In Investing, Don’t Sweat the Small Stuff

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No, it was not really cash in the way money-market funds are — the underlying securities fluctuate in value — but it was close and would increase the yield a little.

I put the other half in a low yielding tax-free money-market fund. You can find such funds at just about every major brokerage house.

Proud of my decision, which took a full day to achieve — a day when I could have done some work, called my kids, gone for a long walk and sneaked in a nap — I examined how much I would gain from all my effort.

The answer was not much.

Here’s what the numbers looked like, based on an investment of $50,000. (I’m using that number for simplicity’s sake.)

Half the money went into the ultrashort bond fund, which returned 1.56 percent over the last year. The yield on that $25,000 invested at 1.56 percent is $390. The other $25,000, in the money market fund paying 0.15 percent, generated just $37.50.

When I added it up, I found that the total yield on $50,000 would be $427.50.

Even that was generous. My calculations were based on the average over the last 12 months, but the situation has gotten worse recently. The municipal money-market fund yield today is exactly zero, and the ultrashort bond fund pays 0.28 percent. So, more realistically, my total return is 0.14 percent, or only $70. That’s 90 percent less than it would have been a year ago. It’s just plain awful.

All my effort resulted in virtually no potential gain.

My unhappy takeaway is that trying to bolster the yield on savings, given today’s interest rates, doesn’t pay off. Some things really matter. But in this case, the adage is really true: Don’t sweat the small stuff. You have better ways to spend a day.