and increased my small cap value percentage and bond percentage because of an incoming inheritance. I'm using Claude with a project specifically prompted with my complex situation with inheritance. Should I get a fee based advisor and an estate CPA? Probably. lol
Treasury bills, one of the securities offered by the US Treasury. Simple explanation is that in exchange for you loaning the government money, they will pay you interest in return (an IOU of sorts). The easiest way to invest in them is to put cash into a money market mutual fund at a brokerage , e.g. VUSXX at Vanguard or FDLXX at Fidelity.
In terms of liquidity, wouldn’t FDLXX in a Fidelity Cash Management Account work better?
It's already time for the boring part, but it's this part that makes us the most money To keep my juices flowing, I keep my savings in Fidelity's money market fund (FDLXX) and sell low delta, 30-45DTE cash secured puts on TQQQ. Nets you a nice 6-9% yearly
Well, thats it for me. Every spare cent I had sitting around went into VOO at 3:59 PM. * have three months rent in the bank and $20k (10% of portfolio) in FDLXX
I thought last week was bad but today alone was worst day yet. I am in a quandary as to whether to stay put and risk going down until nothing left or move to a money market like FDLXX until things look better. Thoughts?
go to [www.fidelity.com](http://www.fidelity.com) open a brokerage account transfer 95000 into said account purchase SPAXX with all of it or if you are in a high state tax state, get FDLXX Sit and accrue around 5% once you feel established you can start investing in other funds like FXAIX
Yes it is. 2023 FDLXX was ~96% state tax exempt. FDRXX was ~41% state tax exempt. Selecting the most appropriate MMF will depend on your state tax rate and the rate of return. I live in Iowa , we have high state taxes right now so FDLXX is the best for me. Someone in Texas should be selecting the highest yield MMF available to them.
Is FDLXX more tax favorable than FDRXX?
There are others at 5 as well. My core position is SPAXX but I move it to FDLXX because FDLXX is exempt from state taxes.
Yes and yes. Maybe once a week or so I'll buy FDLXX when new money comes in. But I'm not going out of my way to do it. It's just a few clicks and it doesn't matter if the market is open so it can be done at any time of the day. As a family of 5 in California we maintain a fairly large emergency fund so it actually makes a difference with the state tax savings.
Yep Fidelity has the choice to make SPAXX your default position but you have to select it as the default sweep (just use the virtual assistant for anyone curious). I forget what the default fund is but it's half the rate of SPAXX. Because I live in California I buy FDLXX in my cash management account due to ~90% less (state) tax. Any automatic payments for CCs etc automatically sell off whatever is needed. Fidelity has its bugs, such as glitchy transfer system, automated investments and issues sometimes with account changes BUT they're IMO the best all in one place to bank and invest. So yeah I think you're spot on with your explanation!
FDLXX, Fidelity's money market fund
You could move to FDLXX and get almost full state tax exemption , as it holds only tbills. The yield is sitting right around 4.94% right now , so not too shabby to be getting 4.94% for a checking account. Most B&M banks you are getting less than .05% in comparison.
6 month emergency fund + all of my liabilities in one of a few Money Market Funds (FDLXX as my primary bill pay account, TTTXX but I'll move to USFR next week for cash I don't immediately need). The rest in VTI, VOO, VT, VXUS or one of a handful of stocks if I'm feeling playful. A big chunk of my IRA is actually Apple, but that's because I bought $1,000 when shares were like $22 a piece.
Put in a stop/limit order (no expiration) for all my whole shares of FBTC and exchanging all my FNCMX shares for FDLXX. I'm taking the win and sitting on the sidelines until January.
He should be putting it in FDLXX instead of spaxx unless his state does not tax income. 4.94% right now with basically 0 state taxes
Fidelity is best, I moved all my accounts there and use the Cash Management. Can keep all cash in FDLXX and not worry about state taxes since I'm in NY and have checks and bill pay. Next week they will be allowing core account on Cash management be SPAXX which gets 4.96% easy winner
I just recently liquidated my Roth and moved it to FDLXX
yeah, been learning about this issue, and I definitely prefer my Fidelity's account these days. Been moving some coin from Ally and Marcus just to sit there in SPAXX or FDLXX. The Fidelity guy in the office even called to ask " hey what's up, why you using it as a piggy bank?" Told him "I just like the 4.9% bruhhhh!!!"
