What is it exactly? Looking in etfs and came across this one and people says it acts like a high yield savings account. But I’m more confused on it and what it is exactly so if someone could give me a more depth awnser that would be great!
In: Economics
sgov buys short term goverment treasuries; which is the same thing your bank does for a majority of its ability to pay you interest on your deposits.
youll find that the bank HYSA interest rates are usually slightly lower than the 3month treasurty rate (so the bank still profits)
owning treasuries directly is slightly more tax efficient; HOWEVER you can not access the money as quick or on weekends or bank holidays……so its not a great place for all of your cash or emergency fund
A SGOV ETF stands for a short-term US government bond ETF. It invests in short-term US government bonds and acts like a high yield savings account because it provides a low-risk, low-return investment option. Essentially, it’s a way to earn interest on your money without risking much of it. Hope that helps!
Thanks for the reply’s yea it did
A HYSA is thru a bank or credit union and in America is federally protected up to $250k per account:
If you open up a Vanguard, Fidelity, etc. account, the money you transfer in but don’t invest sits in a money market fund, which is invested into US treasuries and pays interest (well, dividends).
SGOV is a type of ETF that also tracks US treasuries, it is basically the same as the money market fund but may pay a smidge higher and it is not something your unvested money is automatically put into.
As with money market funds and treasury ETFs, if you want your money you need to sell and transfer out, which can take 1-3 business days usually. As such, for real ASAP emergency funds I would recommend you keep some in a bank/CU where you also have a checking account, as transfers between internal accounts is usually instant.
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