Where Can You Stash Your Cash?
BY: SUSAN POWERS, CFA, CPA, CFP®, CPFA®
Are you looking to invest money for the short term? If so, you are probably wondering - where are the best places to safely stash that cash? With rates rising from 0% to 4% or more in 2022, it now pays to find the best options for your cash.
Are you retired? Keeping a cash reserve to cover 12-24 months of living expenses can provide peace of mind during periods of market volatility.
Saving for a house? Having the cash on hand gives you the flexibility to act when the time is right!
What are your options?
- Bank high-yield savings and money market accounts are now offering more competitive yields and are backed by the FDIC.
- Money market funds – also known as money market mutual funds – are offered by banks, brokerages, and mutual fund companies. They invest in short-term securities, including treasuries, municipal and corporate debt.
- Treasuries are backed by the AAA credit rating of the U.S. federal government.
- Treasury bills - T-bills have a maturity of up to a year. They are purchased at a discount. The difference between the discount and the face value at maturity is your interest payment.
- Treasury notes - T-notes, are issued with maturities of two, three, five, seven and 10 years. They pay interest every six months and return their face value at maturity.
- Certificates of Deposit – Bank CDs pay a stated amount of interest for a specified period and maturity date.
We are here to help! Short-term investments minimize risk but do so at the cost of potentially higher returns available in long-term investments such as equities and longer-term fixed income investments. Call us today to discuss your options.