What are the tax implications holding your emergency fund in SGOV? I’ve got mine in FDLXX on Fidelity. Is SGOV just like any other dividend?
SPAXX in IRA's, FDLXX in a non-retirement account (taxable)
Yeah, sounds like a good deal. Can you post the link here? FZDXX is very high quality with a slightly higher yield, but I prefer FDLXX because it holds only treasuries whereas FDLXX has a little bit of credit risk. Also FDLXX is state tax free, so for me it is higher effective yield. It depends on where you live and what your tax bracket is. Remember these funds are not FDIC insured, but CapitalOne would be. Another alternative after you grab the CapitolOne bonus is SGOV ETF. I have some money in there too. It holds 0-3 month Treasury Bills, so as good as insured, and is yielding 5.27% yield.
I think that offer is expired. Put it in FDLXX at Fidelity. It's yielding 4.94%, it's state tax free, and it's very safe because it's invested in treasuries. Investing in VTI or VOO is a whole different ballgame with a vastly different risk, so it completely depends on your financial situation and goals.
I use FDLXX for my E-fund and down payment. It yields 4.94% and is just about 100% state tax free. It saves me 5% in state taxes (Massachusetts).
I don't know. SPAXX is 4.96 and fdlxx is 4.94%. I didn't even know what FDLXX was, SPAXX was just my core position when I opened my IRA
I liquidated my Roth on April 2nd and was going to go 100% FSKAX but the warning about funds not being settled had me postponed until the 4th. When I saw the first dip I was stoked I didn't buy the day prior. So far I've avoided about 5% losses. I've since moved it all into FDLXX and am probably going to be watching the market until it retests and consolidates. Willing to hold it on there and watch it intensively until June
Robinhood's rate is 5% if you have Gold no? So $5/month to get 5%. I'm pretty sure Fidelity right around there, there's kind of a reason why SPAXX is the largest money market in the world dude. As of April 19th, 2024 [SPAXX's 7-Day Yield is 4.95% without any subscription fee](https://fundresearch.fidelity.com/mutual-funds/summary/31617H102) [FDLXX's 7-Day Yield is 4.93% without any subscription fee](https://fundresearch.fidelity.com/mutual-funds/summary/31617H300) SPAXX and FDLXX both operate as cash sweeps, so you can make trades, use your debit card (ATM fees refunded on CMAs) or free wire transfer to other accounts [Vanguard's VMFXX's 7-Day Yield is 5.27% without any subscription fee](https://investor.vanguard.com/investment-products/mutual-funds/profile/vmfxx#) FDLXX and VMFXX are heavily composed of U.S. T-Bills, states are not legally allowed to tax you on the interest generated from T-Bills. [Use the Money Market Optimizer yourself and click on the VgBestNow and Fidelity BestNow tabs and look for yourself](https://docs.google.com/spreadsheets/d/1ybZv8xuZ1KGSPn4y2gDEycPQX0KJpLbuzFg3hUReJB4/edit#gid=1574271208) If you live in a state with state income tax: **Your After-Tax Yield from Robinhood is guaranteed to be lower than FDLXX or VMFXX** **If you live in a state without state income tax, then you're losing cash at Robinhood when you could purchase SPRXX instead and achieve the same cash sweep capabilities** So your After-Tax yield is lower with Robinhood and then you spend $60/year for that privilege. Make the numbers make sense to me dawg. That doesn't even include the cheat code of purchasing [BlackRock's Institutional TTTXX Fund at 5.18%](https://www.blackrock.com/cash/en-us/products/282697/blf-treasury-trust-fund) through Merrill Edge to avoid the $3 million dollar minimum investment requirement. > The 3% match also includes ongoing contributions forever. But part of that 3% match deal is you have to keep your money at Robinhood for 5 years regardless of their behavior to keep the match. I'm not knocking anyone for taking advantage of the 3% match but the company behind it doesn't have the best track record in terms of systems design and management: ControlTheNarrative, IR0NYMAN, GME. . . But this message isn't for you /u/E_coli42, it's for anybody else that stumbles across this post and hopefully realize they should do their research into their brokerages and not blindly dump all your money into one without knowing what they're about.
