Great Places to Park Your Cash (Article)
Great Places to Park Your Cash
Everywhere you look, it seems that prices have gone up. Your monthly budget for groceries, gas and other items is likely much higher than it used to be. With your dollar’s reach continuing to shorten, it’s time to make sure your cash reserves are parked strategically to give you the best bang for your buck. Consider the following areas where you can help your cash stretch the farthest.
- Cash needed immediately: Online savings accounts are great for cash that you need immediate access to. Banks such as Ally Bank, Capital One, Marcus, and Discover offer some of the most competitive interest rates for your savings (up to 1.7% interest as of August 18, 2022). If you have an emergency fund or a significant sum of cash sitting at a big bank, consider moving it to take advantage of higher rates while still maintaining FDIC insurance coverage.
- Cash needed in 12 months: Series I Savings Bonds offered by the U.S. Treasury are a fantastic option for dollars you can part with for a year. Free of any market risk, Series I Bonds earn interest based on a combination of a fixed rate and an inflation rate. Right now through November 1st the current annual combined rate for the first six months you own the bond is at a record 9.62%! Each taxpayer can purchase up to $10,000 of I Bonds electronically each calendar year, offering you a great way to maintain purchasing power despite the current high inflation environment.
- Cash needed in 5 years: With a longer time horizon, the best opportunity to grow assets would be in an after-tax brokerage account where you can put your cash to work in the market. Consider utilizing a low cost, passively managed total market ETF or mutual fund to grow your assets. A total market index fund has historically offered a positive return during each 5 year period (2000-2005 is the only exception, when the market ended flat over five-years). Make sure you reach out to our team of financial planners to offer our perspective on an investment option that is in your best interests.
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