Cash Isn’t Trash Anymore
For several decades cash has been perceived as trash. The stock market soared in that period while cash stayed in the gutter. The financial landscape has experienced a notable shift and cash offers a compelling choice for some investors. Rising interest rates have benefited cash. Yields on cash-based instruments such as Certificates of Deposit (CDs) and Money Market Accounts have improved significantly.
Currently, CDs at TD Ameritrade are paying 5.409% up to a year. Charles Schwab is offering a one-to-three month CD of 5.41%. Moreover, Schwab has a money market fund mutual fund paying 4.92%. The benefit of a money market is it doesn’t have a time limit. However, money market rates can change frequently and you can’t lock them in like you can with a CD.
Typically, risk-averse investors looking for a secure place to park their funds have used CDs or a money market to avoid market volatility. With recent market uncertainties and political tensions, more investors are opting to reduce their exposure to the market and are taking advantage of these cash-based instruments. Their higher than normal yields are driving more to consider the flight to safety.
Despite these positive changes, it’s important to note that cash investments still have their limitations. Inflation remains a concern, as it can erode the purchasing power of your money over time. Remember, while cash may be offering more attractive yields now, it’s crucial to remain mindful of your financial goals and assess your overall investment strategy regularly. If you would like to discuss CDs or a money market here is my schedule: calendly.com/macielwealth.
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