August 2021 Issue: Why cash still Matters in a low-rate Environment-Why cash still Matters in a low-rate Environment by Michael Halloran

Why cash still Matters in a low-rate Environment by Michael Halloran

Pdf Summary

This article discusses the current low-rate environment and the impact it has on cash management for investors. With short-term interest rates kept near zero by the Federal Reserve, common fixed income choices like savings accounts and money market funds offer minimal yields. As a result, some investors are taking on more risk to chase higher returns, while others are accepting near-zero yields from their banks and brokerage accounts. However, higher yields can still be found by transferring funds into high-yield savings accounts, which offer the safety of FDIC insurance. These accounts currently have yields of up to 0.60% annual percentage yield, significantly higher than the national savings average of 0.06% and the yield on government money market funds or brokerage sweeps. <br /><br />The article also discusses how some investors have responded to the low yields on cash and fixed income by speculating in cryptocurrency or investing in "meme stocks" like GameStop. It suggests that during periods of uncertainty, individuals are more likely to follow the lead of others. However, it advises advisors to remind clients of the words of Warren Buffett, who suggested being fearful when others are greedy and greedy when others are fearful. <br /><br />The article concludes by emphasizing the importance of smart cash management and the availability of higher yields on cash. It suggests that advisors and clients can proactively manage their cash by using intelligent cash management solutions that help them earn market-leading rates while enjoying broader FDIC insurance coverage.

Keywords

low-rate environment

cash management

investors

savings accounts

yields

high-yield savings accounts

FDIC insurance

cryptocurrency

meme stocks

smart cash management