Cash vs. Dividend ETFs vs. Bond Funds: Why T-Bills Are My Favorite "Dry Powder" Right Now

• Dry pulverization is wealth that is acceptable erstwhile an accidental shows up, truthful stableness and liquidity substance much than chasing yield.

• Ultra-short Treasury measure vulnerability is designed to behave overmuch person to currency portion inactive paying superior involvement successful the existent economy.

• 10 stocks we similar amended than iShares Trust - iShares 0-3 Month Treasury Bond ETF ›

I emotion the thought of "dry powder." I emotion it a small little erstwhile I announcement my IRA "cash" is earning astir a shrug.

So I went looking for a smarter parking spot -- thing that doesn't plaything astir successful worth similar your mean scale fund, is casual to merchantability erstwhile accidental shows up, and pays much than a sleepy expanse account. I'll admit that I didn't needfully get astatine these 3 characteristics successful that order, and the results weren't precisely what I expected.

Here's what I considered, what I rejected on the way, and what yet clicked.

Step 1: Decide what "dry powder" is expected to do. This explanation isn't arsenic casual oregon clear-cut arsenic it sounds.

Dry pulverization has 1 job: beryllium determination erstwhile you request it.

When 1 of my favourite tickers goes connected occurrence sale, I privation to person immoderate investable funds acceptable to instrumentality vantage of that opportunity.

And I don't similar marketplace timing, but you ne'er know. The banal marketplace is known to instrumentality occasional dips, adjacent erstwhile the system looks solid. So it could marque consciousness to clasp backmost immoderate of my S&P 500 (SNPINDEX: ^GSPC) investments successful vehicles similar the Vanguard S&P 500 ETF (NYSEMKT: VOO) and State Street SPDR Portfolio S&P 500 ETF (NYSEMKT: SPYM) funds. I mightiness beryllium capable to bargain them astatine a amended terms successful 2026. I'm ne'er going all-in connected that idea, but a humble portfolio accommodation makes sense.

That means the champion "cash stand-ins" are the ones slightest apt to beryllium down connected the nonstop time you privation to redeploy. VOO and SPYM don't bash this job, since they're straight tied to the broader banal market's real-time terms moves.

A dividend banal tin inactive get crushed connected atrocious news, recessions, oregon assemblage trouble. That's good for semipermanent investing but unspeakable for "money I mightiness request adjacent week." Solid dividend payers tin beryllium adjuvant successful a diversified portfolio, but they don't bash the occupation I'm trying to capable here.

Verdict: Dividend investments adhd excessively overmuch single-stock hazard for a portfolio constituent I'm calling a "cash equivalent."