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birb_cromble  10hr ago (text post)   136 thread views

Weekly Finance Thread - 2026-08-01

A weekly thread to discuss financial matters - from personal all the way up to global.

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One common friction point that keeps coming up in these threads is something that I can't clearly name, but seems to be the friction between one person's perceived optimal behavior and another person's risk tolerance. One person will say that they are doing something, and another person will comment that the first poster is Doing It Wrong because they believe there is a more optimal path that they could take. It's a very binary thing that seems common in the Internet in general. I think it comes from a benevolent place, but it seems like it can can people off from the topic entirely as it can educate them.

I've been thinking about that lately because of events in my personal life. My partner is a fairly responsible saver, but she's not really investing. She's in the upper half of her age group for net worth and doesn't have any debt, but I worry that inflation is going to eat those savings over the long term. I've gently tried to get her to consider moving some of that money into funds over the years, but for her, it's entirely too much risk. I've not really pushed on it because what she's doing is better than doing nothing, and nothing is her alternative right now.

For somebody who has that extreme level of risk aversion, what options are there that beat a HYSA? Browbeating her into equities isn't going to fly.

On a similar topic, are there "non optimal" things that you do financially, but you do them anyway?

  1. I pay ahead on my mortgage, even though the interest rate is "only" 3.75%.
  2. I hold some dividend stocks and funds, and even commit the cardinal sin of holding them in a taxable brokerage account.
  3. I don't use credit cards outside of the bare minimum necessary to keep them active.

In all three cases, it's entirely a psychological thing for me, and I recognize this. In the first two in particular, it's still better than not doing anything at all

Treasury bonds could be a good option that's better than savings bank rates and is basically risk-free (if the US government goes belly up, none of your money is worth anything anyway). You can also suggest things like bond funds, which are more liquid and have slightly higher returns than just normal treasury bonds.

Treasury bonds have significant duration risk.

Sorry can you explain this a bit more?

Treasury bonds have maturities of 20-30 years. Cash flows further out in time are more sensitive to interest rate changes. For example, VLGSX has an average maturity of about 22 years and an average duration of about 14 years. A 1% fall (rise) in interest rates would mean about a 14% rise (fall) in the price of VLGSX.

You can get 3 month treasure bonds....

Those are generally referred to as Treasury bills. Absent additional qualifiers, bills, notes, and bonds usually refer to Treasuries with maturities of <= 1 year, >1 year to 10-years, and 20 to 30 years, respectively.

Ahhh okay thanks for the terminology clarification!

Not sure if it's the same problem as what Sloot's saying, but as someone who has to fight the 'just leave it in a savings account' instinct myself, there's a lot of fear about unpredictable expenses occurring in a way that your net worth could easily cover them, but your bank account can't, and either can't be converted into cash at all (eg, tech worker stock in companies they can't sell, ) or can only be converted at a massive cost or time investment (eg, bonds sales on secondary market, where tax ramifications become huge).

That’s why I would suggest a bond fund: it’s liquid in a way that individual bonds are not and has a pretty comparable yield. Yes you need to sell it but credit should be able to tide you over if it’s truly urgent

That’s why I would suggest a bond: it’s liquid in a way that individual bonds are not

Do you mean a bond fund?

Yes, corrected.

I've tentatively brought up the idea of something like SGOV to her, framing it as a slightly better alternative to a savings account. She's suspicious, but hasn't completely shut me down yet.

Yes, my brother-in-law is like your girlfriend. He’s…not young, and every dollar he’s saved is in a savings account. He’d be worth 3, 4, 5x what he is now if he had gone the index fund route, but for some reason that’s not convincing. I think because that doesn’t address the reason he fears risk in the first place.

He also has, so far, refused to get a mortgage, despite the fact all the options they looked at would have resulted in mortgage payments less than their current rent.

The frustration is how much more materially comfortable they could be—right now—if I had been managing their finances for them, or if he’d be willing to bear one iota more risk.

Your point is well-taken, and in that same spirit I don’t harass this man about his financial leadership in his family.

There is a happy medium, and I believe it exists. For example I sell options. Right now, I have a notional risk of 7x-8x my taxable portfolio’s actual value. If the market went to zero I’d lose in the market double what my house is worth. That seems insanely irresponsible to the average person, so I’m very shy about it irl, and I am extremely selective about to whom I mention what I’m up to.

For example I sell options. Right now, I have a notional risk of 7x-8x my taxable portfolio’s actual value.

You sir, have balls of solid rock. There is absolutely no way I could bring myself to do that.

Looking back, the fact that I invest at all has more to do with an accident of fate than anything. I grew up dirt fucking poor. I don't mean "we couldn't afford a new car" poor. I mean "we had to cut slits in my shoes and tape them up because I outgrew them and couldn't afford replacements" poor, or "had a big, filling glass of water for dinner at least once a week" poor.

My first job out of college didn't pay handsomely, but it was enough money that I could dump 13% of my paycheck into my 401(k) and still feel richer than I had ever felt in my life. Every time I get a raise, I increase my savings one way or another and keep my spending power constant.

Absent that, I'd probably be like your brother in law. The terror of being poor stays with you wherever you go. I still regularly wargame what would happen if I lost my job, and wake up at night thinking that I'm going to lose my home.

I think about my relatives who haven't been able to get out. What advice do you offer to somebody who's still working retail in his 30s and has been turned down for his last ~50 applications to better jobs? "Just invest in SPY, bro" is going to bounce off their real-life circumstances that it probably does more harm than good.

For somebody who has that extreme level of risk aversion, what options are there that beat a HYSA? Browbeating her into equities isn't going to fly.

Ibonds? $10k/person/year limit, indexed directly to inflation + a fixed rate, state tax exempt, 30 year term, and 100% safe (well, unless the entire US burns to the ground, in which case nothing would be safe). The only "risk" is that you can't cash them for the initial holding period, and lose the latest 3 months of interest if you cash them within 1-5 years of purchase. Some years, it won't beat an HYSA (current inflation + fixed rate is 4.26%, so if you'd had a 4.5% HYSA earlier this year that would've been higher), but it will always beat inflation by the fixed rate.

On a similar topic, are there "non optimal" things that you do financially, but you do them anyway?

I have some very silly auto-invest/auto-transfers set up, just because I like the flow a bit better, and in some cases I've set them up so they can continue for the future instead of just investing the cash on hand now and then setting up the auto-system.

Related, but I tend to use different accounts as "buckets", even if one of them is giving me less of a rate than, say, an MMF would -- or if one MMF is giving a slightly worse rate than another.

Related related, but I use NFCU's savings account (earning dimes) over a different HYSA/MMF. Will I ever need that immediate liquidity? No, but I like having it there all the same.

The other one is that I'll actually keep a few index ETFs (at around $100) in an account that I also have a mutual fund in. I like being able to log in, see what it's at throughout the day without having to look up the ticker. So for instance, if I'm in an international mutual fund, I'll also have ~$100 in VXUS.

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