Fidelity literally offers SPAXX 5% as a default core position without paying $5 for Robinhood Gold like a dummy. Then I have weekly auto convert to FDLXX to get that 5% state income tax free because you know actual fucking brokerages. When I’m selling cash-secured puts to you regards, I still get paid that state income tax free interest until I’m called. The 3% IRA match is a limited-time offer to make guys like you who cream in their pants from a brokerage UI despite submitting losses to your accountant yearly. Fucking Children lol
It’s VERY safe. Not only does Fidelity money market accounts use SIPC, they have additional coverage thru Lloyds of London. I actually prefer FDLXX, most of the earnings are state tax free.
I see your SPAXX and raise you FDLXX which is exempt from state and local taxes and therefore likely carries a higher after tax yield unless you live in a tax free state!
Fidelity is pretty awesome. I use their cash management account for checking (unlimited ATM fee reimbursement!) and a brokerage account in lieu of high yield savings, in which I hold treasury bills and some of Fidelity’s excellent money market funds (for example FDLXX gets you better after tax yield than a HYSA because it holds treasuries which are exempt from state and local taxes) As an investment platform It’s less automated than Betterment (which I recently moved from) but does most everything you need it to do without the 0.25% fee. If you want automated investing, you can pay for that with Fidelity, too, but at your age I would just go all in on FSKAX or FXAIX and chill, maybe a dash of FTIHX for international exposure if you’re feeling fancy. MUCH later in life you can add bond exposure.
Rates on Treasury bonds have declined over the past 2 years. I'm still holding some that were getting close to 10% but have since declined to be comparable to Treasury bills. T-bills are shorter duration (4-52 weeks) vs bonds and given the comparable yields (5.27% for i-bonds and 5.1-5.3% for T-bills), I'd suggest looking at these instead of the longer duration bonds (that also have an interest penalty if you sell before maturity). They are also State tax free if that's a factor for you. I prefer to buy my own T-bills vs using a fund like FDLXX (also state-tax free) to save on the expense ratio, but you have to buy in increments of $1000 on Fidelity or Schwab (can set these to auto-roll) or $100 on Treasury Direct, vs down to the penny for the money market funds.
I'm with you. I liquidated my Roth last Tuesday and put it into FDLXX, I don't trust the government. With an upcoming election and a high probability Trump might win, I could see the crash happening at the end of the year. I'm waiting to fund my Roth until the end of the year and turned my 401k contributions to bare minimum. I just have a feeling it'll drop later, but it could also sky rocket too, what do I know lol
I’m a crypto degen and I’m here to tell you: please don’t put a significant amount into crypto, especially as crypto markets are just setting new all time highs, *especially* if you have no other investments to fall back on. First, create an account with a major brokerage. I like Fidelity for a bunch of reasons (great funds, better trading tools, more flexible than Vanguard, lets you dabble in crypto if you really want to, great checking account product too) Then ask yourself: if the market saw a big contraction in the next year and your portfolio lost 30% of its value, how would you feel? Do you want to use this money for anything in the next 5 years? 10 years? 20? I’ll say that if you plan to use the money in five years or less, put all of it in a money market fund. SPAXX is great. FDLXX has a roughly similar yield but is not subject to state and local taxes because it invests mostly in treasuries. If you live in a state with income tax or you are a high earner, FDLXX may provide better after-tax returns than SPAXX. You should research more from here if this sounds appealing. If you are not comfortable stomaching a possible 30% loss in value over the next 10 years, you should invest in stocks but tilt more conservative with a bond allocation. Anywhere between 10-40% of the money should go into a low cost, diversified bond fund like BND. The remainder should go into diversified index funds—either some mix of US and International like FSKAX or VTI plus FTIHX or VXUS. Or you could take the lazy (but still extremely valid and maybe even preferable) approach of putting all of your stock allocation—that is, whatever you don’t put into bonds—into a global fund like VT. If you have some risk tolerance and a longer time horizon, I would say it’s worth considering a 5% allocation to Bitcoin either by holding it directly on Fidelity Crypto or Coinbase or whatever, or by holding one of the Bitcoin ETFs like FBTC or IBIT. But don’t go crazy. Crypto his high risk / high reward. Most of the folks you see here will tell you it’s tantamount to gambling. I disagree on balance, but they’re not entirely off base. This is an entire debate unto itself.
