Currently 1-year treasuries yield around 5.3% and 2-year treasuries yield 4.7%. If you have your cash in an investment account’s money market fund you may be getting interest between 4.5 and 5%. The difference is that money market yield can fluctuate daily or weekly and the treasury yield is for the term of the investment. Treasuries are liquid but if you do not hold them to maturity and interest rates rise you may not get 100% of your investment back. With money market funds you have access to your investment or part of your investment without a loss whenever you need it. So how do I decide what is best for my cash? It may be a combination of the two. Keep a portion of your cash in a money market account for short term unplanned needs and, if you think rates will be going lower, put a portion in treasuries to have a guaranteed return when held to maturity. Treasuries can be bought on most online brokerage platforms and most of these companies have bond traders who can help you though the buying process.
For more information on investing and savings for the short and long-term check out our books on financial independence:
Financial Independence Essentials
Financial Essentials for Women by Women
Financial Essentials for Couples
Raising Financially Independent Children
Financially Independent Teens
Budgeting for Women by Women
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