Personal Investments • Re: I think I have too much cash?

Based upon information provided, these two cash accounts equate to $93,610. I would not see that as too much cash if there were no other cash or cash-like holdings.

I am a bit confused as 37% of the $2.3M portfolio is $851,000 and the 11% in cash of that 37% is the $93,610 which is less than the $100K that you want to reduce to. Did I goof somewhere or miss a number or something? Is it more like 11% cash of the $2.3M which amounts to $253,000?

The only thing so far that stands out to me is that with such a high bracket you have not selected a municipal MMF as your effective highest tax rate is at 44.3% (35% fed, 3.8% NIIT, 5.5% state), and 38.8% if using state exempt USGOs.

My percentages may be off, I’m not the best with excel formulas . Currently about $150k in VUSXX, $135k in T-Bills, $110k in I Bonds and the rest in Total Bond. All of the T-Bills and VUSXX are in taxable and all of the Total Bond is in my 401(k).

I’ve debated using a Municipal MMF, but I don’t know enough about them to be confident I’d pick a good one, and Vanguard has no state specific ones for my state (I’m pretty sure no one does). Do you have any non-state specific suggestions?

I calculated a $150K position using the existing VUSXX holding, picked Vanguard’s national tax-exempt MMF VMSXX, and applied 12 months of distributions taken as cash (not reinvested). The VMSXX municipal MMF came out to $4,932 gross income while the VUSXX came out to $7,792.

Now, let us apply the taxes due:

VMSXX has a state tax of 5.5% leaving us with $4,661. Not knowing what the residing state is means that some could be stat exempt, thus making the after-tax amount slightly higher.

VUSXX has 35% federal and 3.8% NIIT for 38.8%. of tax-exempt income, I will assume that the USGO deduction for the unknown state is at the full 100%. This gives an after-tax amount of $4,768.

It is almost a wash depending on the amount of your state’s exemptions for the amounts of municipals and the USGOs in each fund. By the time you may shrink the cash position down it may be easier to just simply leave it alone.

Statistics: Posted by Hacksawdave — Mon Dec 30, 2024 10:57 am

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