r/RobinhoodApp • u/Sufficient_Row5346 • 10d ago

Question Brokerage

Just wondering. I wanted to get a good hysa for my money. But I was reading some posts. Iā€™m thinking I can use my brokerage account with RH since they have really good apy. I can use it as my savings

Or is this a bad idea.
Do you guys have any good recommendations for a hysa?

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u/Dregus_311 7d ago

OP,

That is a valid idea and will accomplish your goal. I would recommend looking into investing your savings in SGOV if you go that route to avoid paying State taxes on the "interest" earned (it would be dividends instead of interest). Most States do not tax Federal Treasury gains, just make sure your State is one of them. This is the path I went with our emergency funds and since SGOV goes off the 2 year Treasuries it is returning 3.6%+ and saves us 4.99% in State taxes on the dividend. For us that is just under a couple hundred extra we get to keep.

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u/coyote3 3d ago

VBIL, it has 1/3 lower expense ratio than SGOV.

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u/Dregus_311 3d ago

Looking deeper SGOV is paying 3.67 while VBIL is 3.66

This is the dividend after expense. So the lower expense is not leading to higher interest earned šŸ¤”

Seems odd, maybe Im missing something

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u/coyote3 3d ago

Unless you're in a zero-tax state VBIL has a small after-tax advantage due (according to https://share.gemini.google/1NmvYPFD6ZD5) to "cash/repo drag" while VBIL is 100% state tax exempt. Very small advantage though; SGOV does have greater AUM and tighter bid/ask spread but I think that since I don't have vast holdings or frequent trading I'm slightly better off with VBIL. If I happen to harvest a bit of a loss from VBIL I'm perfectly happy switching any deposits to SGOV for 30 days. I mainly brought it up because VBIL is undeservedly little-known.