>I believe our income needs will be less in retirement but also believe taxes will continue to increase. Yeah, I'm in the same boat. I think having a healthy mix of Roth, traditional, and taxable is the way to go as it will give you some flexibility in where to draw from. ​ >I am contributing the $550 a month into a fidelity money market account (FZFXX) that has a 7 day yield of 5%. I did some research and thought that was comparable if not better than HYSA. It's also easy to manage and access through fidelity. FZFXX is fine. My comment about the HYSA was for your 8 months emergency fund, which you said was in a "traditional savings account", if it's a HYSA already than great. There are other options for all this money that might give you a higher yield, especially if you have state and/or local income taxes. Treasury earnings are exempt from state and local income taxes, so the post-tax yield of tbills, treasury funds (like FDLXX), or treasury ETF's (like SGOV, SHV, BIL, USFR) are probably higher than what you're earning with your savings account and FZFXX. If it's a significant balance you should do the math on how much more you could be earning and decide from there. Personally I keep 2 months expenses in FDLXX and 5 months expenses in SGOV. ​ > I originally planned to invest it in an index fund but thought the money market account at 5% was a good option. Would you still put this in a index in the current market conditions? This goes back to purpose/goals. Money should be invested according to its purpose (especially timeline and risk tolerance), not based on current market conditions or interest rates. The latter is a form of trying to time the market, which usually backfires. Current interest rates are simply a nice bonus for the cash you need to keep on hand, they're not a reason to avoid investing in the market. If you didn't need the cash, then you've earned maybe 5% this year but missed out on 13% growth in VTI over the past 12 months (18% YTD). If you need it in cash, then definitely keep it in cash. ​ > This account is for future potential expenses, most notably, opportunity to buy into the company I work for. I would still need a loan but this account value is a solid down payment on the expected entry fee. I should know that in the next 6 -12 months. While our cash goals are met, we have had a lot of financial changes over the past three years - new house, two kids and four open heart surgeries. I was just being safe and making sure we would not get in a financial bind with all that going on. Regardless, I may decrease this and up my 401k contribution since I am not maxing it out currently. Is that what you would recommend? I think keeping it in cash is a sound approach especially until you figure out if and when you need it.
I don’t do shorts or puts. You have to get the timing right, expirations, interests etc. Just buy stocks I like, or index funds or FDLXX. Honestly the best ones are ones I’ve never sold or traded. I know I could not, nor any super money manager could be a dead guy that does nothing.
This guy knows what he's talking about. Contribute to your HSA, Roth, and 401k. This is your true invested retirement savings. The more you can save the better, but obviously not everyone can contribute to their maximum yearly limits. 'Save til it hurts'. Essentially, the rest of your money should be in a taxable brokerage account. A taxable brokerage account, like Fidelity, with a core position of SPAXX gives you 5% interest and is SIPC Insured. Functionally it behaves like a bank/credit union checking account; you can write checks, have a debit card, do auto deposit, do fund transfers, etc. This gives you 'cash returns' weekly and can be completely hands free. With a bit more effort, you can manually move your core position SPAXX funds into treasuries by manually buying FDLXX which then becomes exempt from State Tax. If you spend, SPAXX/FDLXX it will auto-convert your positions to cash. This is functionally a HYSA without the drawbacks (more liquid) and with the bonus of being State Tax exempt (if held in FDLXX, not SPAXX). You can use your bank/credit unions savings account for emergency funds or whatever, but you're going to get <1% interest when you could be getting 5%. Some people (like me) like to continue to use their banks checking account as a paycheck auto deposit/spend buffer for daily expenses; you get some advantages like any bank spending protections, and better monthly spending reports, and any other features your bank offers. I average less than $5k in this balance; everything else is retirement savings in tax-advantage accounts, or the taxable brokerage account. If I was wiser, I'd ditch the bank account entirely and use the taxable brokerage account as a main checking account to maximize cash returns.
