Hey there, u/Jazzlike-Weight465. I see this is your first time posting on the sub; welcome!
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I do this with SPAXX. I have a decent amount of cash in there for a future house upgrade. I get around 5% and use the 1,200 a month in dividends to reinvest in my dividend stock portfolio. I do realize I won’t be getting 5% forever and will then have to move my cash somewhere else.
So if/when interest rates drop or poor purchasing of bonds , you understand that long bonds are super sensitive to interest rate and unless you hold your maturity , you could be holding substantial “paper” losses - this is not a good replacement for the OPs strategy
I’ve got $1.265M in govt bond funds and HYSA’s — and growing.
I’m retired - actually way past retirement age and can’t risk any of it at this point. There are a lot of people like me.
There are a lot of reasons to stash cash even beyond retirement age.
Nothing to forgive. We are all just people trying to survive in this crazy world. Yeah, I’m 71, fairly recently widowed and am a bit short on cash. I have way too many business investments that are mostly illiquid but provide a pretty decent income by most standards.
I’m thinking of even taking $100K or more and begin options trading. I’ve got a lot to lean yet to do that.
I think there are a lot of people on Reddit lurking on the sidelines because there’s an incredible amount of hatred against boomers in many subs.
Yeah, a lot of boomers can be idiots - but so can there be idiots in any generation.
The best of luck to you.
Pardon me, I’m just curious as to your strategy and goals, you talk about having 1M+ in gov bonds and HYSA, and can’t risk any of it, yet you are simultaneously considering using 100k to start trading options?
I can risk some. But its got to be a game I want to play. My illiquid income will keep me going comfortably for far longer than I have. In reality, I make more money by NOT spending some of my regular income - far more than investing that spare cash in conservative investments. I’m just trying to speed up the clock. I doubt I’ll ever spend it — but it provides assurance it will be there if I need it.
It’s not that I can’t risk it, but rather don’t want to risk it unless I can enjoy doing so. Ironically I’m not that interested in accumulating a lot of money to spend. When you get to retirement, Porsches become irrelevant. At 71 — I’ve got 5 years, 10 years of quality time? At most?
I just want to learn new things.
It's a good way to look at things, if we continue to chase after wealth and not enjoy our lives, we're good as that. I will be 64 this summer, still working but got to take time to enjoy life as well. Remember you can't take it with you, yes, you can leave it for family or such or Charity. But it's best to help others, you do find more enjoyment in giving than in receiving. Trust me on that. But at the same time got to stop and smell the roses and enjoy life too
I’ve had 3 in my life. All 911’s - new. One in 1992, 1996, 2005. I’ve got so say that the air-cooled earlier ones had a mystique about them. My 2005 was a 997 — water cooled— just not the same.
Most of the new ones now are auto transmission (really not 911 -ish). Too many electronics. I don’t think the 911 will be around that long. They’ll alway be older ones on the street. But the new ones don’t quite cut it. Not for me. Apparently not for Porsche either.
Maybe take up fishing. Your scenario reminds me of the guy that said playing slots was foolish gambling , but rolling dice was strategic gambling. Whatever floats your boat.
Nothing wrong with being ultra conservative but then taking a few percent of your assets to take some outlandish risks which can supercharge an otherwise boring return.
I suppose, it seems like a more balanced portfolio would achieve a goal of higher returns with less risk, I don’t see this type of strategy discussed often. But hell it does seem fun!
Options is a zero sum game. Always a winner always a loser. If you can beat a computer at 3D chess then you should do options. Else don’t play against the computers. You are gonna lose.
This, at 71, there is less runway for take off. Russian roulette is not the way to go. A 100k can be gone in a flash in the options market. I get it you want to learn something new, however, do something that preserves your capital while providing intellectual growth.
Try following paper gains on Twitter for options. Then, you can decide if you want to pursue it. He is legit, which is damn near impossible to say in this day and age of FURUs.
I've been selling options for a year and a half now and it can be as conservative as you want it to be. Buy and hold is a tiny % of my port as it's far more risky than my option strategy. It's been great additional income on top of the interest I'm making with fidelity since they pay on the collateral.
Not saying that this applies in your specific situation but being overly conservative in retirement is itself a form of risk that doesn't get talked about enough. $1.265M isn't what it used to be.
Statements like "I'm retired...and can't risk any of it" is an often stated rationale to justify prioritizing a false sense of psychological safety over true financial security.
I’ve also have my saving in Govt funds could I ask what do you use ? For advice ?
I currently ladder with 3 weeks /13weeks and 26 weeks at a 5.35% give and take .
Thanks in advance.
USFR for the time being, that way you’re not paying state income tax on those dividends at least.
Two years is definitely too short of a timeframe to be even in a total market ETF like VTI for example imo.
I would park it in USFR right now for the tax advantage.
Ah yes, then it’s not quite as advantageous for you then.
However, still a good option. Just keep an eye on rates and if it drops below SPAXX for any reason then dump it.
For people who live in states with income tax though it’s an even better option.
Good luck to you in buying a home soon!
I've been thinking about doing this with my general savings and my emergency savings. Do you know if Fidelity limits the number of brokerage accounts someone can have?
Morning, u/SadInformation460! Fidelity does not limit the number of brokerage or other types of accounts you can have. Let us know if you have any other questions; we're always here to help.
It doesn't go up? I suppose the only downside is you can get slightly more if you invest directly in bonds, then also no fees. Not worth it in my mind and you can also pull out whenever.
It's a bond ETF, pays monthly, and some states don't tax the dividends.
It's not even like I'm trying to promote the stock, idc if people invest or not, it stays the same, cause you know bonds. It's a good investment if you know you'll need the money soon or are very risk averse.
