In an account that allows you to trade stocks and ETFs (exchange traded funds), where can you safely park your money so that it is available almost immediately (within 2-3 days max) and you suffer very little risk of loss on your capital (i.e. you're not invested in stocks for example) and at the same time you earn a little interest (eg 0.5% to 3%) a year? I was thinking about a very cautious bonds ETF with a short term duration/maturity to limit the risk of loss on the capital, but when looking at charts of a very cautious bond ETF as the Vanguard Short-Term Bond ETF (BSV), I noticed drawdowns of 1% or more over a few weeks time period and just holding cash could do better than this ETF at certain times. What investment earns a little interest a year with no risk of drawdown in capital within a stocks and ETF account? Max total investment being around $50K. If and when I choose to go back to cash, I need to be able to go back to cash in increments of $10K max, i.e. I must not be forced to go back to cash all at once or in large chunks of $25K for example, so that I keep a degree of flexibility on the percentage of the account I choose to hold in pure cach and the percentage I choose to hold in the investment.
Stick it in an online savings account that is FDIC insured. Nothing in the stock market has "very little risk". If you buy an ETF, it takes time for the trade to settle as well as transfer your money (unless you're willing to wire, which costs money), so you definitely won't get the money in 2-3 days. Expectation of 3% interest in this environment without incurring any risk and not being able to handle a 1% drawdown over a few weeks, indicates to me that you should stick it in a savings account like ING or Ally.
+1. Snakeeye, I seriously hope you're joking re zeroes. They have the highest duration of any fixed income instrument - in layman's terms you'd blow up if rates went up all in the name of "earning a little income". This topic has come up so many times over the past few years w/ rates so low b/c people remember when rates were 5% and they say "if i have 100k i would earn 5k a year now i earn nothing how do i get that 5k back" and they take exorbitant risk to get it. we are in a low rate environment and will be there for a while - it is what it is. successful traders take ZERO chances w/ money that needs to be both liquid and immediately available. just put it in FDIC insured MMA and be done w/ it. i don't mean to come across as preaching - it's just that this topic has come up a lot (i know new people join et all the time) but the solution remains the same now as it was 1, 5 or 10 years ago. the bottom line is i don't want to see other traders lose money in something we shouldn't lose money on (short term funds) b/c we all know we will lose money elsewhere.
Choose a broker that's a public company that way you can monitor their health closely and park it in cash for when the trading opportunities present themselves. For instance, IBKR If you are a successful trader perky year returns or 2% or less make no difference to you. If you aren't one, you are asking the wrong question. Crazy A
do these online savings banks like Ing and ally allow you to initiate (via online) a wire transfer into a brokerage account?
Most of the online banks facilitate bank to bank online transfers once you link accounts. If not set up for it (unusual), you can pull money out via one that does as long as you have the routing number. Usually takes 3 business days but I've experienced less. Regarding wire transfers, you'd have to check with them individually. I've transferred money (NC) to/from my brokerage account to/from these, often in a day. Only limit was on frequency. Again, you have to check on both ends to determine logistics, fees, etc.
yes i know all these online saving accounts offer ACH withdrawls, but the OP's requirement was a 2-3 day transfer. add to that the fact that (some) brokers hold ACH deposits before you can invest them, and it makes ACH transfers totally useless for quick access to funds for investing. that's why i asked about wire transfers. a lot of places don't let you initiate a wire into a brokerage via online; you have to go down to the local branch. even my shit bank (which is a very large bank) requires me to go to the branch to do this. so it appears Ing, Ally, etc, do not solve the OP's needs because they're too slow