Re: Increased Liquidity when buying at Treasury Direct?
Posted: Tue Jan 22, 2019 9:12 am
Pugchief,
I use my Fidelity brokerage account’s “available to withdraw” window much as you do, except that I replenish for major purchases from STTs I keep on auto-roll. I also like Fidelity’s no-fee credit card with the 2% rebate. It is probably the highest rate that automatically covers all purchases. In practice, I think the major risk of using this form of “ready cash” is identity theft, which is a manageable (if growing) risk, given that the credit card company effectively insures against it.
At the same time, the ultimate form of liquidity within our current financial system theoretically should be physical cash. But similar to physical gold, during “normal times” many of us are relying on physical cash less and less. Increasingly, the pile of greenbacks I keep in my local bank safe deposit box is for “abnormal times” and is a shrinking percentage of my portfolio—even in the present era of relatively low inflation. The major risks of physical cash seem to be: 1) uninsured theft, and 2) the bank could shut its doors before I can get to my safe deposit box. In “normal times” these risks seem small and remote.
I recall Uncle Harry said we should keep some physical gold and cash near by for "abnormal times," but I don’t think he was more specific about it than that. My solution has been to self-insure against these diverse risks by having some of both forms of “ready cash” available. Perhaps our greatest challenge is how to judge “abnormal times” from “normal times”?
I use my Fidelity brokerage account’s “available to withdraw” window much as you do, except that I replenish for major purchases from STTs I keep on auto-roll. I also like Fidelity’s no-fee credit card with the 2% rebate. It is probably the highest rate that automatically covers all purchases. In practice, I think the major risk of using this form of “ready cash” is identity theft, which is a manageable (if growing) risk, given that the credit card company effectively insures against it.
At the same time, the ultimate form of liquidity within our current financial system theoretically should be physical cash. But similar to physical gold, during “normal times” many of us are relying on physical cash less and less. Increasingly, the pile of greenbacks I keep in my local bank safe deposit box is for “abnormal times” and is a shrinking percentage of my portfolio—even in the present era of relatively low inflation. The major risks of physical cash seem to be: 1) uninsured theft, and 2) the bank could shut its doors before I can get to my safe deposit box. In “normal times” these risks seem small and remote.
I recall Uncle Harry said we should keep some physical gold and cash near by for "abnormal times," but I don’t think he was more specific about it than that. My solution has been to self-insure against these diverse risks by having some of both forms of “ready cash” available. Perhaps our greatest challenge is how to judge “abnormal times” from “normal times”?