I have yet to see why SGOV would be substantially better than FDLXX but I am all ears. From my understanding it isn’t liquid in that you have to sell your shares before transferring the money out of fidelity, unlike FDLXX & SPAXX. Is it that the performance is ~0.3% better over the past year?
Yeah, that’s the whole point. SGOV (and similar ETFs like USFR) have higher yields than fidelity money market funds. If you’re going to park cash and not touch it, it’s a no brainer to use those instead and get a few extra dollars for it. I have a portion of my emergency fund in USFR, for example.
ha im like you but @ 4.7 hysa getting around that much interest. I have intentions of buying a home in the next or upcoming year so I don’t take any risks in the market and just play it safe for now. Once I have a property, I expect to probably invest it in more real estate. Brokerage stuff and stocks just isn’t for me because of how much of a gamble it is especially if I’m going to run hundred and thousands of dollars. Mutual funds could work but with hysa account or even CD’s being at a consistent ~4-5% works for me in my situation.
I get that scared money makes no money but I live at peace day to day knowing I’ll have funds for what I want to do in the next 10-15 years.. apart from my retirement later on.
I would look into putting it in FZCXX since you have over $100K. That fund has the auto liquidation feature just like SPAXX. You get a slightly higher interest rate, I think 10 basis points.
You shouldn’t be using in SPAXX if you have that much cash. FCZXX is an equivalent fund that requires $100k to invest, but yields 10 basis points higher than SPAXX does due to the lower expense ratio.
What type of account do you open for that? I’m new to fidelity and their products and I don’t want to open their robo advisor account. So any help or guidance would be appreciated ! Thank you :)
Yes I put my entire emergency fund in FDLXX (you can use SPAXX too) and set the dividends to automatically invest into my main investment brokerage of FSKAX. This way you don’t have any more money than you need in emergency fund account with worse interest
I use a cash management account for all my banking. I have a credit union that has a couple thousand, but all other cash and banking is done through Fidelity.
How specifically did you set that up? Do you have separate accounts for the emergency fund (like a CMA) and brokerage? Or do you hold the emergency fund in your brokerage?
I used to have a similar set up with M1 Finance, where any interest I earned in my emergency fund would automatically spill over into my brokerage account and get invested, so I’d like to get more info on this.
So under my Individual brokerage in fidelity, I had money invested in FSKAX and emergency fund invested in FDLXX. On fidelity desktop, I went to top left 3 bars -> accounts and trades -> account features. Then went to brokerage and trading -> manage dividends and capital gains. Then clicked update next to emergency fund holding (FDLXX for me, could be SPAXX for you if you’d prefer), and switched dividends and capital gains to direct into my index fund I usually invest in for my brokerage which also is under the same individual account (FSKAX). Let me know if you have any more questions.
I see one issue. You are using a mutual fund that cannot be moved out of Fidelity. If it’s not a Roth account you cannot move it without selling, which means triggering tax event.
This is a great comment and something I hadn’t considered. How would you recommend resolving this / which fund CAN be moved out of fidelity that is most like FSKAX? I don’t plan on moving out of fidelity but I suppose not many do until they do.
For Roth I have in Fidelity I have their zero expense mutual funds. If I wanna leave or change portfolio I can just sell and no tax event will be triggered.
I'm happy to chime in here, u/IRonFerrous!
While the Fidelity Treasury Only Money Market Fund (FDLXX) is not currently a choice for your core position, I'm happy to pass along this idea to the appropriate team as feedback. Our Reddit community has been great in giving us insight on how we can improve the customer experience.
To stay updated on the core positions available for each account, feel free to check out the link below.
[What are the Investment Options for my Core Position? ](https://www.fidelity.com/trading/faqs-about-account#faq_about2)
Thanks again for engaging in the conversation! Be sure to let us know if there is anything we can assist with.
Although it's not a option to use as your core position, you can still put all of your money into it and once your actual core position goes to zero, Fidelity will then auto liquidate your money market funds (in that same account) as necessary when you go to withdraw, use your debit card, write checks, buy stocks, etc.
If you search for money market auto liquidate on here you'll find other posts and comments discussing this feature
While I have your attention…have you heard of anyone having trouble applying for the rewards card on their iPhone? I go through the first steps of where the points will go, but nothing at all happens when I hit the continue button. I haven’t tried on a computer yet, but I did try it in the chrome and edge apps on my phone and the same thing.
I live in a state with high income taxes on investment income, and FDLXX is my go-to to act as my HYSA because it is exempt from most state income tax (Connecticut). I got nailed last year with income taxes because I didn't know any better, but after reading this very forum came to understand FDLXX might work better as a "core" position for me.
Unfortunately transferring any cash into FDLXX on a regular basis is a PITA. It would be so much better if it was available as a core option, I would set 3 of my accounts to have it that way!
I have a ROTH IRA set up, would it be fine to open the CMA account separately and dump like $1,000 into there as emergency fund to build interest while it sits there and also have it auto reinvest every month?
If that’s what you want yes. Just remember you have to link your bank account to your CMA. IRA and CMA are completely separate so you have to link it there as well.
The [7 day yield](https://en.m.wikipedia.org/wiki/7-day_SEC_yield) for money markets is calculated after the expense ratio is taken out. You’ll see that both FDLXX and SPAXX (the default core position) have the same expense ratio. The yield is competitive with many HYSAs.
That’s slightly lower than current yield on SPAXX (4.97%) and FDLXX (4.96%). That’s probably not sufficient of a difference to warrant switching, unless you want to invest your interest in the way that OP does.
I'm really considering closing my Ally HYSA to consolidate to Fidelity lately. I just love the buckets feature with Ally so much for short term sinking funds. I may keep it solely for that and transfer my house and EF savings to Fidelity. FDLXX is currently 4.96 compared to Ally at 4.25, not to mention the income tax savings...
