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REDDIT

How to compare HYSA interest rates to fund/etf returns?

L
Feb 16, 2025 · 19:35

I currently have cash parked in an HYSA account with a 3.8% interest rate.

If I wanted to move this cash into a brokerage account investing in funds/etfs, what is the most Apple to Apple way of comparing what return % (via dividends instead of interest) I can expect compared to the 3.8% I know I can get from my HYSA?

For instance - if a money market fund has a 7 day yield of 4%, is it safe to assume that moving my cash from my HYSA paying 3.8% to here would essentially earn me an extra 20 bps on my money?

What about for ETFs? If an etf has a distribution yield that is even higher (let’s say, closer to 5%), does that mean I can expect even greater returns if I put the money there?

Overall I am just trying to learn the most uniform way to compare what could be seen as effectively “interest rates” for non bank/interest bearing accounts.