Where Are You Putting All That Cash?

Mar 14, 2023

For the past decade, it has been incredibly difficult for savers to earn much on cash savings. However, this is changing as the Federal Reserve raises interest rates to battle inflation. As a result, yields on various cash vehicles are now becoming more advantageous.

High-Yield Savings Accounts

High-yield savings accounts, popular with online banking institutions, typically offer higher interest rates than traditional banks while still providing FDIC insurance coverage. In addition, unlike checking accounts, these accounts generally do not have a minimum deposit or balance requirement. In today’s environment, where interest rates at your typical bank are still near zero, it is possible to find high-yield savings accounts yielding over 3%.

High-yield savings accounts are a good option for those who don’t want to close a checking account that has established auto payments and direct deposits. It’s possible to keep an existing checking account and open a high-yield savings account at a different banking institution. Most accounts can be connected, and money can be transferred electronically back and forth between different banks easily.

Be sure to check whether the savings account limits the number of transfers per month. If you anticipate frequent transfers, make sure the account doesn’t have a low monthly cap.

Brokerage Money Market Accounts

Investors with brokerage investment accounts at large custodians like Charles Schwab, Fidelity, Vanguard, etc., can invest cash within money market funds. Unlike bank accounts, these funds are generally not FDIC-insured.

However, established custodians have a long track record of running these funds over various market cycles. As a result, many of these money market funds are yielding above 4%. Similar to high-yield savings accounts, yields generally increase as interest rates increase.

Ultra-Short Duration Bond Funds

The final option is an ultra-short duration bond fund to earn additional yield. Bond funds do not offer FDIC insurance, and the value can fluctuate. While these funds may work for those seeking higher yields, it is important to talk to your investment advisor before purchasing one because these funds vary greatly in the amount of risk taken and yield earned.


With the Federal Reserve’s rapid interest rate increases, more options exist for your cash to earn interest. However, your bank may not be keeping up. Contact us and we will be happy to discuss possible solutions.

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Any reference to an index is included for illustrative purposes only, as an index is not a security in which an investment can be made. Indices are unmanaged vehicles that serve as market indicators and do not account for the deduction of management fees and/or transaction costs generally associated with investable products. The material has been gathered from sources believed to be reliable, however Bedel Financial Consulting, Inc. cannot guarantee the accuracy or completeness of such information, and certain information presented here may have been condensed or summarized from its original source. To determine which investments or planning strategies may be appropriate for you, consult your financial advisor or other industry professional prior to investing or implementing a planning strategy. This article is not intended to provide legal advice, and nothing contained in these materials should be taken as such. Investment Advisory services are offered through Bedel Financial Consulting, Inc. Advisory services are only offered where Bedel Financial Consulting, Inc. and its representatives are properly licensed or exempt from licensure. No advice may be rendered unless a client agreement is in place

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