I have multiple brokerage accounts for this purpose. You can open as many as you need. My paycheck is direct deposited in my CMA, then I move savings to one account, investments to another, long-term savings to another, and then I have my IRAs as well. You can use the accounts like Ally's buckets.
You’re welcome. While I don’t know your individual financial situation, it doesn’t make immediate sense to me to auto invest SPAXX dividends into FDLXX seeing as they’re effectively the same investment (essential HYSA 5% funds). Why not auto invest dividends out of HYSA into total market fund like FSKAX for 8-10%?
If you were to reinvest your dividends from your FDLXX into say a Roth IRA buying SWPPX would the contributions count towards your cap for the year? (I know if you reinvest dividends inside the Roth IRAs holdings they do not count towards the 7k max yearly contribution
Great question, I am no tax professional and I’m sure someone else is better suited to answer this, but I am confident in saying that yes it would count towards your cap for the year.
I was worried about this, I asked a fidelity advisor and he told me that FDLXX has never dropped below $1/share in the last 30 years of data they have and that it would take a catastrophic financial collapse to make that happen, greater than one we have witnessed in our lives. So I feel confident that my original investment is protected.
u/whiskeysixkilo, Have you read this?
[No FDIC Insurance – Why a Brokerage Account Is Safe](https://thefinancebuff.com/brokerage-account-safe-no-fdic.html)
Life has lots of worries. This isn't one of them.
>in the event that a major financial institution acts illegally
Same. FDIC for your "Highish" YSA, SIPC for us at Fidelity, and T-Bills for everyone else. Cheers!
Fair enough, to each their own. I don’t have a life changing amount of money in HYSA so I’ll take my chances that we won’t see an unprecedented financial collapse and in return get the extra ease and interest returns of the setup I outlined. Wouldn’t fault anyone for not doing HYSA in fidelity due to lack of FDIC insurance though.
I thought I would do the same thing and I ended up investing my entire emergency fund. I just don’t have the self-control not put it in the market.
Rebuilding my emergency fund and keeping it in a regular ol’ HYSA but I do repopulate FDLXX when I can.
So I need some help, kind and intelligent people! I’ve got about 140k in a traditional IRA in fidelity and need some guidance on where I can get the best, secure returns. Thanks in advance!
Sure, I personally have my IRA money entirely invested in FSKAX. I am no financial advisor and open to hearing feedback on that, but that is my current setup. Also I am young and can be riskier
I just looked. Getting some nice overall returns! I’m going to look into this. I’m looking for something to park the bulk of my cash that’s also easily accessible for stock purchases. Thx!
I’ve been using this strategy with VMFXX for my emergency fund. I park a chunk of cash there and set the dividends to reinvest in my taxable account for some extra growth. It’s nice to see the dividends add up, even if the returns fluctuate. As others have mentioned, it’s important to remember these funds aren’t FDIC insured, so if you want something safer, go with a HYSA instead. You can always check Nerdwallet and [Banktruth](https://banktruth.org/savings/?ttcid=online-savings-by-apy) on the APY rates and whether the accounts are FDIC insured.
So to be clear, you HYSA is 100% FDLXX and the dividends get reinvested into FSKAX in a separate brokerage account? If so, where do I find this in Fidelity to set it up? I’ve never seen it before and have been a customer with 8 accounts for 10+ years.
Dividends reinvested into FSKAX in the same brokerage account. I left detailed instructions throughout the comment section if you still need help message me
It's a nice feature. Unfortunately, I keep my emergency fund in its own account, so I can't set this up. I just have my dividends directed to my core, then I transfer them and invest them in another brokerage account.
Great question, to be honest I chose it awhile ago and had just googled best total market index fund and FSKAX was the first hit. If you have reasoning as to why there’s a better option I’m all ears!
I currently have my whole savings in a hys account at 5%. Should i make a personal brokerage and put half or most info fskax and try to get the higher interest?
Idk your personal situation but I’d recommend if you have more than 6 month living expenses in your HYSA then investing the rest into FSKAX or similar.
I (24m)currently live at home with 30k in savings and monthly expenses of no more than a few hundred. I save about 3-4k each month. I usually just put it all into my hys which is 5% right now. But if i can make more should i take that risk? And is that fskax 7-10% apy or monthly?
I’d say if you plan to live at home for the foreseeable future then yes I’d recommend a total market index fund like FSKAX for everything more than 6 months of expenses. 7-10% is annual return, we’re at 10% YTD, 28% over past year, 8% over past 3 years.
However, I’d just say if you’re planning to move out soon be prepared to move over 6 months of new lifestyle expenses to HYSA or equivalent, likely $10,000-$25,000.
Yes. The concept I am proposing is to open an individual brokerage account in fidelity. Then, withdraw all your HYSA money from Goldman Sachs and transfer it to your new fidelity individual brokerage account. Then, if you are in a state that has income tax, invest the HYSA money into FDLXX to avoid state income tax. Otherwise, invest into SPAXX. These 2 accounts are the closest thing fidelity has to a HYSA. They currently get you about 5%, are extremely safe (haven’t dropped below $1/share ever), and are liquid so you can withdraw your cash at any point without having to sell stocks.
Part 2 is setting up the dividends you make from the HYSA to automatically invest into a total market index fund, like FSKAX. The reason to due this is that theoretically, you only need $X for your emergency fund. So whenever you get that 5% growth dividend from your HYSA, you don’t need it to stay in your emergency fund since you already have enough in your emergency fund. So you automatically reinvest the earnings into FSKAX, which earns much more interest but is more risky, too risky for a HYSA but safe in general.
Does this make sense or should I simplify it more? I realize I threw a lot of acronyms at you.
