Where to park excess cash in account?

Saltynuts said:
I've got an IB account, margin account, with an absolute ton of excess cash in it. I'm saving it as dry powder to slowly buy the dips.

But its just been sitting in the account for awhile now, and I don't think I'm earning interest on it.

Where would you park it to earn some (presumably) interest on it, but not risk very much, so that you could have access to it in short order when you need to liquidate it to get the funds to buy stocks? I obviously don't want to get into longer-term bonds/bonds funds due to risk of rates moving up a good bit. Short term bond fund? Ultra-short term bond fund? Actual short term treasuries?

I'm way over the total $500,000 account insurance limit so I really need to move a good bit of it to additional brokers, but that is a separate issue haha. The most immediate thing is I hate losing out to inflation (and opportunity cost) on my cash!

Thanks ETers.
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Pentagon Federal Credit Union (PENFED) is paying 1.62% on six month CDs and a little over 2% for longer term CDs. Perhaps creating a CD latter may be right for you. PENFED membership is available to the general public with a small donation to a millitary based charity.

You might want to research tax certificates, discounted first residential mortgages taken as seller based financing, and purchasing discounted annuities. There is some work involved, but the risk adjusted return of these alternative investments may be worth it for you. The key with these alternative investments is being selective. However, the effort spent in learning about them will likely payoff in useful knowledge that can be applied profitability in other areas, not just these alternative investments.
 
Humble and Eves, thanks so much, sounds like the one month treasuries might be ideal, a good bit higher interest rate, very little downside risk (ignoring government default risk haha) very liquid so can get my cash out when needed.

Max suffering, thanks as well, I was hoping someone would post some slightly outside the box products - will definately check those out!
 
@Saltynuts not giving advice about what to buy, of course, but also note that bonds you buy at IB (corporate bonds for example) don't have to be bought for the full duration. If you look at IB's bond explorer (browser ? scanner ? what the hell do they call it ?) you can find countless corporate bonds that will mature in 30 days, or 60, or 90, etc, even though they may have originally been for 10 years or more.
 
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About 1.8% short retail and most brokers offer around a 90% release to SMA.
Institutional size they go up a bit, but your taking the bank/broker credit risk.
You can enhance the bill a little with the listed option, but it's almost not worth the effort after all the friction.


MONDAY, APRIL 30, 2018
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Money Rates
Latest Prev. Yr Ago
Discount Rate (NY) 2 1/4 2 1/4 1 1/2
Prime Rate (base) 4 3/4 4 3/4 4
Fed Funds Rate
Avg effective offer 1 18/25 1 22/31 8/9
Avg weekly auction-c 1.69 1.69 0.91
T-Bills Rate
13 weeks, Coupon Yield 1.864 1.792 0.833
13 weeks, Auction Rate 1.830 1.760 0.820
26 weeks, Coupon Yield 2.033 1.992 0.973
26 weeks, Auction Rate 1.985 1.945 0.955
Avg weekly auction-c 1.78 1.72 0.80
Broker Call Rate 3 1/2 3 1/2 2 3/4
Bankers Acceptances
1 month 1.78 1.78 0.95
2 months 1.93 1.93 1.03
3 months 2.08 2.08 1.13
6 months 2.23 2.23 1.28
Euribor Interbank Rate
3 months -0.329 -0.328 -0.329
6 months -0.269 -0.271 -0.249
12 months -0.189 -0.189 -0.121
Libor Interbank Rate
1 month 1.91 1.90 1.00
3 months 2.36 2.36 1.17
6 months 2.52 2.51 1.43
12 months 2.78 2.76 1.77
Foreign Prime Rates
Canada 3.45 3.45 2.70
Germany 0.00 0.00 0.00
Japan 1.475 1.475 1.475
Switzerland 0.50 0.50 0.50
Britain 0.50 0.50 0.25
Other Money Rates
Fannie Mae Home Loan:
30-Year Fixed Conv 4.19 4.14 3.57
Bank money market-z 0.18 0.18 0.11
Interest Checking-z 0.08 0.08 0.08
6-Month Certif-z 0.31 0.31 0.21
12-Month Certif-z 0.55 0.54 0.34
30 Month Accounts-z 0.76 0.76 0.54
5-Year Certificates-z 1.16 1.15 0.89
U.S. Savings EE Bonds:
Long-Term (5yrs+) 0.10 0.10 0.10
c-Annualized yields, adjusted for constant maturity, reported by the Federal Reserve on a weekly average basis.
Sources: Tullett Prebon information, Ltd. SIX Financial Information. z-Bankrate.com.
 
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Get 1 year UST bills instead of 1 month. That way you dont have the hassle of rolling over them and having to pay commissions several times a year
 
Humble Investor said:
Buy short term treasury bills and roll them over accordingly. That's what I have been doing with my excess cash. IB pays around 1.18% vs 1 month treasury bill of 1.6%. That's probably what IB does with our excess cash, they earn the spread.
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You might be able to allow Treasury Direct to access your account so you may Buy Bills and Notes from the Trade Account and have them replace the Funds upon Maturity.
 
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