Happy Saint Patrick’s Day! The color of the holiday is green, and with that in mind we wanted to share good news on something else green: cash. Specifically, getting paid by banks through savings account interest rates.
As a result of rising interest rates, some banks now pay 5%:
The bad news is that many still pay low interest:
If you have a lot of cash it pays to shop around. The table below highlights the potential difference in interest earned on $100,000, $300,000, and $500,000:
If you do not want the hassle of opening a new bank account, consider a money market fund. These can be bought in an investment account, which most people already have. One example is Schwab’s Value Advantage Money Fund (ticker symbol SWVXX). It has paid an annual rate of 4.49% over the past week.
Keep in mind that most interest payments are taxable. If you are in a high tax bracket, consider a tax-free fund. One example is Schwab’s California Municipal Money Fund (ticker symbol SWKXX). The interest is exempt from California and federal tax, and has paid an annual rate of 2.27% over the past week.
If you have any questions about maximizing the return on your cash, please reach out.
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Disclaimer: Investments are not guaranteed and are subject to investment risk, including possible loss of the principal amount invested. Past performance is no guarantee of future results. All allocations and opinions expressed are as of the date of this presentation and subject to change. The information contained herein does not constitute investment advice or a solicitation. Information obtained from 3rd parties is believed to be accurate, but has not been independently verified.
The opinions expressed in this article are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security. The material is presented solely for information purposes and has been gathered from sources believed to be reliable, however Think Different Financial Planning cannot guarantee the accuracy or completeness of such information, and certain information presented here may have been condensed or summarized from its original source. Think Different Financial Planning does not provide tax or legal advice, and nothing contained in these materials should be taken as such. As always please remember investing involves risk and possible loss of principal capital. Advisory services are only offered to clients or prospective clients where Think Different Financial Planning and its representatives are properly licensed or exempt from licensure. No advice may be rendered by Think Different Financial Planning unless a client service agreement is in place.Your content goes here. Edit or remove this text inline or in the module Content settings. You can also style every aspect of this content in the module Design settings and even apply custom CSS to this text in the module Advanced settings.