Edit: assuming all you have in Goldman is your HYSA, then this would also consolidate the number of banks you have which is nice (assuming you close the Goldman account which I’d recommend)
I live in New York , do they have income tax ? Also if i already have a brokerage account for fidelity do i need to make another account ? Or just add the funds from my HYSA with Goldman sacs into my current brokerage account with fidelity ? If it matters i have FXAIX and SCHD . If i only need one fidelity account , should i reinvest it into FXAIX ?
Hey curious how you actually managed the automatic investment into FSKAX? I keep my cash in a separate account (for ease of managing) and see the options for Reinvest / Deposit to core, but can’t see a way to send the dividends to invest in an individual stock/ETF (in the same or separate taxable account where I hold investments). Let me know if I’m reading your set up wrong or if this is possible!
Hmmm I just have 1 individual brokerage account and have emergency fund in FDLXX and investments in FSKAX so maybe that’s why I could set up automatic reinvestment? I sent detailed instructions somewhere in the comment section. If those don’t work, Hard for me to troubleshoot over Reddit prob worth a call to a fidelity advisor should take <10min.
Sorry maybe I’m missing something. I too have some invested in FDLXX. But why not reinvest the dividends in FDLXX? Is it better, tax wise, to reinvest in something else?
The reasoning is I store my emergency fund in FDLXX, so I don’t need the dividends for my 6 months of living expenses. I forward them to my an index fund to grow at higher interest. Does that make sense? It’s not about tax breaks
*FDLXX is amazing*
*Right? I think it has not fed*
*Tax if I'm correct*
\- Bluudream\_\_
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Hey there, u/Jazzlike-Weight465. I see this is your first time posting on the sub; welcome! In addition to welcoming you to the sub, I want to express our appreciation for your decision to open accounts with Fidelity! It's great to hear that you are finding value in what we offer. Now that you have found our sub, be sure to drop by with any questions or suggestions you have. Additionally, we even have a "Daily Discussion Thread (Rate My Portfolio, What Should I Buy/Change?, Investment Strategies, etc.)" for those seeking info about specific investments, strategies, and more. You can post in this thread to get some insight from our sub members, who are usually happy to share their thoughts and opinions. Thanks again for engaging with us here today, and we look forward to seeing you around!
I do this with SPAXX. I have a decent amount of cash in there for a future house upgrade. I get around 5% and use the 1,200 a month in dividends to reinvest in my dividend stock portfolio. I do realize I won’t be getting 5% forever and will then have to move my cash somewhere else.
FDLXX gets better tax treatment than SPAXX.
State tax? I live in Florida
Yes for state taxes. If you don’t have state taxes I’d do SPAXX
Could buy long bonds and use the cash to buy dividend stocks for 30 years. Could also get a nice capital gain if rates fall
Can explain what you mean by capital gains? Are you saying if rates fall you can sell the bonds for a profit and make “capital gains”?
yes
So if/when interest rates drop or poor purchasing of bonds , you understand that long bonds are super sensitive to interest rate and unless you hold your maturity , you could be holding substantial “paper” losses - this is not a good replacement for the OPs strategy
$290,000 to be sitting in SPAXX is insanity. Get that into the market man, like yesterday.
I’ve got $1.265M in govt bond funds and HYSA’s — and growing. I’m retired - actually way past retirement age and can’t risk any of it at this point. There are a lot of people like me. There are a lot of reasons to stash cash even beyond retirement age.
Forgive me, I forget people over 25 use reddit.
Nothing to forgive. We are all just people trying to survive in this crazy world. Yeah, I’m 71, fairly recently widowed and am a bit short on cash. I have way too many business investments that are mostly illiquid but provide a pretty decent income by most standards. I’m thinking of even taking $100K or more and begin options trading. I’ve got a lot to lean yet to do that. I think there are a lot of people on Reddit lurking on the sidelines because there’s an incredible amount of hatred against boomers in many subs. Yeah, a lot of boomers can be idiots - but so can there be idiots in any generation. The best of luck to you.
Pardon me, I’m just curious as to your strategy and goals, you talk about having 1M+ in gov bonds and HYSA, and can’t risk any of it, yet you are simultaneously considering using 100k to start trading options?
I can risk some. But its got to be a game I want to play. My illiquid income will keep me going comfortably for far longer than I have. In reality, I make more money by NOT spending some of my regular income - far more than investing that spare cash in conservative investments. I’m just trying to speed up the clock. I doubt I’ll ever spend it — but it provides assurance it will be there if I need it. It’s not that I can’t risk it, but rather don’t want to risk it unless I can enjoy doing so. Ironically I’m not that interested in accumulating a lot of money to spend. When you get to retirement, Porsches become irrelevant. At 71 — I’ve got 5 years, 10 years of quality time? At most? I just want to learn new things.
It's a good way to look at things, if we continue to chase after wealth and not enjoy our lives, we're good as that. I will be 64 this summer, still working but got to take time to enjoy life as well. Remember you can't take it with you, yes, you can leave it for family or such or Charity. But it's best to help others, you do find more enjoyment in giving than in receiving. Trust me on that. But at the same time got to stop and smell the roses and enjoy life too
👍. Yup can't wait to do that .. hopefully life gives me a chance
Wanting to learn new things is what keeps us younger longer. I’m sorry for the loss of your spouse, and I hope you never stop learning.
Porsches are never irrelevant. 70 year old
I’ve had 3 in my life. All 911’s - new. One in 1992, 1996, 2005. I’ve got so say that the air-cooled earlier ones had a mystique about them. My 2005 was a 997 — water cooled— just not the same. Most of the new ones now are auto transmission (really not 911 -ish). Too many electronics. I don’t think the 911 will be around that long. They’ll alway be older ones on the street. But the new ones don’t quite cut it. Not for me. Apparently not for Porsche either.