FDLXX should only be federally taxed, no state or local tax on the interest. Someone please correct me if this is wrong, though
There are etfs also that follow tbills like sgov/usfr/bil for example. They are all above 5.15% sec yield and you can buy them almost anywhere so you aren't stuck having to stay at vanguard or any one broker. For my cash holding I prefer USFR, which is a floating rate treasury etf. I think any of them are fine. The one thing i would add that is VMFXX isn't 100% t-bills like the other options , the repos holdings have been fluctuating a lot over the last year or so, so not sure how much of it will be state tax exempt. If you want 100% perceent tbills money market fund at vanguard I think VUSXX is the much better option it has slightly higher yield than vmfxx. As of the end of last month its 98% or so in tbills. VMFXX is like 27% in to tbills and the rest in repos and us governement obligations. Only drawback is vusxx requires 3000 min balance. My main broker is Fidelity which I use their cash management account with their FDLXX, 100% treasury fund, its basically like having a 5% yielding checking account, while rates aren't has high as vfmxx/vusxx it gives a lot flexibility that vanguard doesn't provide. As of this month I have a split of cash holdings between a majority in USFR, and a smaller portion in FDLXX in case I need to withdraw money. Thats my 2 cents on cash like holdings.
FDLXX is better. 90% of its holdings are state tax exempt.
True. But if it’s under a thousand dollars just put it in a treasuries only money market fund like FDLXX. TD is a godawful mess of a system that does not allow selling on the secondary market, has inferior autoroll functionality, and is just a pain in the ass in so many ways. I used for ibonds but won’t use it for anything else.
Thank you everyone for taking the time to respond. Great suggestions here, and instead of commenting on each, I am writing a general response to your suggestions, as to why I asked about what are my options: ​ ​ It is intimidating, because of how many options there are. Honestly, just my own demons to fight. Vanguard, Fideltiy, Schwab? how do I compare? or are they all the same and just pick one? Then, there are bonds, etfs, money markets, etc. In other words, I now understand t-bills, so how do I find a replica of t-bills - track yield of t-bills, principal is secure, can be cashed in around 5 days. and then, furthermore, am I limiting myself by focusing on t-bills? are there other options where principal is secure, tax exempt, and yield is better? A quick search gave me a long list: FDLXX FHQFX VFISX VUSXX SGOV TBLL BIL, BILS Information overload!
Someting to consider about sgov vs most mmf/hysa is that sgov is state tax exempt most mmf like spaxx/vmfxx/fzfxx are not . I assume webull money management is the same. Personal experience wise , I did experiment at end of the last year where I put the same amount of cash into SGOV, USFR, STIP, FDLXX and 3 month Tbill. USFR and 3 month tbill performed the best 3 month tbill you can sell early if you need the liquidity but probably isn't optimal . The best performers were USFR and 3 month tbills. SGOV and FDLXX were similar and STIP had too much interest rate risk , so didn't have the best performance. All of those options had more than 95 percent treasuries so were state tax exempt for me.
Last Thursday I sold all my target date funds and go all-in on fidelity Treasury bonds (FDLXX)
Based on current bond yields I’d probably go half VTSAX and half FDLXX. 5% risk free is insane and would keep things liquid if assets drop and there are lower entry points to enter into housing or stocks.
So, what I'm hearing is I should liquidate all positions of my 401(k) and go 100% into FDLXX?
I recommend switching to a federal government Money Market fund in a Fidelity brokerage account. Works essentially the same as a high yield savings account but with higher yield. Same liquidity and transfer process. Can even write checks out of the account. And if you put it in a treasury only fund like FDLXX, you might save a little on state taxes.
Plenty of Money Markets mostly in treasuries such as FDLXX which satisfy even tough to please state rules such as California
Transfer this cash to Fidelity and buy an ETF holding T-bills, like USFR or SGOV. These are liquid in that all you need to do is sell shares, then trade within Fidelity using the unsettled cash. They pay out monthly dividends. USFR is around 5.35% at the moment and the dividends are tax-exempt at the state level. You can also buy T-bills directly at Fidelity for a slightly higher yield, but they aren't as liquid as holding a fund that contains them. For me the convenience of the ETF is worth the slight reduction. Nothing wrong with a money market fund at Fidelity either, but most are not state tax exempt (FDLXX is), and yields are a little lower. These are treated as cash though, whereas the T-bill ETFs do have a NAV price that rises and falls predictably over the course of each month, following its dividend payout schedule. Lots of good choices. Sitting in a bank earning nothing is not one of them!
FDLXX should be a consideration for people in high tax areas , 4.93% with state tax exemption is pretty good as well.
I got my tbill exposure through FDLXX. While less interest due to expense ratio, it’s convenient and liquid.
