Repositioning Cash

Photo by Pepi Stojanovski / Unsplash

If you are like most people, you have been using the same bank for years and have no desire to change.  However, despite the Fed raising rates, there is a good chance your bank hasn’t increased the interest rate it pays on your savings account. 

As of last week, the national average savings account is paying 0.16%.  Many large banks are still proudly paying .01%. 

If you are sitting on considerable cash, now is a good time to explore your options.  Tools like MaxMyInterest.com will help you open multiple savings accounts and move the money around to earn the highest rates while staying below the FDIC insurance limits.  If you would prefer to just stick with one bank, there are plenty of online options that are paying above 2.5%.  If you have no idea what your bank is paying, just give us a call and we’ll help you figure it out.   

Bond Opportunities for Higher Interest

If you are sitting on cash above your normal emergency reserves, and want to look beyond savings accounts, one-year US Treasuries and CDs are paying over 4%, while the bonds in your investment accounts (with additional duration and credit spreads) are paying even more.  If you want to explore bond options, we’re happy to help you compare alternatives and see what makes sense for your situation. 

Stock Opportunities for Higher Long-Term Returns

If that excess cash can be earmarked for a long-term purpose (beyond 5-years) the stock market is a lot cheaper than it was a few months ago.  No one knows when, where, or why the current market decline ends but history tells us that it will, and you don’t get a 20%-off sale more than about once every five years.