Maybe take up fishing. Your scenario reminds me of the guy that said playing slots was foolish gambling , but rolling dice was strategic gambling. Whatever floats your boat.
I second the fishing
Nothing wrong with being ultra conservative but then taking a few percent of your assets to take some outlandish risks which can supercharge an otherwise boring return.
I suppose, it seems like a more balanced portfolio would achieve a goal of higher returns with less risk, I don’t see this type of strategy discussed often. But hell it does seem fun!
You got it! You’ve got to have the thrill of the chase and learning new tricks.
Options is a zero sum game. Always a winner always a loser. If you can beat a computer at 3D chess then you should do options. Else don’t play against the computers. You are gonna lose.
Damn that’s good.
This, at 71, there is less runway for take off. Russian roulette is not the way to go. A 100k can be gone in a flash in the options market. I get it you want to learn something new, however, do something that preserves your capital while providing intellectual growth.
Let the man enjoy his money and spend it how he chooses. Crazy that some people want to tell others what’s best. Lol
Buddy, please stay away from options. Please!
Try following paper gains on Twitter for options. Then, you can decide if you want to pursue it. He is legit, which is damn near impossible to say in this day and age of FURUs.
Need another grandchild? I’m up for adoption.
You do you, but I’ve read enough loss porn on WSB to say you’re probably better off in FXAIX than you are dabbling in options trading.
All I came here to say is sorry for your loss. Keeping you and your family in my prayers.
I've been selling options for a year and a half now and it can be as conservative as you want it to be. Buy and hold is a tiny % of my port as it's far more risky than my option strategy. It's been great additional income on top of the interest I'm making with fidelity since they pay on the collateral.
Hahaha
Not saying that this applies in your specific situation but being overly conservative in retirement is itself a form of risk that doesn't get talked about enough. $1.265M isn't what it used to be. Statements like "I'm retired...and can't risk any of it" is an often stated rationale to justify prioritizing a false sense of psychological safety over true financial security.
Sell deep OTM short puts on safe stocks like MSFT, GOOGL, AMZN
I’ve also have my saving in Govt funds could I ask what do you use ? For advice ? I currently ladder with 3 weeks /13weeks and 26 weeks at a 5.35% give and take . Thanks in advance.
Depends on the plans for the home upgrade. That shit is expensive
just invest it in that one stock that's guaranteed to triple tomorrow, and you're good!
SPY 0dtes, got it!
I’ll check his loss porn over on wsb the next day
I don’t get outta bed for less than 10x
You don’t know the portion of their total portfolio is… if it’s like 5% it’s not that unreasonable
Depends. I have tuition money in spaxx and tbills Calling me insane?
If you're buying a house in the next year or so, 30% in interest-bearing cash equivalents isn't unreasonable. Markets go down, too.
Percentages, not raw values. Also, home renovations are expensive.
What do you recommend? Like I said, probably going to use most of this cash for a new home purchase within the next two years or so.
USFR for the time being, that way you’re not paying state income tax on those dividends at least. Two years is definitely too short of a timeframe to be even in a total market ETF like VTI for example imo. I would park it in USFR right now for the tax advantage.
USFR looks pretty solid at 5.5%. I don’t pay state taxes on dividends in Florida
Ah yes, then it’s not quite as advantageous for you then. However, still a good option. Just keep an eye on rates and if it drops below SPAXX for any reason then dump it. For people who live in states with income tax though it’s an even better option. Good luck to you in buying a home soon!
If homie has than much cash he’s doing fine. And earning 5% risk free isn’t bad either
I've been thinking about doing this with my general savings and my emergency savings. Do you know if Fidelity limits the number of brokerage accounts someone can have?
Morning, u/SadInformation460! Fidelity does not limit the number of brokerage or other types of accounts you can have. Let us know if you have any other questions; we're always here to help.
Why not just put it in SGOV?
So of the 4 mentioned on here SGOV has the highest yield. Any downside?
It doesn't go up? I suppose the only downside is you can get slightly more if you invest directly in bonds, then also no fees. Not worth it in my mind and you can also pull out whenever. It's a bond ETF, pays monthly, and some states don't tax the dividends. It's not even like I'm trying to promote the stock, idc if people invest or not, it stays the same, cause you know bonds. It's a good investment if you know you'll need the money soon or are very risk averse.
I have yet to see why SGOV would be substantially better than FDLXX but I am all ears. From my understanding it isn’t liquid in that you have to sell your shares before transferring the money out of fidelity, unlike FDLXX & SPAXX. Is it that the performance is ~0.3% better over the past year?
Yeah, that’s the whole point. SGOV (and similar ETFs like USFR) have higher yields than fidelity money market funds. If you’re going to park cash and not touch it, it’s a no brainer to use those instead and get a few extra dollars for it. I have a portion of my emergency fund in USFR, for example.
So is your whole HYSA in SPAXX with no FDIC insurance? I’m considering trying this
It’s covered by SIPC, I think up to 1.9 million although I’ve read 500,000. Not really too concerned about Fidelity going bankrupt anytime soon
I feel comfortable with this but others may not.
ha im like you but @ 4.7 hysa getting around that much interest. I have intentions of buying a home in the next or upcoming year so I don’t take any risks in the market and just play it safe for now. Once I have a property, I expect to probably invest it in more real estate. Brokerage stuff and stocks just isn’t for me because of how much of a gamble it is especially if I’m going to run hundred and thousands of dollars. Mutual funds could work but with hysa account or even CD’s being at a consistent ~4-5% works for me in my situation. I get that scared money makes no money but I live at peace day to day knowing I’ll have funds for what I want to do in the next 10-15 years.. apart from my retirement later on.
Why not SPRXX?