Money market funds don't have profits; they distribute yield which is taxed as ordinary income along with your wages. So it's your own federal marginal tax rate and state tax situation that determines how much you'll owe. As such, everyone's situation is different with regard to finding a MMF that delivers higher net (post-tax) income despite having a lower gross yield percentage than some other funds. MMF invested in municipal bonds would potentially be totally tax-exempt. MMF invested in 100% treasury bills/bonds would be state tax-exempt. The specific MMF available to you are usually determined by your broker. At Fidelity for example, there are numerous - SPAXX, SPRXX, FDLXX, FDRXX, FZDXX, etc. Do some research on your broker's site and find out your choices.
You can buy shares of any money market fund in any account. Whether that MMF can be a core position is another story. But buying it is easy. FDLXX at this writing has a 7 day yield of 4.88%, which when compared to SPRXX at 5.03% is a higher post-tax yield in my state (NJ). You do have to keep tabs on these rates though. A couple months back, this was not the case. So if you're obsessive about a few basis points, check regularly.
While you cannot change your core position outside of a select few options, you should be able to purchase FDLXX manually. My core position in my CMA is an FDIC insured sweep, but I purchase SPAXX whenever my paycheck hits for the higher interest rate. Also r/fidelityinvestments will answer your fidelity related questions ;)
As far as I know FDLXX is typically used as a core position in brokerage accounts not just cash management accounts, but the availability of different funds can vary based on the type of account and the brokerage's policies so you might want to hit up Fidelity and ask them what's up. A cash management account can offer some benefits like ATM fee reimbursements, checkwriting, and bill pay, which can be pretty dope if you need those features. But if you're just looking to stash your cash and earn some interest a brokerage account can do the trick too. Money market funds like FDLXX and FZFXX can generate income that's subject to federal income tax but some of it might be exempt from state and local taxes. So if you're looking to save on taxes FDLXX could potentially give you a bit of an edge.
FDLXX invests in near maturity federal debt. SPAXX invests 20% in that and the rest in repos that don’t get the same tax treatment. Some states have municipal bond funds that are very accessible from Fidelity that are federally tax exempt and home state tax exempt.
Why not invest the CMA into something like FDLXX? Fidelity will auto-sell MMFs for you to cover purchases/ATM withdrawals.
VUSXX carries about 30% Treasury Obligation/Redemptions which are not state tax exempt....so this fund is perhaps 70% tax free for states. SNSXX is 100% treasuries....if your broker allows this issue. Etrade does not, Schwab of course does. FDLXX for the Fidelity folks.
One big consideration is the state tax situation. On the face of it VMFXX has a higher yield (5.06%) than FDLXX (4.74%). However, because VMFXX is invested mostly in repos, while FDLXX is invested in treasuries, VMFXX is partially (or completely, in CA/NY/CT) subject to state tax while FDLXX is essentially exempt. Depending on your state tax situation you might come out ahead investing in the fund that appears to have a lower yield. If you're not married to the money market funds but just want exposure to the short term interest rates you might also look at extremely short term bond ETFs like SGOV and USFR.
I would add a few nitpicky things there are some fully treasury based MMF that have same advantages of state tax exempt tbills. Off top of my head FDLXX at fidelity is one of those options. Last time I checked it has decent 4.65% 7 day yield pretty decent. There are also ultra short term etfs that are state tax exempt, I like USFR/TFLO which are floating rate etf for a cash like holding. It doesn't have that much interest rate risk like short or intermediate term bond etfs have. Another option is sgov that a 0-3 month tbill. I believe all 3 etfs have 30 day sec yield sitting a bit above or below 5.2%, so it has decent yields as of right now. Who know s what will happen in future though.
There’s no universal answer. With regard to low-risk investments, people in higher tax brackets will tend to benefit from investments with more tax exemptions, whereas those in low brackets are better off seeking higher before-tax yield. A prime money market fund often has the highest after-tax yield for low- to middle-income people. A Treasury fund exempt from state and local tax or a home-state muni fund exempt from all income tax might be better for high-income people. The available mutual funds depend on which broker you use, but ETFs can be purchased anywhere. Examples: Prime money market funds: VMFXX, SWVXX, SPRXX State/local tax-exempt Treasury funds: SGOV (ETF available anywhere), SNSXX, FDLXX Home state muni funds: VCTXX (California), SWYXX (New York), FSJXX (New Jersey) Muni funds are exempt from state and local tax only if the bonds are issued by your home state. So VCTXX is fully tax-exempt for Californians, but residents of other states would owe state tax. When taxed, bond income is always taxed as ordinary income. A fund that holds US Treasury bonds like SGOV has the same tax exemptions as directly holding the bonds yourself.
