Introduction
High-yield savings accounts (HYSAs) are the most common place to park cash. But for financially astute earners, the more rational approach is to treat an HYSA as tier-one liquidity—then deploy excess funds into other vehicles that can deliver higher yields with similarly low risk as a second tier.
This article breaks down those second-tier options.
If you want to skip straight to the punchline and adopt the closest thing to a financial Hobson’s choice: park surplus cash in the SGOV ETF through your brokerage account and move on.
Why? Four reasons:
✅ Historically higher returns than most HYSAs and comparable cash vehicles
✅ State-tax-exempt (though still federally taxable)
✅ Extremely safe—this Bogleheads thread explains SGOV’s risk profile in detail
✅ Highly liquid
⚠️ Important caveat: SGOV isn’t identical to holding cash in a bank account. Selling shares and settling funds can take a day or two. That said, if the U.S. Treasury were to default, even FDIC-insured deposits could face systemic stress—since FDIC backstops ultimately rely on the federal government as well.
Ironically, Treasury securities are also what banks themselves often use to earn returns on the cash you keep in savings accounts.
Interested to know about other options in detail? Keep going –
#1 Treasury ETFs – USFR or SGOV or TFLO:
SGOV, TFLO, and USFR are low-cost, low-risk Treasury ETFs designed to hold ultra-short-term government securities. These are my preferred vehicles for parking short-term cash, with SGOV slightly ahead of the other two.
👉 All three are exempt from state income tax, giving them a structural advantage over HYSAs. This resource explains the details. This link explains it all.
#2 Treasury Bills and Notes:
You can also buy Treasuries directly—either through TreasuryDirect or your brokerage account:
- T-Bills: maturities under one year
- T-Notes: maturities of two to ten years
👉 Like Treasury ETFs, these are also exempt from state income tax.
#3 Your brokerage’s cash sweep programs:
Whether you’re with an established firm like Fidelity or a newer platform like Robinhood, parking cash inside your brokerage often earns competitive monthly interest.
That said—watch the expense ratios on automatic sweep funds. High fees can quietly erode returns if you’re not paying attention.
So, should you still have an HYSA?
Absolutely, as highly liquid first-tier emergency savings. A few solid options include SoFi, Capital One, and Ally, all of which offer strong rates and polished digital banking experiences.
❇️ My personal favorite: SoFi. Its Gen-Z- and millennial-friendly app and customer experience stand out—and it also happens to be one of my top long-term growth stock ideas, inspired by Peter Lynch’s “invest in what you know” philosophy. At ~$26 per share as of December 2025, I view SoFi as a future financial super-app in the making.
⚠️ Lastly, be really skeptical of HYSAs advertising eye-popping yields. If a rate looks too good to be true, it usually comes with hidden trade-offs—poor service, teaser rates, or awkward withdrawal rules.
🧘♂️ Unruffled Life Pro Tip
For your next read, go for 5-types of wealth – an indispensable, life-changing book by the quintessential Sahil Bloom. As always, stay rich and unruffled!
Disclaimer: The intent behind this post & any other material on this portal is to help our readers cultivate total wealth of health, money, time & social life (in that order) – essentially amplifying the joy and contentment in life. None of the content substitutes professional financial, tax, legal, health, home care or any other kind of advice. Please perform your own due diligence before acting on any of the ideas & material shared here.
Leave a Reply