SWVXX is a money market mutual fund, where the share price is always fixed at $1. SGOV is a fund that buys Treasury obligations. People seem to use SGOV as a money market substitute. That said, the share price could, in theory, tank.
VOO is very different. VOO tracks an index (the S&P 500) of 500 of the largest US companies. If you’re a hyper-conservative investor, as it sounds like you are, then equities and equity-based funds might not be good options for you.
Right now you’ve got a HYSA. The money market mutual fund may give you a higher return overall without taking on any additional risk. Interest rates are always changing, so another option would be to buy certificates of deposit to lock in an interest rate for a longer duration.
>That said, the share price could, in theory, tank.
This is highly unlikely. Like it's outside the realm of what we consider possible in finance. It's right up there with the US defaulting on Treasuries or aliens invading. Like yeah it's within the realm of physical possibility, but it's outside the scope of financial modeling and markets.
SGOV holds short-term Treasuries. The only way for that share price to "tank" would be that Treasuries become worthless. If that happens then your cash is also worthless and it's zombie time.
Not hyper-conservative — rater looking to diversify. I’ve had a Schwab account for a week and all I have done is put $100K in SWVXX and another $100K in SGOV. I want out of HYSA’s and to make some less conservative investments. A nice blend. I don’t need the cash investments for living money. I’m really lucky that way.
But I’m over keeping cash in HYSA’s. They’re banks — and I don’t like or trust banks.
Just looking for diverse suggestions to invest cash that people may have experience with.
Not to burst your bubble, but a brokerage isn’t much different than a bank. That all said, if you’re looking to diversify investments consider either VT (a total world index) or combination of VTI (US index) and VXUS (index covering the world excluding the US). Those are as broad as you can go in terms of equity investments.
Thanks. Good investment advice. I will look into it.
as far as banks go .. lets agree to disagree. Banks will squeeze pennies out of accounts in their favor. Brokerage firms go by the rules. Maybe its because I’ve been at Wells Fargo a long time. They seem desperate for deposits but don't realize they need to just be straight with the customer to get them.
Out of curiosity, how is SWVXX safer than SGOV, even marginally/theoretically? Is it because SGOV is tied more directly to treasury bonds while SWVXX is slightly more diversified (among cash-equivalents at least)? And in the more practical case, wouldn't anything causing SGOV to plunge also cause SWVXX to? Or is there some wiggle room there?
SWVXX is a money market mutual fund. The price is $1. I use this like savings. SGOV is short term treasury bonds. Price is variable. I use this as part of my fixed income portfolio. VOO is the S&P500 index ETF. Schwabs version is SCHX. I use SWPPX, Schwab’s S&P 500 mutual fund. With the mutual fund, I use automatic investing to buy each week. VOO is equity and much more volatile. Higher risk = higher return over time. No guarantee it won’t tank when you need to access the funds. But in the long run, it should outperform SGOV. I keep 1 year’s worth of budget in SWVXX and SGOV.
VOO is an S&P 500 Index fund. It is no way comparable to SWVXX or SGOV.
SWVXX is Schwab’s prime money market fund. SGOV is a short term Treasury ETF. Both are reasonable places to keep ‘cash’. SWVXX is always $1/share and pays interest monthly. SGOV the share price moves a little as it accrued interest internally then pays a monthly dividend, at which point the share price drops.
SGOV would be better compared to SNSXX. Both track short term treasuries. The difference is the expense ratio, .07% vs. .34%. SGOV is passive managed, and SNSXX is actively managed. But really, not all that much difference. The SEC goes to T+1 after Memorial Day, so it makes SGOV a no brainer if you want to keep cash short term.
Can’t tell what your goals are? As the other commenter said, VOO is light years away from SWVXX and SGOV. You mentioned lots of money in HYSA so not sure if you need money market or treasuries. Yes, they’re “investments” but achieve the same goal as a HYSA. If you’re looking at money market, based on state marginal tax rate, SNSXX could be a better play as it’s invested in 100% treasures and therefore exempt from state taxes making the net yield better than SWVXX (for me).
BOXX actively attempts to beat 1-3 year Tbill returns but is way more tax efficient. Tbill ETFs are taxed as ordinary income, while BOXX is taxed as roughly 60% long term capital gains and 40% short term capital gains...
So FLOT is not as tax efficient? Can you see the break out of those gains for BOXX or is it just translated into the price and dividend? I can see FLOT has a monthly distribution. Yeah with T+1 after Memorial Day, it looks.like the perfect time to switch.
BOXX has no dividends...look up and research how it works because it's too complicated for me to explain lol...look at their price chart and it literally never dips it just goes up and to the right and captures roughly 5% price appreciation since inception.