The new allocation plan is BRK.B only for equities and GOVZ/ZROZ/EDV for the long term treasury bond allocation, and keep about $2k or so in a treasury-only money market such as FDLXX for occasional spending on medical expenses. I would plan to pretty much never sell the BRK.B except if a tax loss harvesting opportunity presents itself. Since HSAs are not taxed at the federal level, and treasury bonds are state tax exempt, I won’t have to worry about “phantom interest” or ETF dividend income from the bonds. But if the bond funds rise significantly in value due to declining prevailing interest rates, I would sell to buy more BRK.B and rebalance the allocations. Capital gains on treasury bonds are taxed by California as ordinary income, so harvesting losses on the bond fund is a good idea, I can rotate between the three funds every so often whenever they’re showing a loss.
I like BRK.B, I’m worried about its value if something were to happen to Warren or Charlie. I’m assuming I can open the HSA at Fidelity and they will auto liquidate FDLXX (treasury-only money market) for debits, so that’s where the spending money would be held. Three funds and some cash in a money market overly complicated? I really don’t mind tending to it and I’ve found some tax loss harvesting partner ETFs for each allocation. I’m not opposed to simplification though, any suggestions other than BRK.B for the equities allocation?
A ton of banks do. Last month it was 11 month CDs. I feel like I've never seen these weird CD term lengths before. My guess would be that they have specific bundles of assets maturing at these times and they're trying to attract CD deposits to cover them. I'm almost tempted to do some CDs, but I don't want to lock up money I might need, and I'm slightly paranoid that they'll roll over into a near zero rate once they mature. Mostly just building up savings at Fidelity in MMFs. I was doing FDLXX because it's state income tax exempt, but now its yield is too low compared with SPAXX for the tax savings to make up for lower yield.
>So then why do the external sites like marketwatch and yahoo finance, etc, not show the 7-day yield? They only show other yields. I have no idea. Actually I am looking at Marketwatch's page for FDLXX (an MMF I use), it isn't even showing the right expense ratio. Yahoo Finance does show me something close to the 7 Day Yield for FDLXX, but basically no other info. >This made me think that maybe the fund managers themselves were focusing on 7-day yields because that made their fund look better. MMFs should be trying their best to look as good as possible while staying within their rules. MMFs use very short term holdings, so their rates can change quickly.
Why is your core position FCASH instead of SPAXX? SPAXX is over 4% right now and I thonk FCASH is 2%. Return is much better on SPAXX or in your I assume high tax bracket FDLXX which is federal tax free since it only holds treasuries instead of being all repos like SPAXX.
Did that fund also have commercial paper? I'd expect a fund that only deals with T bills, bonds and notes, and repos of those (for example SPAXX would be safer. The repos are very short term loans to banks, but they're backed by treasuries as collateral. A fund like FDLXX which is only treasuries should in theory be the safest MM fund, although it's still not FDIC insured, but if treasuries become worthless we're really in trouble.
Depending on where you live (or OP lives) you can put money in FDLXX, a Treasury Only Money Market, and earn a bit more with a few clicks. My after tax return is 0.25% higher as of last Friday. If you have $50,000 it'll take 30 seconds to earn $1250 more per year.
FDLXX maybe is what I read in another thread 4.33%
Someone here mentioned FDLXX which has state and local tax exemptions due to investing majority in T-bills. I see FZSXX has a lot in repurchased agreements which are taxable interest. Or am I getting this wrong
Dang. I opened discover a few months ago for a $200 promo for $25k. It’s at 3.5% currently. It never had a specific time that money need to stay but I left it there for 60 days just in case. I just moved all my HYSA money to fidelity to put into FDLXX, although still looking at some other promising ones suggested by others
Well I just transferred ~48k from HYSAs to dump into FDLXX. Thanks for this. Guess we’ll see together!
So if I invest in FDLXX instead, I wouldn’t get taxed on the interest for state?
