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Forget Savings Accounts. Use This New ETF Instead. (BOXX ETF Review)

What if I told you there’s a way to get the risk-free return of T-bills but in a way that’s more tax-efficient than buying T-bills directly or buying a T-bills fund? Here I review the BOXX ETF and why you might want to consider it over your favorite T-bills ETF or money market fund for your cash management needs. // TIMESTAMPS: 00:00 - Intro 00:15 - Cash-Equivalent Investments and Taxes 01:33 - BOXX - Alpha Architect 1-3 Month Box ETF 02:12 - Box Spreads 04:26 - Risks 05:02 - Taxes 06:00 - Performance and Fees 06:36 - Conclusion // SUMMARY: For short-term cash-equivalent investments, which you’d use for an emergency fund or for a short-term goal, you’ve got a few pretty standard options like a high yield savings account, certificates of deposit, treasury bills or T-bills for short, and money market funds. These are all about as low as it gets on the risk scale and pay something close to what’s called the risk-free rate, defined as the 3-month Treasury Bill rate. At the time of writing, that rate is around a very appreciable 5%, so these products have attracted more discussion and more investment recently. The problem with all these is that you’re still taxed on that monthly interest or return because the IRS treats it as income, even if you’re just reinvesting it and letting that money grow inside the account. And while obviously that interest is money you didn’t have previously so it’s all gravy even after taxes, I don’t know anyone who enjoys paying taxes, especially on money that’s not really being used for anything tangible. But of course, that taxation is simply unavoidable, right? Well, maybe not anymore… Enter BOXX, an ETF from Alpha Architect that aims to deliver the risk and return profile of T-bills but in a more tax-efficient manner. Its full name is the Alpha Architect 1-3 Month Box ETF. It may now be the best place to hold cash. So how does it work? While it may sound counterintuitive, in attempting to resemble T-bills, BOXX doesn’t actually hold T-bills or any bonds at all. It uses highly liquid derivatives to synthetically extract a return resembling the risk-free rate. It does this specifically by simultaneously holding a synthetic long position and a synthetic short position on the S&P 500, and the difference in strike price between those should be close to the risk-free rate of return. This trade is known as a “box spread,” hence the name of the ETF. Taxation of box spreads is pretty complicated, but the gist is that options on indexes like the SPX are taxed as 60% long term capital gains and 40% short term capital gains. BOXX now impressively boasts over $1 billion in assets after only a little over a year. Read the blog post here: https://www.optimizedportfolio.com/boxx/ #shortterminvesting #savingsaccount #treasurybills // INVEST ► M1 Finance: https://optimizedportfolio.com/go/m1 ► My comprehensive review of M1 Finance: https://www.optimizedportfolio.com/m1... ► Get my dividend portfolio: https://www.optimizedportfolio.com/m1... ► Lazy Portfolios: https://www.optimizedportfolio.com/la... ► Beginners’ reference guide (updated regularly): https://www.optimizedportfolio.com/be... ► Webull (for stock traders; get 2 free stocks): https://act.webull.com/kol-us/share.h... // SOCIAL ► Website: https://www.optimizedportfolio.com/ ► Patreon:   / optimizedportfolio   ► Facebook:   / optimizedportfolio   ► Instagram:   / optimizedportfolio   ► Twitter:   / optimizedport   ► Support my channel by shopping on Amazon (free for you): https://amzn.to/2TLCgCc I appreciate all the support! Disclaimer: This is not financial advice, investing advice, or tax advice. The information presented is for informational, educational, and entertainment purposes only. Investment products discussed are for illustrative purposes only. It is not a recommendation to buy, sell, or otherwise transact in any of the products mentioned. I always attempt to ensure the accuracy of information presented but that accuracy cannot be guaranteed. Do your own due diligence. All investing involves risk, including the risk of losing the money you invest. Past performance does not guarantee future results. Opinions are my own and do not represent those of other parties mentioned. Read my lengthier disclaimer here: https://www.optimizedportfolio.com/te... Disclosure: Some of the links above are referral links. At no additional cost to you, if you choose to make a purchase or sign up for a service after clicking through those links, I may receive a small commission. This allows me to continue producing high-quality content on this channel and pays for the occasional cup of coffee. I have first-hand experience with every product or service I recommend, and I recommend them because I genuinely believe they are useful.