What is the Do Nothing Portfolio (DNP)?
The DNP is the easiest way to earn interest on your money because you don’t need to do much. Think of it as the default way to make some interest. Not much thought needs to go into it.
Why is DNP Useful For?
The DNP is where you put your money if you don’t have a plan or any goals for your money. You might not know what you want to do with your extra cash. If you don’t know or don’t have any ideas put your money in the DNP.
What is The Income Yield?
The income yield is 4.00%.
What are the Main Benefits of the DNP?
- High Interest – You get the best rates available, somewhat tied to Federal Reserve short term rates.
- Flexibility – The day you decide you want to move the money somewhere else, you can do it.
- Par Value – This is a fancy term for “protecting principal”. The money invested is not market priced, because the investments maintain a par value, which doesn’t change.
- Optionality – There are different options available, some with higher interest. Pick those that fit your needs and perhaps some of these are accounts that you already have.
What are the Risks of the DNP?
Some of these investments technically have no insurance such as FDIC insurance. They may invest in government debt or sometimes privately issued debt. It is possible that these funds could fail, but the risk is very low, but not zero.
If you are very concerned about this risk, choose from the investments that have FDIC insurance as “Yes”. The Federal Deposit Insurance Corporation (FDIC) provides a backstop against institution failure or loan failure (up to $250K per account).
FDIC insurance exists for some of these investments because the money is placed at a bank. Bank deposits qualify for FDIC insurance.
Another risk of the DNP is interest rate risk. Interest rates are priced very quickly and frequently, you can’t depend on these rates staying around. They can also go up quickly as well.
How do I get the Money into these Accounts?
We recommend that you use what is called Automated Clearing House (ACH) to fund your accounts from your bank or other institution. ACH transfers typically are no cost and universally accepted between banks, financial institutions and investment exchanges.
How do I sign up for these Accounts?
It is possible you may already have accounts at these institutions, but just need to know where to put the money to get the high interest.
If you don’t, we include a link where you can sign up for an account.
DNP Portfolio – 01/12/2025
| Broker / Exchange | Security | Symbol | Description | Yield | FDIC Insurance? | Open Account |
| Schwab | SCHWAB Value Advantage Money Investor Shares | $SWVXX | Money market mutual fund. This closely tracks short term Fed rates. Since this is a mutual fund, the money can be traded only once per day. | 4.21% | N | Schwab Signup |
| Fidelity | FIDELITY Goverment Money Market | $SPAXX | Money market fund. This closely tracks short term Fed rates. The money can be traded thoughout stock market hours. Great that you get this yield by default for your cash – no action necessary. | 4.04% | N | Fidelity Signup |
| Interactive Brokers | Cash Balance Account | None | Cash balance account. This closely tracks short term Fed rates. The money can be traded thoughout stock market hours. Great that you get this yield by default for your cash – no action necessary. | 3.83% | N | Interactive Brokers Signup |
| Ally | Savings Account | None | Ally is a full service bank, open a savings account and deposit your cash here instead of your Ally investment account. | 3.80% | Y | Ally Signup |
| Coinbase | USDC Digital Dollar | $USDC | Stable cryptocurrency coin pegged to the US Dollar. Stable coin interest is called a “reward” and not income. The income comes from Coinbase corporate assets. | 4.10% | N | Coinbase Signup |
| PayPal | PayPal savings account | None | PayPal savings account is held at Synchrony Bank. As a bank deposit, these funds have FDIC insurance up to $250K. | 4.10% | Y | Paypal Signup |