No, it wasn’t really cash like money market funds are – the underlying securities fluctuate in value – but it was close and would boost the return a bit.
I put the other half in a low yielding tax free money market fund. You can find such funds at almost any major brokerage firm.
Proud of my decision, which took an entire day to make – one when I could have worked, called my kids, took a long walk, and took a nap – I considered how much I would gain from all of my efforts.
The answer was not much.
Here’s what the numbers looked like, based on a $ 50,000 investment. (I’m using this number for simplicity.)
Half the money went into the ultra-short bond fund, which has returned 1.56% in the past year. The return on that $ 25,000 invested at 1.56% is $ 390. The remaining $ 25,000 in the 0.15% paying money market fund only generated $ 37.50.
When I added it up, I found that the total return on $ 50,000 would be $ 427.50.
Even that was generous. My calculations were based on the average of the last 12 months, but the situation has recently worsened. The return on the municipal money market fund is now exactly zero, and the ultra-short bond fund is paying 0.28%. So, more realistically, my total return is 0.14%, or only $ 70. This is 90% less than a year ago. It is just awful.
All of my efforts resulted in virtually no potential gain.
My regret is that trying to increase the return on savings, given current interest rates, is not paying off. Some things really matter. But in this case, the adage is really true: don’t sweat the little things. You have better ways to spend a day.