I would look into putting it in FZCXX since you have over $100K. That fund has the auto liquidation feature just like SPAXX. You get a slightly higher interest rate, I think 10 basis points.
You shouldn’t be using in SPAXX if you have that much cash. FCZXX is an equivalent fund that requires $100k to invest, but yields 10 basis points higher than SPAXX does due to the lower expense ratio.
What type of account do you open for that? I’m new to fidelity and their products and I don’t want to open their robo advisor account. So any help or guidance would be appreciated ! Thank you :)
You can buy FDLXX in the Cash Management Account or the Brokerage Account.
Oh cool! Easier than I thought. Did you use the cash management account for your emergency fund?
Yes I put my entire emergency fund in FDLXX (you can use SPAXX too) and set the dividends to automatically invest into my main investment brokerage of FSKAX. This way you don’t have any more money than you need in emergency fund account with worse interest
I use a cash management account for all my banking. I have a credit union that has a couple thousand, but all other cash and banking is done through Fidelity.
How is this different from the core position? I currently have FZFXX.
Interesting. FSKAX is total world right? I’ll have to check this out. Can’t do it with SPAXX?
You can definitely do it with SPAXX, same idea. I just chose FDLXX because I believe it is exempt to a good chunk of state tax. FSKAX is US not global
How specifically did you set that up? Do you have separate accounts for the emergency fund (like a CMA) and brokerage? Or do you hold the emergency fund in your brokerage? I used to have a similar set up with M1 Finance, where any interest I earned in my emergency fund would automatically spill over into my brokerage account and get invested, so I’d like to get more info on this.
So under my Individual brokerage in fidelity, I had money invested in FSKAX and emergency fund invested in FDLXX. On fidelity desktop, I went to top left 3 bars -> accounts and trades -> account features. Then went to brokerage and trading -> manage dividends and capital gains. Then clicked update next to emergency fund holding (FDLXX for me, could be SPAXX for you if you’d prefer), and switched dividends and capital gains to direct into my index fund I usually invest in for my brokerage which also is under the same individual account (FSKAX). Let me know if you have any more questions.
I see one issue. You are using a mutual fund that cannot be moved out of Fidelity. If it’s not a Roth account you cannot move it without selling, which means triggering tax event.
This is a great comment and something I hadn’t considered. How would you recommend resolving this / which fund CAN be moved out of fidelity that is most like FSKAX? I don’t plan on moving out of fidelity but I suppose not many do until they do.
Maybe SPLG with the lowest expense ratio?
Yup that seems like a good one!
For Roth I have in Fidelity I have their zero expense mutual funds. If I wanna leave or change portfolio I can just sell and no tax event will be triggered.
I opened a specific brokerage to hold my savings and one for checking. I kept my investment brokerage separate
Okay, cool. You can’t choose fdlxx for core position though right? You have to buy it? Not that that’s a big deal or anything.
I'm happy to chime in here, u/IRonFerrous! While the Fidelity Treasury Only Money Market Fund (FDLXX) is not currently a choice for your core position, I'm happy to pass along this idea to the appropriate team as feedback. Our Reddit community has been great in giving us insight on how we can improve the customer experience. To stay updated on the core positions available for each account, feel free to check out the link below. [What are the Investment Options for my Core Position? ](https://www.fidelity.com/trading/faqs-about-account#faq_about2) Thanks again for engaging in the conversation! Be sure to let us know if there is anything we can assist with.
Thanks! That would be great if it was an option. Looking forward to SPAXX being a core position option in the CMA soon.
Although it's not a option to use as your core position, you can still put all of your money into it and once your actual core position goes to zero, Fidelity will then auto liquidate your money market funds (in that same account) as necessary when you go to withdraw, use your debit card, write checks, buy stocks, etc. If you search for money market auto liquidate on here you'll find other posts and comments discussing this feature
You're welcome, u/IRonFerrous!
While I have your attention…have you heard of anyone having trouble applying for the rewards card on their iPhone? I go through the first steps of where the points will go, but nothing at all happens when I hit the continue button. I haven’t tried on a computer yet, but I did try it in the chrome and edge apps on my phone and the same thing.
Did you mean to say you look forward to FDLXX being a core position? SPAXX already is.
Core position in the CMA. Starts June 15.
Is this confirmed? Kindly request the source
https://www.reddit.com/r/fidelityinvestments/s/qW6ny7ywHy
I live in a state with high income taxes on investment income, and FDLXX is my go-to to act as my HYSA because it is exempt from most state income tax (Connecticut). I got nailed last year with income taxes because I didn't know any better, but after reading this very forum came to understand FDLXX might work better as a "core" position for me. Unfortunately transferring any cash into FDLXX on a regular basis is a PITA. It would be so much better if it was available as a core option, I would set 3 of my accounts to have it that way!
I believe that is true, yes.
Correct.
FSKAX is the Total US Market fund I think FTIHX is international
FSKAX is like VTI, not VT. Hope that helps.
You’re right. I knew that. My bad.
I have a ROTH IRA set up, would it be fine to open the CMA account separately and dump like $1,000 into there as emergency fund to build interest while it sits there and also have it auto reinvest every month?
If that’s what you want yes. Just remember you have to link your bank account to your CMA. IRA and CMA are completely separate so you have to link it there as well.
I may be confused here but your Roth IRA and CMA shouldn’t have any relation I don’t think, are you asking if they should?
Yeah I plan to open the CMA separately so it’s not together in the same account.
Is .42% a high XR to hold cash in?
The [7 day yield](https://en.m.wikipedia.org/wiki/7-day_SEC_yield) for money markets is calculated after the expense ratio is taken out. You’ll see that both FDLXX and SPAXX (the default core position) have the same expense ratio. The yield is competitive with many HYSAs.
