Cash Is No Longer Trash

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Cash Is No Longer Trash

Yep, you read that right. It’s finally time for your stagnant cash to get a little love.

Thanks to the rise in interest rates over the last year or so it’s now possible for your cash sitting around to earn a little bit for itself. Treasury bonds, CDs, money market accounts, and high yield savings are all great options currently paying over 4% annually.

Across all of these I’ve earned over $1,000 passively in the last year, and decided to do a quick post on my three favorite methods.

Let’s get into it 🤝 

3) CDs/TBills

CD is short for certificate of deposit. These CD’s don’t have George Strait’s 50 Greatest Hits, but do offer yields over 5% at the moment.

With a CD you are locking in that rate for the length of the certificate (assuming it’s not callable). I’ve bought numerous three and six month CDs over the last year directly through Fidelity and have not had any issues. You’ll receive your original investment + interest once the CD reaches it’s maturity date.

Here is a screenshot of their current CD offerings:

As a reminder, CDs are subject to state and local income tax. For that reason, treasuries/TBills take the honorable mention spot since they are exempt from state income tax. Here is a helpful calculator to compare interest rates of CDs and treasuries depending on where you live.

Note: CDs/Treasuries allow you to lock in rates. The other two options on this list have variable yields that will change with interest rates.

2) High Yield Savings

Coming in at #2 are high yield savings accounts. This is the simplest and easiest option for getting a yield on your cash.

There are countless banks out there at the moment offering savings accounts with yields over 4%. That might not sounds like much, but when compared to 0.57% (the national average yield for savings accounts), it’s a 7x increase.

To make this make sense assume you have $50,000 in a savings account.

At 0.57% you will earn $285/year.

At 4% you will earn $2,000/year.

Remember, this is completely passive. Who doesn’t want a $2,000 raise for doing nothing?!

Almost all major banks have some sort of high yield savings account at the moment. Shop around to compare rates and see what you can find (also check for FDIC insurance). To get you started, Ally bank and Wealthfront are two I have used in the past.

1) Money Market Funds

After a year of finding ways to have my cash earn money the one I enjoy the most is using a money market fund.

Money market funds are basically where your cash sits in a brokerage account before you invest it in a stock or ETF. Note, money market funds are SIPC insured which is different from FDIC insurance on traditional savings accounts (did a post on it below).

Click here to learn the difference of FDIC and SIPC insurance.

Personally, I opened a new “brokerage” account with Fidelity and have been using it as a savings account. When you deposit money it will be held in the money market fund SPAXX which currently has a yield of 5%. For the Vanguard users VMFXX is their money market equivalent.

I’ve shared tactic this with my brother, fiancé, and friends who have all mentioned how nice it is to have their cash pay them a little something every month.

Conclusion

If you aren’t earning over 4% on your savings and emergency funds right now it’s time to make a move.

Rates won’t stay high forever, but you might as well cash in on these safe yields while the opportunity exists.

If you need help, or have any questions shoot me a reply to this email and I’ll try to help where possible.

Let’s put that cash to work. ~ Cade

Cade's Finds

What Comes After A Good Year In The Stock Market? - After such a good performance in 2023 you are probably wondering what 2024 holds. Ben Carlson put together a few handy tables showing what return you can expect following years with a 10%, 15%, and 20% gain.

Bitcoin ETFs Have Been Approved - Though the SEC pump faked the market with an “unauthorized” tweet, Bitcoin ETFs have been approved. Here is quick video on what this means for Bitcoin, the market, and potentially your portfolio.

Best Memes

Politicians got nothing on this guy.

Stanely’s are the new Gold change my mind.

Nothing in this email is intended to serve as financial advice. Do your own research. Thanks for reading, if you have any questions, comments, suggestions, etc. about the email don’t hesitate to send me a reply.