I just got turned onto FDLXX, it holds like >95% treasuries which is helpful for those of us living in high state and local tax zones
Yes, FZFXX, FDLXX, and SPAXX are mutual funds offered by Fidelity. Investing in these funds with your leftover cash can be a good way to make sure your money is fully invested and potentially earn some interest. [The rate right now is over 4%](https://usefidelity.com/what-is-spaxx-in-fidelity-why-is-this-under-my-account/).
Those are mutual funds, right? FZFXX, FDLXX or SPAXX? So if I have some petty cash after buying treasuries, and buy these. Are they gonna be worth it? Like I have maybe $1,400 in my account, I can deploy that cash so I'm fully invested (LOL)? I have AMTD.
Thanks - so if I find a 6 month treasury on Fidelity, and it says 5.1%, then I really only get 2.55% and would need to repurchase another treasury after it matures at the 6 month mark. FDLXX says it's only 1.9% for the one year, so it seems to be a mix of all kinds of treasuries not just the highest yielding treasuries.
Yup, just look up Fidelity treasury bonds, and the first link should be it. I have purchased them through Fidelity. ​ SPAXX is like the ETF of low risk investments (plus a bunch of other low-risk investments). FDLXX might be closer to an ETF of gov't securties though. T bills are purchased individually and you have to manage them yourself (e.g., buy more when they mature).
sgov has 30 day sec yield 4.41 and YTM of 4.45 , 1.45 is 12 month yield. Its a perfectly good option if you want a full treasury tbill etf. VUSXX is an option for vanguard users, FDLXX is good option for fidelity users. VUSXX used to be 100% treasury I don't exactly what they are doing now holding 23%+ in repos.
The equivalent fund to VMFXX at Fidelity include - SPAXX, FDRXX, FDLXX, FZFXX - these are the zero minimum funds. If you have more capital, there are a bunch of other government money market funds. If you prefer a prime fund, there are another half dozen options. And if you prefer muni money market fund, there are another dozen options. It depends on the type of money market fund and the minimum investment.
FDLXX at Fidelity is probably a safer choice for a money market fund as it only uses US treasuries. SPRXX contains financial company commercial papers and is riskier imho. There is a higher possibility of principal loss with SPRXX. While SPRXX has a higher yield, the difference is not large enough to justify the risk.
I will be a bit nitpicky and state to factually correct you would need vusxx, fdlxx, and snsxx to be the most similar to 4 week tbills due to the ones you listed above have either repos or some government backed morgatges. According to vanguard VUSXX is 100% state tax exempt, FDLXX is 96% and SNSXX is 84%. All the other ones with repos or GMMA are much lower maybe 65 or lower. I also think at the major brokers to buy tbills at auction or secondary market it shouldn't cost anything , at least for me at fidelity it didn't cost me anything other than reaching min of 1000 per tbill.
That's an old press release, the fund was temporarily closed in 2020 but it's not closed anymore. I bought into it after that myself. You probably had an issue because it's a Vanguard fund but you tried to buy from Fidelity. I believe the equivalent at Fidelity is FDLXX. Looks like it's a little behind on yield but it should catch up soon. There can be slight differences between funds depending on the maturities of the underlying treasuries.
I see FDLXX, treasury only MMF, but it shows up as taxable. Am I misunderstanding something here? I see FMOXX, tax exempt MMF, which looks quite similar to the above. Both seem to provide yield that looks anemic, like 10x less than what STIP is currently providing. However I'm not sure if I'm reading it correctly so please share insight. That said, I understand STIP may be considered relatively volatile for a cash alternative but I'm curious about its current state in particular. Specifically, its yield is super high while the price has already dropped a ton (see history). What are the odds that it will drop more versus the yield dropping over the same period?
Tbills you hold till maturity so interest when you buy is what you get till you redeem for whatever duration. Value can't go down, which isn't the case with short term treasury etfs vgsh or shy or short term tips like vtip and stip. As interest rates slightly increase like they are now the short term tips and treasury bonds will lose value. If you aren't held down to fidelity , vanguard has best option for treasury only money market funds , they have 7 day yield of 2.36 vs Fidelity Treasury only money market fund which has 2.07. Only caveat is VUSXX has 3000 min balance, while FDLXX has 1 dollar min balance. If you are looking for inflation protection play Ibonds should be your first option if you can hold for more than a year. Its currently at 9.62% or something like that. Max per year is 10k.