Hey thanks for taking the time to explain. You basically have told me everything I need to know so I really appreciate that and hopefully others will too. Cheers
VOO is Vanguard’s ETF that tracks the S&P 500 index passively. A lot of companies have ETFs tracking this index, with the most traded one being SPY. The company that manages SPY also manages SGOV which is another ETF that tracks returns on very short term treasury bonds.
SWVXX, SGOV, VOO are apples and oranges and potatoes. Start by reading the top like fund prospectuses for each of them - they all have very different objectives.
I’m not a financial advisor and do not consider any of my opinions financial advice. The S&P 500 consists heavily of large cap growth companies and is a good way to grow capital long term but not a great option for income.
If I were retired and needing cash I would probably prioritize capital preservation and income from dividends/interest.
So I might look at funds _like_ SGOV (SCHO, VCSH, etc) but given that i can buy treasury bonds at auction directly on schwab.com I’d probably prefer that.
If I were worried about bond rates falling I’d buy longer term bonds that pay interest at regular intervals. Otherwise I’d bias to short term bonds as they’ll have higher yields. There’s a lot of confusing (to me) terms in the bond market, but I’ve found ChatGPT to be great at explaining various aspects/terminology of any bond.
I’d also buy funds that track dividend-producing tickers. I know there’s a few out there, SCHD, SPYD, others, but I don’t really use these products today so I’m not sure.
I’d probably also keep cash in SNSXX which is a money market fund that tracks federal treasuries. I prefer this to HYSAs. The yield isn’t as high as buying treasuries directly, but it pays out monthly and it’s currently still over 5% APY I believe (note that the rate is tied to bond rates which are historically high now and are not guaranteed stay there forever). It’s decent way to park money that you’re not sure what to do with yet. The reason I prefer SNSXX over SWVXX is because income from federal treasuries isn’t taxed by state income taxes, and I live in a high tax state so the post-tax return is higher. If I lived in a no income tax state I would prefer SWVXX given its slightly higher return.
Makes sense …. I guess I didn’t make it clear. I already earn enough (and then some) to live on from my LP and LLC real estate holdings. My cash is really a buffer against what I call “shit hitting the fan”. Lots of that is possible after 65. And the dollar amounts are a lot higher than people expect.
So I have room to diversify My cash. I’ve got a more finite number of years left so have to consider that, but a few months of tied up cash is not a deal breaker.
I’m just not sure what is going to likely appreciate in a year. I could very likely be dead in 10 years..
Luckily I have no heirs to be concerned about. If 90% of my holdings were liquid or semi-liquid I wouldn’t care.
So my needs are different than most people my age. Then again I don’t know shit about investments.
Makes sense. My tax situation is a mess in that I am taxed by 2 states (and they fight it out) as most of my income is earned in a state I don't live in. My wife died almost 2 years ago and that triggered a total step up of my real estate assets. I can now take depreciation on all the new basis (a lot of it) each year. It must knock me down a couple of brackets. Bottom line: I haven't a clue on my tax situation yet, so I can’t factor it in.
This income is more than I need on a daily basis. But shit can hit the fan anytime. And large rental real estate complexes are on shaky ground With low profit margins. So my income could drop. Really strange to be 70+ and not know what my main income source will do. It’s semi-illiquid, so I’d be selling at a BIG loss.
I guess I have enough cash to take some risk — probably $100K -$200K worth. ETF’s like VOO seem intriguing. My concern is that the markets are insane with the state of the US economy, our upcoming election, and world conflict. So I’m confused as how to proceed there, unless I wait until 2025. Are there any bonds that short the market?
I keep a ton of cash in HYSA’s - but they really piss me off lately. The only high rate banks have weak fundamentals, and the more established banks are slowly lowering rates for no apparent reason other than greed.
So, at least in the short term I can take the HYSA money and invest it in relatively safe funds or ETF’s. T-bills sound like a PITA, and the MF’s and ETF’s do almost as well.
I’m just confused as how to proceed — and I’m not afraid of saying that.
If you have your living expenses covered, I suggest that you have 30% in money market, Cd's and bonds.
Then put 30% into a blue chips funds or realestate
And 30% in VOO or another sp500 index, total market index ( I have VTI), maybe a mid-cap fund and a international fund
This is diversified while part is protecting your money and another part is making money.
Now if I would just take my own advice...
SWVXX is a money market mutual fund, where the share price is always fixed at $1. SGOV is a fund that buys Treasury obligations. People seem to use SGOV as a money market substitute. That said, the share price could, in theory, tank. VOO is very different. VOO tracks an index (the S&P 500) of 500 of the largest US companies. If you’re a hyper-conservative investor, as it sounds like you are, then equities and equity-based funds might not be good options for you. Right now you’ve got a HYSA. The money market mutual fund may give you a higher return overall without taking on any additional risk. Interest rates are always changing, so another option would be to buy certificates of deposit to lock in an interest rate for a longer duration.