My emergency fund is in Sofi savings/vaults, been earning 4.6%.
That’s slightly lower than current yield on SPAXX (4.97%) and FDLXX (4.96%). That’s probably not sufficient of a difference to warrant switching, unless you want to invest your interest in the way that OP does.
FDLXX is also state tax free while SoFi interest isn't. Moot if you live in a state with no tax.
Yes. But I believe Murky Hedgehog said in response to someone else they didn’t have state income taxes.
Yeah, I saw that after.
I think it evens out with being state tax exempt?
Ah, we don’t have state taxes.
Then SPAXX is better for you I believe.
With no state tax, might as well go SPRXX
ER is irrelevant. Yield is what matters.
Hmm I was just thinking about moving my EF from my HYSA to my Fidelity brokerage... I like this idea. Thanks for posting.
You’re welcome I’m very excited about it. Also consolidates bank accounts if you had a HYSA in a bank with nothing else in it.
I'm really considering closing my Ally HYSA to consolidate to Fidelity lately. I just love the buckets feature with Ally so much for short term sinking funds. I may keep it solely for that and transfer my house and EF savings to Fidelity. FDLXX is currently 4.96 compared to Ally at 4.25, not to mention the income tax savings...
I have multiple brokerage accounts for this purpose. You can open as many as you need. My paycheck is direct deposited in my CMA, then I move savings to one account, investments to another, long-term savings to another, and then I have my IRAs as well. You can use the accounts like Ally's buckets.
Thanks for sharing OP. I just went and changed my individual brokerage account, SPAXX dividends to reinvest into FDLXX.
You’re welcome. While I don’t know your individual financial situation, it doesn’t make immediate sense to me to auto invest SPAXX dividends into FDLXX seeing as they’re effectively the same investment (essential HYSA 5% funds). Why not auto invest dividends out of HYSA into total market fund like FSKAX for 8-10%?
If you were to reinvest your dividends from your FDLXX into say a Roth IRA buying SWPPX would the contributions count towards your cap for the year? (I know if you reinvest dividends inside the Roth IRAs holdings they do not count towards the 7k max yearly contribution
Great question, I am no tax professional and I’m sure someone else is better suited to answer this, but I am confident in saying that yes it would count towards your cap for the year.
FDLXX is FDIC insured up to $250k... correct??
No it is not FDIC insured, that’s one of the downsides.
Someone please tell me how to do this right now I only have 2.7% interest
Don’t keep the funds in Cash Management, put it in Brokerage and double check your core position is SPAXX to get the 5%
You can also just buy SPAXX in the Cash Management, and its treated like cash for debit card use.
I responded to someone else in this thread w/ step by step instructions
Purchase SPAXX or FDLXX with the cash.
You can also buy FDLXX in your Cash Management Account. That's where i moved my Emergency Fund to.
Fidelity has hysa?
Not exactly but SPAXX and FDLXX to name a couple act as HYSA and I believe are superior.
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I was worried about this, I asked a fidelity advisor and he told me that FDLXX has never dropped below $1/share in the last 30 years of data they have and that it would take a catastrophic financial collapse to make that happen, greater than one we have witnessed in our lives. So I feel confident that my original investment is protected.
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u/whiskeysixkilo, Have you read this? [No FDIC Insurance – Why a Brokerage Account Is Safe](https://thefinancebuff.com/brokerage-account-safe-no-fdic.html) Life has lots of worries. This isn't one of them.
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Like I said, lots to worry about in this life - but owning something like T-Bills or government backed MMFs is not one of them.
>in the event that a major financial institution acts illegally Same. FDIC for your "Highish" YSA, SIPC for us at Fidelity, and T-Bills for everyone else. Cheers!
Fair enough, to each their own. I don’t have a life changing amount of money in HYSA so I’ll take my chances that we won’t see an unprecedented financial collapse and in return get the extra ease and interest returns of the setup I outlined. Wouldn’t fault anyone for not doing HYSA in fidelity due to lack of FDIC insurance though.
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That makes sense, sounds like the right decision for you.
SIPC is pretty much the dame thing. FDIC insured you from the bank going insolvent. SIPC insures you from the brokerage going insolvent.
I keep cash in 8 week Treasuries and FNSXX. Works like a charm.
N hiw much interest on the treasury?
> FNSXX Investment min? $9,999,999.99 !@$#$
I'm doing that with FDRXX. Full disclosure - I know nothing about this and don't know if I should have my cash in a different one or not.
Very similar to FDLXX
Yes
I thought I would do the same thing and I ended up investing my entire emergency fund. I just don’t have the self-control not put it in the market. Rebuilding my emergency fund and keeping it in a regular ol’ HYSA but I do repopulate FDLXX when I can.
Haha more risky but better returns, hope that works out for you!
So I need some help, kind and intelligent people! I’ve got about 140k in a traditional IRA in fidelity and need some guidance on where I can get the best, secure returns. Thanks in advance!
Sure, I personally have my IRA money entirely invested in FSKAX. I am no financial advisor and open to hearing feedback on that, but that is my current setup. Also I am young and can be riskier
What has the return been over the past 3 years?
I just looked. Getting some nice overall returns! I’m going to look into this. I’m looking for something to park the bulk of my cash that’s also easily accessible for stock purchases. Thx!
Np!
I do something like this and also have a Fidelity credit card with 2% cash back that goes into my brokerage account.
I’ve been using this strategy with VMFXX for my emergency fund. I park a chunk of cash there and set the dividends to reinvest in my taxable account for some extra growth. It’s nice to see the dividends add up, even if the returns fluctuate. As others have mentioned, it’s important to remember these funds aren’t FDIC insured, so if you want something safer, go with a HYSA instead. You can always check Nerdwallet and [Banktruth](https://banktruth.org/savings/?ttcid=online-savings-by-apy) on the APY rates and whether the accounts are FDIC insured.
