SWFG: Cash & Cash Alternatives You've Got Options
Take a quick look at these yields:
- Treasury Bills – up to 4.72% for six-month and 4.92% for one-year.
- Brokerage 1-Year Certificate Deposits – approximately around 4.75%
- Money Market Funds – have dramatically increased over the past year, aligning closely with the above rates while being more liquid.
Clients who want to receive a higher yield than what they are in their traditional checking or savings accounts have been taking advantage of the above options. While we don’t believe your portfolio should be solely cash/cash alternatives, moving some of your cash in a checking or savings account to a money market fund or treasury bill may make a lot of sense.
A money market fund is a mutual fund investing in high quality, short-term debt instruments, cash, and cash equivalents. While not principal protected, they are considered extremely low risk on the investment spectrum. The money market fund generates income, but little capital appreciation.
A treasury bill is a short-term debt obligation backed by the U.S Treasury Department with a maturity of one year or less.
A brokerage certificate deposit (CD) is offered through a brokerage firm, as opposed to a bank, generally offering more flexibility and yield than a regular CD because of a more competitive market.
Call us if you would like to discuss these options.
Disclosure: Every investor’s situation is unique, and you should consider your investment goals, risk tolerance and time horizon before making any investment. Investing involves risk and you may incur a profit or loss regardless of the strategy selected. The forgoing is not a recommendation to buy or sell any individual security or any combination of securities. Be sure to contact a qualified professional regarding your particular situation before making any investment or withdrawal decision.
