{"id":9065,"date":"2020-11-25T16:24:44","date_gmt":"2020-11-25T16:24:44","guid":{"rendered":"https:\/\/zackspcg.com\/blog\/?p=9065"},"modified":"2022-02-26T13:06:00","modified_gmt":"2022-02-26T13:06:00","slug":"ideas-for-putting-cash-to-work-in-this-low-rate-environment","status":"publish","type":"post","link":"https:\/\/zacksim.com\/blog\/ideas-for-putting-cash-to-work-in-this-low-rate-environment\/","title":{"rendered":"Ideas for Putting Cash to Work in this Low Rate Environment"},"content":{"rendered":"\n

Linda D. from Ocean\nCity, MD asks: <\/em>Hello Mitch, I\u2019ve noticed the deposit rate at my bank has dropped\nto 0.1%, which feels like it\u2019s basically paying nothing. I\u2019m curious if you\nhave any other ideas for earning a little bit of interest on cash right now,\nwithout locking it up. Thank you. <\/p>\n\n\n\n

Mitch\u2019s Response:<\/strong><\/p>\n\n\n\n

Thanks for writing, Linda. Yours is a concern shared by many\naround the country. Banks have pushed deposit rates lower in lockstep, to the\npoint where the average rate on savings accounts currently stands at 0.8% \u2013 not\nexactly inspiring. <\/p>\n\n\n\n

Banks are currently flooded with deposits \u2013 total deposits\nswelled to $15.9 trillion, which is up from $13.2 trillion at the beginning of\n2020. And with a flat yield curve, it is not highly profitable to put those\ndeposits to work by making loans. In a sense, banks are trying to discourage\npeople from parking cash, and lowering their deposit rates is one way to do it.\n<\/p>\n\n\n\n

______________________________________________________________________<\/p>\n\n\n\n

Is Your Retirement Prepared for Future Circumstances?<\/a><\/strong><\/p>\n\n\n\n

There are many\nunknowns when it comes to predicting your future retirement strategies: Will\ninterest rates stay low? Will there be a major market downturn? What if I face\nlarge medical expenses? <\/p>\n\n\n\n

Finding the right\ninvestment strategy can make a huge difference when managing these unknowns,\nand can help prepare your long-term investments for success.<\/p>\n\n\n\n

To help you learn\nmore about strategies that cater to different investment objectives, we have\ncreated our Dean\u2019s List of Investment Strategies. Our Dean\u2019s List describes\nfive of our investment strategies that are ranked in the top of their\nrespective classes by Morningstar (as of 9\/30\/20).<\/p>\n\n\n\n

If you have $500,000\nor more to invest and want to learn about five of our top strategies, click on\nthe link below.<\/p>\n\n\n\n

Learn More About Our Top-Ranked Strategies!<\/a>1<\/a><\/sup><\/strong><\/p>\n\n\n\n

______________________________________________________________________<\/p>\n\n\n\n

One potential option if you\u2019re looking for a slightly more\ncompetitive rate is to take a look at online players, like Goldman Sachs\u2019 Marcus,\nCapital One, or Ally Financial. You might find deposit rates in the 0.5% to\n1.5% range, which again is a far cry from attractive. But it\u2019s better than\n0.1%.<\/p>\n\n\n\n

A hard truth in this circumstance is that deposit rates are\nnot likely to change meaningfully in the coming year or perhaps few years.\nGenerally speaking, banks cut their deposit rates when the Federal Reserve cuts\nshort-term interest rates, which happened quickly in March in response to the\npandemic. The Fed slashed its benchmark rate by 1.5% in March, and banks\nfollowed shortly after with\ncuts to deposit rates.2<\/sup><\/p>\n\n\n\n

I cannot really give you advice on what to do with your\ncash, since I\u2019m not fully aware of your financial situation. As a general rule,\nI like to tell clients to keep at least a year\u2019s worth of cash in a savings\naccount \u2013 enough that you would be able to replace your full income needs. No\none can truly know what will happen in life and work, so it\u2019s good to build-up\na buffer of emergency reserves.<\/p>\n\n\n\n

If the cash you\u2019re asking about is part of your emergency\nreserves, I would say just leave it where it is (assuming it\u2019s at a trusted\nfinancial institution). You could <\/em>look\nto other banks for better deposit rates, but it may not be worth the trouble\nwith rates so low across the board. Certificates of Deposit, money market\nfunds, and U.S. Treasury bonds pay a little more, but your money may not be as\naccessible as you want it to be. <\/p>\n\n\n\n

If this cash is in addition to your emergency reserves, you\nmay consider taking a longer-term view with it, and investing it in accordance\nwith your objectives and risk tolerance. Doing so is likely to yield you far\nmore than 0.1% over time, in my view. <\/p>\n\n\n\n

Finding the right investment strategy can make a huge\ndifference when managing the highs and lows of the market. To help you learn\nmore about strategies that cater to different investment objectives, we have\ncreated our Dean\u2019s List of Investment Strategies.3<\/sup><\/p>\n\n\n\n

Our Dean\u2019s List describes five of our investment strategies\nthat are ranked in the top of their respective classes, according to\nMorningstar (as of 9\/30\/20).4<\/sup> If you have $500,000 or more to invest\nand want to learn more about these strategies, click on the link below to see\nhow they could potentially benefit you.<\/p>\n","protected":false},"excerpt":{"rendered":"

With deposit account rates hovering near 0%, Mitch offers other options for investors<\/p>\n","protected":false},"author":3,"featured_media":7436,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[66,71],"tags":[],"class_list":["post-9065","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-mitchs-mailbox","category-private-client-group"],"acf":[],"_links":{"self":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/9065","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/comments?post=9065"}],"version-history":[{"count":1,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/9065\/revisions"}],"predecessor-version":[{"id":10501,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/9065\/revisions\/10501"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/"}],"wp:attachment":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/media?parent=9065"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/categories?post=9065"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/tags?post=9065"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}