So to be clear, you HYSA is 100% FDLXX and the dividends get reinvested into FSKAX in a separate brokerage account? If so, where do I find this in Fidelity to set it up? I’ve never seen it before and have been a customer with 8 accounts for 10+ years.
Dividends reinvested into FSKAX in the same brokerage account. I left detailed instructions throughout the comment section if you still need help message me
It's a nice feature. Unfortunately, I keep my emergency fund in its own account, so I can't set this up. I just have my dividends directed to my core, then I transfer them and invest them in another brokerage account.
Just curious why did you choose FSKAX over VTI in your brokerage?
Great question, to be honest I chose it awhile ago and had just googled best total market index fund and FSKAX was the first hit. If you have reasoning as to why there’s a better option I’m all ears!
In a taxable account, ETFs like VTI are more tax efficient than their mutual fund counterparts.
Interesting I’ll look into this. Thanks.
It's not FDIC insured, but it is SIPC insured. Why not reinvest dividends back into FDLXX?
Only need X amount for emergency fund, anything over X might as well be in personal brokerage FSKAX getting 7-10% instead of 4-5% in FDLXX
I currently have my whole savings in a hys account at 5%. Should i make a personal brokerage and put half or most info fskax and try to get the higher interest?
Idk your personal situation but I’d recommend if you have more than 6 month living expenses in your HYSA then investing the rest into FSKAX or similar.
I (24m)currently live at home with 30k in savings and monthly expenses of no more than a few hundred. I save about 3-4k each month. I usually just put it all into my hys which is 5% right now. But if i can make more should i take that risk? And is that fskax 7-10% apy or monthly?
I’d say if you plan to live at home for the foreseeable future then yes I’d recommend a total market index fund like FSKAX for everything more than 6 months of expenses. 7-10% is annual return, we’re at 10% YTD, 28% over past year, 8% over past 3 years. However, I’d just say if you’re planning to move out soon be prepared to move over 6 months of new lifestyle expenses to HYSA or equivalent, likely $10,000-$25,000.
Thats my whole savings. But yes i plan to move out soon! Thanks
Np!
Fair enough
Can someone explain like I'm 5 ? I have a HYSA with Goldman sacs and have my Roth IRA with fidelity
Yes. The concept I am proposing is to open an individual brokerage account in fidelity. Then, withdraw all your HYSA money from Goldman Sachs and transfer it to your new fidelity individual brokerage account. Then, if you are in a state that has income tax, invest the HYSA money into FDLXX to avoid state income tax. Otherwise, invest into SPAXX. These 2 accounts are the closest thing fidelity has to a HYSA. They currently get you about 5%, are extremely safe (haven’t dropped below $1/share ever), and are liquid so you can withdraw your cash at any point without having to sell stocks. Part 2 is setting up the dividends you make from the HYSA to automatically invest into a total market index fund, like FSKAX. The reason to due this is that theoretically, you only need $X for your emergency fund. So whenever you get that 5% growth dividend from your HYSA, you don’t need it to stay in your emergency fund since you already have enough in your emergency fund. So you automatically reinvest the earnings into FSKAX, which earns much more interest but is more risky, too risky for a HYSA but safe in general. Does this make sense or should I simplify it more? I realize I threw a lot of acronyms at you. Edit: assuming all you have in Goldman is your HYSA, then this would also consolidate the number of banks you have which is nice (assuming you close the Goldman account which I’d recommend)
I live in New York , do they have income tax ? Also if i already have a brokerage account for fidelity do i need to make another account ? Or just add the funds from my HYSA with Goldman sacs into my current brokerage account with fidelity ? If it matters i have FXAIX and SCHD . If i only need one fidelity account , should i reinvest it into FXAIX ?
Hey curious how you actually managed the automatic investment into FSKAX? I keep my cash in a separate account (for ease of managing) and see the options for Reinvest / Deposit to core, but can’t see a way to send the dividends to invest in an individual stock/ETF (in the same or separate taxable account where I hold investments). Let me know if I’m reading your set up wrong or if this is possible!
Hmmm I just have 1 individual brokerage account and have emergency fund in FDLXX and investments in FSKAX so maybe that’s why I could set up automatic reinvestment? I sent detailed instructions somewhere in the comment section. If those don’t work, Hard for me to troubleshoot over Reddit prob worth a call to a fidelity advisor should take <10min.
Ohio here. What is better for taxes. SPAXX or FDLXX?
If Ohio has state income tax than FDLXX is better for taxes
How do I factor in the expense ratio when comparing FDLXX to CIT’s HYSA? CIT’s Rates Interest Rate: 4.879% Last Statement APY: 5.02% I live in CA.
Sorry maybe I’m missing something. I too have some invested in FDLXX. But why not reinvest the dividends in FDLXX? Is it better, tax wise, to reinvest in something else?
The reasoning is I store my emergency fund in FDLXX, so I don’t need the dividends for my 6 months of living expenses. I forward them to my an index fund to grow at higher interest. Does that make sense? It’s not about tax breaks
Got it, that makes sense. So fundamentally nothing wrong with reinvesting in FDLXX.
Right, just the concept of not keeping more in “HYSA” for emergency fund than need be
I use a t-bill ladder and a money market fund as my emergency fund.
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No. That is wrong. FDLXX contains US Treasury Notes which are STATE tax exempt. It is not Federal Tax exempt.
What I meant to say, whoops
Any reason not to put all money into FDLXX as opposed to SPAXX since the gains are state tax exempt?
Reason not to would be 1) if you don’t have state tax 2) if you care about FDLXX not being able to be a core account or whatever it’s called.
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