What are some recommended ETF funds to park cash with little to "no-risk" while earning yield in retirement accounts where withdrawing is not possible. I have used $TFLO (iShares Treasury Floating Rate Bond ETF) and $TLT (iShares 20+ Year Treasury Bond ETF) but curious some other options.
TFLO is basically "risk free", short duration treasuries with a monthly dividend paid and yield of 3.60% (30 day SEC yield). Low maintenance fee of 0.15%. Price is extremely stable.
TLT is another beast all-together, with pretty significant price movements for a bond. It's trading at near 5 year average lows right now, but yield is 4.93% (30 day SEC yield). Dividends also pay monthly. Same maintenance fee of 0.15%. TLT price can move significantly +/- 15 or 20% but at current prices it seems like a great option to park cash long term with some upside price potential.
Recommendations to park cash and earn yield ETFs
byu/JustinK101 inpersonalfinance
Posted by JustinK101
1 Comment
Short-term and long-term bonds function differently.
The fact that TFLO, USFR, and SGOV hover at $50, $50, and $100 is not an accident. It’s the same as money market funds that generally keep a NAV at $1 with small fluctuations around the predictable dividend dates. The duration is so short that these function only as yield distributors. They’re effectively cash equivalents.
Longer term bonds offer a premium in yield rate for locking up money longer. The yield is nice, but if you realize you need cash you have to sell, and bonds may be worth more or less depending on how rates have changed and what newly issued bonds yield. That’s just how it works. A fund with such bonds will likewise have fluctuation in value. If rates rise and a new bond pays more than an old bond, buying someone’s old bond is less appealing than getting a new one and the value drops.
You’re comparing apples to oranges. One is cash, one is bonds.
In any case, I listed popular cash-like ETFs. Many money market funds are available and do the same thing.