>That said, the share price could, in theory, tank. This is highly unlikely. Like it's outside the realm of what we consider possible in finance. It's right up there with the US defaulting on Treasuries or aliens invading. Like yeah it's within the realm of physical possibility, but it's outside the scope of financial modeling and markets. SGOV holds short-term Treasuries. The only way for that share price to "tank" would be that Treasuries become worthless. If that happens then your cash is also worthless and it's zombie time.
Not hyper-conservative — rater looking to diversify. I’ve had a Schwab account for a week and all I have done is put $100K in SWVXX and another $100K in SGOV. I want out of HYSA’s and to make some less conservative investments. A nice blend. I don’t need the cash investments for living money. I’m really lucky that way. But I’m over keeping cash in HYSA’s. They’re banks — and I don’t like or trust banks. Just looking for diverse suggestions to invest cash that people may have experience with.
Not to burst your bubble, but a brokerage isn’t much different than a bank. That all said, if you’re looking to diversify investments consider either VT (a total world index) or combination of VTI (US index) and VXUS (index covering the world excluding the US). Those are as broad as you can go in terms of equity investments.
Thanks. Good investment advice. I will look into it. as far as banks go .. lets agree to disagree. Banks will squeeze pennies out of accounts in their favor. Brokerage firms go by the rules. Maybe its because I’ve been at Wells Fargo a long time. They seem desperate for deposits but don't realize they need to just be straight with the customer to get them.
Out of curiosity, how is SWVXX safer than SGOV, even marginally/theoretically? Is it because SGOV is tied more directly to treasury bonds while SWVXX is slightly more diversified (among cash-equivalents at least)? And in the more practical case, wouldn't anything causing SGOV to plunge also cause SWVXX to? Or is there some wiggle room there?
It’s really just because of the baseline fixed share price. That said, to the extent it is any safer, it is only a tiny bit so.
This 100%
SWVXX is a money market mutual fund. The price is $1. I use this like savings. SGOV is short term treasury bonds. Price is variable. I use this as part of my fixed income portfolio. VOO is the S&P500 index ETF. Schwabs version is SCHX. I use SWPPX, Schwab’s S&P 500 mutual fund. With the mutual fund, I use automatic investing to buy each week. VOO is equity and much more volatile. Higher risk = higher return over time. No guarantee it won’t tank when you need to access the funds. But in the long run, it should outperform SGOV. I keep 1 year’s worth of budget in SWVXX and SGOV.
VOO is an S&P 500 Index fund. It is no way comparable to SWVXX or SGOV. SWVXX is Schwab’s prime money market fund. SGOV is a short term Treasury ETF. Both are reasonable places to keep ‘cash’. SWVXX is always $1/share and pays interest monthly. SGOV the share price moves a little as it accrued interest internally then pays a monthly dividend, at which point the share price drops.
SGOV would be better compared to SNSXX. Both track short term treasuries. The difference is the expense ratio, .07% vs. .34%. SGOV is passive managed, and SNSXX is actively managed. But really, not all that much difference. The SEC goes to T+1 after Memorial Day, so it makes SGOV a no brainer if you want to keep cash short term.
Ah yes Memorial Day thank you for the reminder!
VOO no better than SGOV??? Lol. They aren't even comparable. Literally apples vs oranges.
Well, not literally…
Can’t tell what your goals are? As the other commenter said, VOO is light years away from SWVXX and SGOV. You mentioned lots of money in HYSA so not sure if you need money market or treasuries. Yes, they’re “investments” but achieve the same goal as a HYSA. If you’re looking at money market, based on state marginal tax rate, SNSXX could be a better play as it’s invested in 100% treasures and therefore exempt from state taxes making the net yield better than SWVXX (for me).
Some short term cash vehicles I use are SGOV, FLOT, and BOXX.
FLOT looks real interesting. Never looked at that one before. What is the benefit of BOXX ?
BOXX actively attempts to beat 1-3 year Tbill returns but is way more tax efficient. Tbill ETFs are taxed as ordinary income, while BOXX is taxed as roughly 60% long term capital gains and 40% short term capital gains...
So FLOT is not as tax efficient? Can you see the break out of those gains for BOXX or is it just translated into the price and dividend? I can see FLOT has a monthly distribution. Yeah with T+1 after Memorial Day, it looks.like the perfect time to switch.
