If
you’re
still
settling
for
stingy
yields
on
your
idle
cash,
it’s
time
for
an
overhaul.
The
Federal
Reserve’s
latest
rate-hiking
cycle
has
been
generous
for
savers
who
are
stashing
money
in
safe
havens.
Consider
that
the
U.S.
3-month
Treasury
bill
is
yielding
about
5.4%,
while
the
Crane
100
Money
Fund
Index
—
that
is,
the
100
largest
money
market
funds,
per
Crane
Data
—
has
a
seven-day
current
yield
of
5.2%.
Not
everyone
is
feeling
equally
generous.
The
national
average
annual
percentage
yield
for
savings
accounts
is
0.6%,
according
to
Bankrate.com
.
That
figure
includes
traditional
brick-and-mortar
banks
that
are
offering
low
yields.
“People
are
still
kind
of
catching
up
and
letting
their
extra
funds
languish
in
no-interest
accounts,”
said
Catherine
Valega,
a
certified
financial
planner
and
founder
of
Green
Bee
Advisory
in
Winchester,
Massachusetts.
“It’s
important
to
keep
sharing
this
idea
to
do
something
with
your
cash;
these
rates
won’t
be
here
forever.”
Indeed,
while
the
Federal
Reserve’s
latest
meeting
minutes
gave
no
indication
of
possible
rate
cuts,
fed
funds
futures
pricing
suggests
a
chance
that
policymakers
may
start
trimming
rates
next
spring.
As
you
go
on
the
hunt
for
a
safe
place
to
sock
away
short-term
cash,
bear
in
mind
three
key
factors:
liquidity,
time
horizon
and
fees.
Here’s
where
to
get
the
biggest
bang
for
your
idle
cash
as
2023
winds
down:
High-yield
savings
accounts
and
CDs
Some
online
banks
are
offering
generous
rates
on
savings
accounts,
with
the
likes
of
Ally
Financial
,
Sallie
Mae
and
Synchrony
Financial
paying
yields
of
more
than
4%.
At
Bread
Financial
,
savers
can
get
an
APY
of
5.15%.
There’s
a
trade-off,
of
course.
For
starters,
it
may
be
harder
to
find
an
ATM
for
these
institutions,
and
some
banks
may
limit
the
number
of
withdrawals
or
transfers
you
can
make
each
month.
With
certificates
of
deposit,
investors
must
be
willing
to
tie
their
money
up
for
a
set
period
or
else
forfeit
some
interest
as
a
penalty.
Online
banks
are
also
offering
the
most
generous
deals,
with
Sallie
Mae
recently
hiking
its
APY
on
one-year
CDs
to
5.5%
and
raising
the
yield
on
a
two-year
CD
to
5.25%.
Keep
an
eye
out
for
banks
that
pay
richer
rates
on
CDs
with
unusual
time
frames,
such
as
10-,
11-
and
13-month
instruments,
said
Jeremy
Keil,
CFP
and
financial
advisor
at
Keil
Financial
Partners
in
New
Berlin,
Wisconsin.
Synchrony,
for
example,
pays
a
5.5%
yield
on
its
9-month
CDs,
while
offering
5.3%
on
a
12-month
CD.
“If
you
truly
don’t
need
the
money
for
a
year,
the
best
rates
you’ll
find
will
be
in
a
CD,
and
keep
in
mind
that
a
lot
of
these
banks
have
odd
times
where
you
might
find
the
best
rates,”
Keil
said.
With
CDs
and
savings
accounts,
investors
enjoy
an
extra
measure
of
protection
in
the
form
of
Federal
Deposit
Insurance
Corp.
coverage.
The
FDIC
offers
up
to
$250,000
in
backing
per
depositor,
for
each
FDIC-insured
bank
and
ownership
category.
Short-term
Treasurys
Valega
recommends
that
her
clients
carry
12
to
18
months
of
living
expenses
in
cash.
For
those
with
more
than
$100,000
that
they’d
like
to
hold
in
cash-like
investments,
she’s
been
buying
T-bills.
“I
like
the
T-bills
because
they’re
state
income
tax-free,”
she
said.
“When
the
funds
come
due,
we
can
have
a
conversation
of
where
we
will
invest
next.”
Clients
can
opt
to
deploy
the
money
into
the
stock
market
if
they
have
longer-term
plans
for
the
cash,
or
they
can
roll
into
another
T-bill
if
they
need
time
to
decide.
A
one-year
T-bill
yields
5.27%,
which
could
be
fine
for
an
investor
with
a
short-term
horizon
for
the
cash
—
and
the
funds
are
backed
by
the
full
faith
and
credit
of
the
U.S.
government.
There
are
also
trade-offs
for
T-bills.
For
starters,
if
rates
begin
to
decline,
you’ll
have
fewer
options
to
reinvest
proceeds
once
your
T-bills
mature.
There’s
also
the
issue
of
what
may
happen
if
an
investor
needs
to
dump
the
holdings
in
a
pinch
before
the
maturity.
“T-bills
are
marketable,
but
who
is
to
say
what
the
value
is
if
you
transact,”
said
Charles
Sachs,
CFP
and
chief
investment
officer
of
Kaufman
Rossin
Wealth
in
Miami.
“You
might
have
lost
a
little
money
or
gained
a
little
money.”
Municipal
money
market
funds
Rather
than
tying
up
money
in
CDs
or
T-bills,
Sachs
prefers
municipal
money
market
funds
for
investors
in
the
highest
income
tax
brackets.
These
funds
invest
in
short-term
municipal
securities
and
offer
shareholders
the
benefit
of
interest
that’s
free
of
federal
income
taxes.
Vanguard’s
Municipal
Money
Market
Fund
(VMSXX)
has
a
seven-day
SEC
yield
of
3.53%
and
carries
an
expense
ratio
of
0.15%.
Residents
in
high-tax
locales
may
also
want
to
consider
state-specific
municipal
money
market
funds,
which
have
the
additional
benefit
of
providing
income
that’s
free
of
state
taxes.
For
instance,
there’s
the
Vanguard
California
Municipal
Money
Market
Fund
(VCTXX)
and
the
Fidelity
New
York
Municipal
Money
Market
Fund
(FSNXX)
.
“Keep
it
simple,”
said
Sachs.
“Money
markets
are
there
and
working
really
well
at
this
time.”
—
CNBC’s
Michael
Bloom
contributed
reporting.
