this post was submitted on 15 Jun 2023
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FIRE (Financial Independence Retire Early)
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What’s the delta between T bill rates and a money market fund like SPAXX or similar? Just curious… I’ve never looked into it.
Here’s the most recent T Bill rates: https://www.treasurydirect.gov/auctions/announcements-data-results/
The last 26 week rate was 5.381%
SPAXX 7 day yield is 4.75%
T Bills are also state tax exempt, CA 9.3% bracket, which makes the T Bills more like 5.88%
With no state tax and cash being a pretty small part of my allocation, my focus is much more on accessibility vs yields. I am ok with taking the yield hit but have the flexibility of an Ally 4.15% MMA with checking options, so no T bills for me
To be honest, the 1% extra is probably only yielding me around $500/yr, but I have learned a lot more about fixed income over the last year than I've learned while rates were low.
I've never been in the position to have to decide when/if to extend the duration of my bonds, hence the original question. My gut is saying that sometime this year I should extend to around 2 years duration and that by next year rates might start going down. But of course I don't know nothing!