For saving accounts (instant access without penalty), E-Loan offers
5.50%, there some others offering 5%+, e.g. HSBC

For CDs, some brokers' offers are also pretty attractive, e.g. etrade.
3M 5%, 6M/1Y 5.3% 1Y+: 5%

"Paul Michael Brown" <pmb[at]his.com> wrote in message
newsmb-1811061855370001[at]max1ka-75.his.com...
- quote -

Fidelity Connecticut MMF (7 day yield 3.18%)
http://personal.fidelity.com/product...html?316089408

Dreyfus Connecticut MMF (7 day yield 2.99%)
http://www.dreyfus.com/content/dr/co...&fundcode=0101

- quote -

Muni MMFs and taxable MMFs go through cycles where for some time one is
better than the other for most tax brackets, and then they reverse. Until
6-12 months ago, munis were the clear winner. Now taxable MMFs are. IMHO,
rotating MMFs takes a fair amount of effort for little gain, but its a game
that can be played.

As you can see from the yields for Conn. MMFs, these aren't the best funds
around; one would do better with a national muni MMF (Vanguard's is
currently yielding 3.52%) and paying the state tax. When comparing other
family state-specific funds with Vanguard's national funds, this is often
the case. (But be advised that up to 20% of the Vanguard funds' income can
be, and often is, subject to AMT.)

Mark Freeland
BnetOnewsX[at]sbcglobal.net

There are money market funds that invest solely in municipal bonds. They
maintain a $1.00 net asset value, although that's not guaranteed or
insured. All the big fund house (Vanguard, Fidelity, etc.) offer munibond
money market funds. Problem is, he's not going to find one that's state
specific to Conn. So he'll still pay the state tax. Moreover, the original
poster's federal marginal rate is 28 percent. This is fairly low compared
to most people who invest in munibonds. If he parked his emergency fund in
a national munibond money market fund yielding 3.4 percent, his taxable
equivalent yield would be 4.72 percent. That's less than he's getting now.

Shhhh wrote:
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treasurydirect.com.

When rates were rising, I just bought 4-week T-bills. When rates
stabilized, I split it into 13-weekers and started buying 26's on the
side whenever I have an extra $1000 in the checking account.

Best regards,
Bob

Hello Bob. I appreciate your reply to my inquiry.

I like your suggestion, but I believe I would still have to pay my
federal taxes on the gains as regular income, so I would lose 28% of
the interest, approximately $350 of the $1250 annual interest. Now I
understand the tbills to be virtually risk free, but I consider the CDs
to be very, very low in risk as well. I'm not sure that saving the 5%
state income tax is preferable to having an extra 0.5 in interest.


On Nov 10, 2:41 pm, zxcvbob <zxcv...[at]charter.net> wrote:
I have mine in a 3-bond ladder of 90 day T-Bills, plus I buy a $1000
- quote -

- quote -

treasurydirect.com? or do you participate in the auctions through a broker?

blue7echo wrote:
- quote -

Ok, here's my take. The CD ladder has the risk of whatever early
withdrawal penalty you incur for early withdrawal.

Now, the Bond fund has a bit different risk, interest rate risk. The
change in present value based on a change in general rates. The
"duration" of FICNX is 5.9 years. This means (to put it simply) that the
present value will fluctuate as if this fund were a single instrument
with a single payment 5.9 years out. What does this mean, practically
speaking? If interest rates rise .25%, the fund may fall as much as
1.47% in value. So, in theory, a 1% rise in rates can create a 5.9%
decrease in present value, and you may find that over a year, the return
is negative. (Sometime around late 80's early 90, I thought stocks were
due to fall, and in my 401 switched to short term bond fund. Well, it
wasn't short enough. Rates went up so much that my one year return was
0%, there was a lesson to be learned)

JOE
JoeTaxpayer.com

blue7echo wrote:
- quote -


I have mine in a 3-bond ladder of 90 day T-Bills, plus I buy a $1000
six-month T-Bill every month that I have money left over (that didn't
happen this month because an emergency wiped out my checking account
reserves, but I didn't have to touch the ladder.)

The 3-month T-Bills are earning about 5%, exempt from state taxes.
Every month, one of them matures and I can take money out instead of
rolling it over if I have to pay for an emergency. (the emergency can
go on a credit card for a month while I wait for a bond to come around)
It works great for me; YMMV. ;-)

Bob

I have an emergency fund and I am presently reconsidering how to store
it effectively. It is presently stored in a high yield savings account
(Interest Rate 4.93%, Annual Percent Yield: 5.05%). I need to have the
money available to me if I need it, but I want to earn as much as
possible while sitting around.

I am considering whether it is preferable for me to put the money in a
single state municipal bond fund for my state or to put it in a CD
ladder.

I am considering the Fidelity Connecticut Municipal Income (FICNX)
fund.
The average annual total returns quoted are:
1 Year 4.95 3 Year 3.80 5 Year 4.41 10 Year 5.38

The CD yields I am looking at are between 5% and 5.50% depending on
length.

The munis have historically produced tax free yields very close to the
taxable rates for the CDs. But I am concerned about the stability and
availability of the funds if I choose the munis.

My tax rate is 28% federal and 5% state.

I am also considering a half and half solution.

I am interested in comments and suggestions concerning this matter.