Where to Park Your Cash Right Now (And Actually Earn Something)
Maximize your idle funds with T-bills, HYSAs, and low-risk yields.
Cash is not neutral. In a tight-margin year, where borrowing costs are still elevated and rate cuts are merely possible, the spread between lazy cash and smart cash can be four to five figures for a typical small business. The good news in 2025: safe yields are still near ~4% if you pick the right wrappers. The bad news: your default bank or brokerage sweep probably pays far less. This guide shows you, plainly and quickly, what to use, when to use it, and what to avoid—with the after-tax angle baked in.
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2025 Cash Parking Cheat Sheet (as of Aug 21, 2025)
Yields change—always check the current 7-day/30-day SEC yield or APY before moving cash. The figures above are from fund sponsors, FRED/Treasury, and major rate trackers as of Aug 20–21, 2025.
What to Use—and Why
T-Bills: your baseline
What they are: Discounted U.S. Treasury obligations that mature at par, in 4 to 52 weeks.
Why they pay: You’re taking time risk (weeks to months), not credit risk.
Why they win after tax: Interest is exempt from state and local tax, which can add 30–60 bps of edge versus taxable bank interest in high-tax states.
How to run them well: Set auto-roll at your broker; build a ladder (e.g., 4/13/26-week) so something matures every month.
Treasury/Government Money Market Funds: the convenient workhorse
What they are: Funds holding T-bills, repos, and agencies; $1 NAV target, same-day liquidity.
Use case: Operating float—payroll, vendor cycles, quarterly tax set-asides—where you want yield without calendar juggling.
Tax wrinkle: Check the fund’s annual U.S. Government Obligations % to estimate your state-tax pass-through.
HYSAs: the simple dial
What they are: Online savings accounts with FDIC/NCUA insurance.
Use case: Convenience and fast transfers.
Trade-off: Rates float—they usually drop before you notice if the Fed cuts. Good as a layer, not a sole solution.
CDs: pin the rate on purpose
What they are: Time deposits. Bank CDs charge penalties for early withdrawal; brokered CDs can be sold (at a market price).
Use case: If you want to lock a ~4% handle for the next 6–12 months and you’re comfortable with the leash.
Ultra-short Treasury ETFs: near-cash inside a brokerage
What they are: Exchange-traded wrappers of very short T-bills.
Use case: Intraday flexibility and quick sizing in portfolios; expect small price drift around ex-div dates and flows.
A 60-Minute Setup That Works
Segment the cash by job.
Operating float (0–30 days): Treasury/government money market fund in your leading brokerage.
Opportunity & taxes (1–6 months): T-bill ladder (13–26 weeks) with auto-roll.
Rate hedge (6–12 months): A 1-year CD slice to lock a level.
Make after-tax your benchmark.
Compare after-state-tax yields, not just sticker APYs. Treasuries often win by tens of basis points in high-tax states.
Kill the sweep drag.
Check what your “core” or sweep position pays. If it’s materially below ~4%, manually buy a Treasury/government MMF or T-bill.
Write the playbook.
One page: target balances, approved instruments, who can toggle auto-roll, and when you review (e.g., monthly).
Mini After-Tax Example (why Treasuries often edge out banks)
You hold $1,000,000 for the next year in a 9% state:
Treasury sleeve at 4.20% (state tax exempt)
Bank/HYSA at 4.20% (state tax fully taxable)
Even with identical sticker rates, the state tax alone costs ~0.38% on the bank interest (4.20% × 9%), or about $3,800. That drops your after-tax bank yield to ~3.82%, while the Treasury sleeve stays ~4.20%—a clean $3,800 edge on the same million, before any federal differences.
Common (and Costly) Missteps
Letting cash sit in the default sweep. Many sweeps trail by hundreds of basis points—verify the APY and move idle cash deliberately.
Buying the wrong fund type. Most entrepreneurs don’t need prime MMFs with stress-time fees; use Treasury/government for core cash.
Ignoring call features on CDs. Callable CDs may be redeemed early by the bank—read the term sheet.
Forgetting liquidity sequencing. Keep enough in the MMF for payroll and taxes so you aren’t forced to sell CDs or unwind ladders at awkward times.
In August 2025, cash still pays if you’re intentional. Use T-bills and Treasury-heavy money funds as your default, HYSAs for convenience, and a short CD slice if you want to nail down a rate. Measure everything after tax, and never accept your broker’s default sweep as fate.
Educational only, not tax or investment advice. Always confirm current yields and your tax treatment before acting.