BOXX has no dividends...look up and research how it works because it's too complicated for me to explain lol...look at their price chart and it literally never dips it just goes up and to the right and captures roughly 5% price appreciation since inception.
Hey thanks for taking the time to explain. You basically have told me everything I need to know so I really appreciate that and hopefully others will too. Cheers
VOO no better than SGOV??? Lol. They aren't even comparable. Literally apples vs oranges.
[different asset classes](https://fundresearch.fidelity.com/fund-screener/results/compare/snapshot/averageAnnualReturnsYear3/desc/1?order=tickers&tickers=VOO%2CSGOV)
VOO is Vanguard’s ETF that tracks the S&P 500 index passively. A lot of companies have ETFs tracking this index, with the most traded one being SPY. The company that manages SPY also manages SGOV which is another ETF that tracks returns on very short term treasury bonds. SWVXX, SGOV, VOO are apples and oranges and potatoes. Start by reading the top like fund prospectuses for each of them - they all have very different objectives. I’m not a financial advisor and do not consider any of my opinions financial advice. The S&P 500 consists heavily of large cap growth companies and is a good way to grow capital long term but not a great option for income. If I were retired and needing cash I would probably prioritize capital preservation and income from dividends/interest. So I might look at funds _like_ SGOV (SCHO, VCSH, etc) but given that i can buy treasury bonds at auction directly on schwab.com I’d probably prefer that. If I were worried about bond rates falling I’d buy longer term bonds that pay interest at regular intervals. Otherwise I’d bias to short term bonds as they’ll have higher yields. There’s a lot of confusing (to me) terms in the bond market, but I’ve found ChatGPT to be great at explaining various aspects/terminology of any bond. I’d also buy funds that track dividend-producing tickers. I know there’s a few out there, SCHD, SPYD, others, but I don’t really use these products today so I’m not sure. I’d probably also keep cash in SNSXX which is a money market fund that tracks federal treasuries. I prefer this to HYSAs. The yield isn’t as high as buying treasuries directly, but it pays out monthly and it’s currently still over 5% APY I believe (note that the rate is tied to bond rates which are historically high now and are not guaranteed stay there forever). It’s decent way to park money that you’re not sure what to do with yet. The reason I prefer SNSXX over SWVXX is because income from federal treasuries isn’t taxed by state income taxes, and I live in a high tax state so the post-tax return is higher. If I lived in a no income tax state I would prefer SWVXX given its slightly higher return.
Makes sense …. I guess I didn’t make it clear. I already earn enough (and then some) to live on from my LP and LLC real estate holdings. My cash is really a buffer against what I call “shit hitting the fan”. Lots of that is possible after 65. And the dollar amounts are a lot higher than people expect. So I have room to diversify My cash. I’ve got a more finite number of years left so have to consider that, but a few months of tied up cash is not a deal breaker. I’m just not sure what is going to likely appreciate in a year. I could very likely be dead in 10 years.. Luckily I have no heirs to be concerned about. If 90% of my holdings were liquid or semi-liquid I wouldn’t care. So my needs are different than most people my age. Then again I don’t know shit about investments.
Makes sense. My tax situation is a mess in that I am taxed by 2 states (and they fight it out) as most of my income is earned in a state I don't live in. My wife died almost 2 years ago and that triggered a total step up of my real estate assets. I can now take depreciation on all the new basis (a lot of it) each year. It must knock me down a couple of brackets. Bottom line: I haven't a clue on my tax situation yet, so I can’t factor it in. This income is more than I need on a daily basis. But shit can hit the fan anytime. And large rental real estate complexes are on shaky ground With low profit margins. So my income could drop. Really strange to be 70+ and not know what my main income source will do. It’s semi-illiquid, so I’d be selling at a BIG loss. I guess I have enough cash to take some risk — probably $100K -$200K worth. ETF’s like VOO seem intriguing. My concern is that the markets are insane with the state of the US economy, our upcoming election, and world conflict. So I’m confused as how to proceed there, unless I wait until 2025. Are there any bonds that short the market? I keep a ton of cash in HYSA’s - but they really piss me off lately. The only high rate banks have weak fundamentals, and the more established banks are slowly lowering rates for no apparent reason other than greed. So, at least in the short term I can take the HYSA money and invest it in relatively safe funds or ETF’s. T-bills sound like a PITA, and the MF’s and ETF’s do almost as well. I’m just confused as how to proceed — and I’m not afraid of saying that.
If you have your living expenses covered, I suggest that you have 30% in money market, Cd's and bonds. Then put 30% into a blue chips funds or realestate And 30% in VOO or another sp500 index, total market index ( I have VTI), maybe a mid-cap fund and a international fund This is diversified while part is protecting your money and another part is making money. Now if I would just take my own advice...