Maximize Return on Cash
Hi Terry –
I’d appreciate your perspective on smart options for investing $500k in cash making 0% interest. I don’t need the money for a decade or more as I have entirely separate savings and rainy day funds ( sitting multiple money market accounts ).
The market is all over the place now so I’m thinking of parking it in a one year treasury bond after the interest rate hike by the feds that is anticipated in this Wednesday’s meeting. I’ve already bought $10k iseries bonds for myself and my husband and kids. Thank you in advance for sharing your perspective and ideas!
Terry Says
Well, at the current rate of inflation, your cash (and mine) is losing purchasing power dramatically. So while I always advise having a significant amount of “chicken money” in cash, it looks like most of your money is in cash. And you need some stocks for growth, because over the long run a diversified portfolio of large company stocks with dividends reinvested has always beat inflation.
Yes, you could go to TreasuryDirect.gov (where you bought your savings bonds) and put money in Treasury notes, perhaps staggering the maturities. 6-month T-bills are currenly yielding about 3%.
But this would also be a good time to get an overall financial plan –with a FIDUCIARY FEE-ONLY financial planner you can trust. Find one through this link on my website.
Depending on your age and stage in life, there are other consideratins. What about college for children, grandchildren? What about long-term care insurance (a combo policy that requires a deposit but gives a death benefit if not used)? And do you have an estate plan (a Revocable Living Trust — in which case you’d open your Treasury account in the name of the trust).
I’m a big believer in “chicken money” — but you really need an overall plan. Now is the time to do it!
