I have not been able to find any good very short-term places for some of my money. This is money that needs to remain mostly liquid, but not so liquid that it needs to be in a day-demand account (money market, savings, checking, etc).
Here’s the experiment I just did. I bought 250 CDs (CUSIP 38151PHY0) on the secondary market that are 3-month CDs and pay an interest rate of 3.75% and mature on 5/19/26. Here are the numbers:
Cost right now was $251,673.63, that’s $249,850 for the CDs and $1,823.63 of accrued interest. On 5/19, I think I will receive $2285.96 in interest and $250,000 in principal.
The IRR calculation is here:
| Date | Cash Flow |
|---|---|
| 4/30/26 | -251,673.63 |
| 5/19/26 | 2285.96 |
| 5/19/26 | 250000 |
| IRR | 4.78% |
I was absolutely shocked that my lowball bid was accepted. Maybe it was accepted because I was willing to take the entire inventory off their hands? The ask was 99.992 with a size of 250(10), total of 250, minimum order accepted 10. I bid 99.94 and it was accepted immediately (whenever my bid is accepted immediately I second guess myself and think I should have bid lower, ha.)
My question is, despite my calculation of a 4.78% IRR, is that roughly equivalent to a daily rate? Or is that some other calculation? It’s certainly better than 3.3% in the money fund the money was sitting in, but how much better?
Also, if lowball bids are sometimes accepted, then perhaps I will try it again. Maybe even regularly. But it is important to note that because brokers take a “markup” of a fixed amount (I think it was $50, but it may have been more), in order for any of these short-term remaining instruments to be worth buying, you have to buy them in large quantities.
But take all this with a large grain of salt. My previous experiment with bonds was an utter failure (the entire saga was posted here) because I hadn’t taken into account that it matured on a Saturday but I didn’t actually receive the money until the next Monday. So that dropped the yield down to roughly equivalent to a money market fund. And it shows that the bond market is ruthlessly efficient. Maybe the CD market isn’t that efficient.
[EDIT: I had some small errors that I corrected above]
