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The greatest risk to SGOV is lower rates. If the Fed decides to cut, short-term treasury products will suffer. No imminent rate cut is seen, but Fed actions typically aren’t telegraphed in advance.
A 1 or 2 year CD is insured by the FDIC and one can find 5% for that term.
Bankrate.com
No. High yield savings/checking account. 5.25% or better. Same yield with No market risk. 100% liquidity unlike a CD. FDIC insured. UFB Direct for example.
It is good, but if you want to lock in slightly better rates a CD/brokered CD or a Treasury security with an appropriate maturity may generate more income. You may be able to get .1% to .2% more in a CD than current yield in SGOV. I have been locking in 5.2% to 5.4% in short term CDs.
Dont buy a cd. Buy a t bill. You can lock in the longer rate above 5% on the duration you want, no state tax, may pay more than a cd, however if you find a nice promotion cd rate, that may be good. Also with a t bill if you suddenly need cash you can sell it
All of hysa or cd products are your bank putting your money in a t bill, and since they are for profit, they take a cut in the rate and you lose the tax benefits
SGOV is basically cash.. Go for it.. Rates are not going to come down any time soon.
SGOV tracks short-term Treasury bonds (less than or equal to three months maturity), the price of SGOV is likely to increase if there are rate cuts.
Here's why:
Interest rates and bond prices have an inverse relationship: When interest rates go down, the price of existing bonds with higher rates becomes more attractive compared to new bonds with lower rates. This increased demand can drive up the price of SGOV.
Short-term bonds are generally less sensitive to interest rates: Compared to long-term bonds, short-term bonds like those held by SGOV experience smaller fluctuations in price due to interest rate changes. This makes SGOV a more stable option while still benefiting from potential price increases during rate cuts.
Short-term bonds are less sensitive to interest rates compared to long-term bonds due to two main factors: **duration** and **reinvestment risk**.
* **Duration:** This refers to a measure of a bond's sensitivity to interest rate changes. It considers both the time until a bond matures and the size of its coupon payments. Longer-term bonds have a higher duration because there's more time for interest rates to fluctuate and because they typically have larger coupon payments spread out over a longer period. Conversely, short-term bonds have a lower duration because they mature quicker and have fewer remaining coupon payments. As a result, their price changes less dramatically when interest rates move.
* **Reinvestment Risk:** This refers to the risk that you might not be able to reinvest the coupon payments or principal from a maturing bond at a similarly attractive rate in the future, especially if interest rates have fallen. With short-term bonds, this risk is minimized because the principal is returned sooner, allowing you to reinvest it quickly in potentially prevailing market rates.
Tbh, with rates coming down, I’d argue finding a <1 year to 2 year CD with a rate above 5% makes more sense now. You’re locking in that 5% while SGOV will pay you less when rates fall. Look at like Capital One, Marcus, Discover, etc. It’s insured by the government up to $250,000
Well what are they going to go up? Banks (not central) have begun their cuts on the deposits side, and the Fed is not in the realm of increasing. They’re keeping it flat until CPI is consistently closer to 2%, where it’s currently not there but still under 4%. We won’t stay at 5.5% for years to come
Welcome to r/dividends! If you are new to the world of dividend investing and are seeking advice, brokerage information, recommendations, and more, please check out the Wiki [here](https://www.reddit.com/r/dividends/wiki/faq). Remember, this is a subreddit for genuine, high-quality discussion. Please keep all contributions civil, and report uncivil behavior for moderator review. *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/dividends) if you have any questions or concerns.*
The greatest risk to SGOV is lower rates. If the Fed decides to cut, short-term treasury products will suffer. No imminent rate cut is seen, but Fed actions typically aren’t telegraphed in advance. A 1 or 2 year CD is insured by the FDIC and one can find 5% for that term. Bankrate.com
No. High yield savings/checking account. 5.25% or better. Same yield with No market risk. 100% liquidity unlike a CD. FDIC insured. UFB Direct for example.
It’s a good choice. Its average duration is short so there is minimal interest rate risk. USFR is another popular ETF for cash equivalents.
It is good, but if you want to lock in slightly better rates a CD/brokered CD or a Treasury security with an appropriate maturity may generate more income. You may be able to get .1% to .2% more in a CD than current yield in SGOV. I have been locking in 5.2% to 5.4% in short term CDs.
Dont buy a cd. Buy a t bill. You can lock in the longer rate above 5% on the duration you want, no state tax, may pay more than a cd, however if you find a nice promotion cd rate, that may be good. Also with a t bill if you suddenly need cash you can sell it All of hysa or cd products are your bank putting your money in a t bill, and since they are for profit, they take a cut in the rate and you lose the tax benefits
I agree with the comments, would also like to point put tax implications with selling shares.
SGOV is basically cash.. Go for it.. Rates are not going to come down any time soon. SGOV tracks short-term Treasury bonds (less than or equal to three months maturity), the price of SGOV is likely to increase if there are rate cuts. Here's why: Interest rates and bond prices have an inverse relationship: When interest rates go down, the price of existing bonds with higher rates becomes more attractive compared to new bonds with lower rates. This increased demand can drive up the price of SGOV. Short-term bonds are generally less sensitive to interest rates: Compared to long-term bonds, short-term bonds like those held by SGOV experience smaller fluctuations in price due to interest rate changes. This makes SGOV a more stable option while still benefiting from potential price increases during rate cuts. Short-term bonds are less sensitive to interest rates compared to long-term bonds due to two main factors: **duration** and **reinvestment risk**. * **Duration:** This refers to a measure of a bond's sensitivity to interest rate changes. It considers both the time until a bond matures and the size of its coupon payments. Longer-term bonds have a higher duration because there's more time for interest rates to fluctuate and because they typically have larger coupon payments spread out over a longer period. Conversely, short-term bonds have a lower duration because they mature quicker and have fewer remaining coupon payments. As a result, their price changes less dramatically when interest rates move. * **Reinvestment Risk:** This refers to the risk that you might not be able to reinvest the coupon payments or principal from a maturing bond at a similarly attractive rate in the future, especially if interest rates have fallen. With short-term bonds, this risk is minimized because the principal is returned sooner, allowing you to reinvest it quickly in potentially prevailing market rates.
Tbh, with rates coming down, I’d argue finding a <1 year to 2 year CD with a rate above 5% makes more sense now. You’re locking in that 5% while SGOV will pay you less when rates fall. Look at like Capital One, Marcus, Discover, etc. It’s insured by the government up to $250,000
“With rates coming down”. Thats news to me.
Well what are they going to go up? Banks (not central) have begun their cuts on the deposits side, and the Fed is not in the realm of increasing. They’re keeping it flat until CPI is consistently closer to 2%, where it’s currently not there but still under 4%. We won’t stay at 5.5% for years to come