4 best places for cash as the Federal Reserve weighs a policy shift

Peopleimages | Istock | Getty Images

1. High-yield savings accounts

The top 1% of savings accounts has an average 4.69% rate, according to DepositAccounts.com. But only 22% of investors are earning 3% or more on their cash, according to a Bankrate survey conducted earlier this year. 

High-yield savings accounts, with easy access to your funds, are worth considering, said Ken Tumin, founder and editor at DepositAccounts.com

They’re also safe places to keep your cash. Most savings accounts are covered by the Federal Deposit Insurance Corporation, which generally offers depositors $250,000 of coverage per bank, per account type.

While investors expect the Federal Reserve to start cutting interest rates next year, online savings account rates won’t fall significantly until the policy shifts, he added. 

2. Certificates of deposit

The top 1% average for one-year CDs can be as high as 5.55% as of Aug. 18, according to DepositAccounts.com. 

Rates are also typically “locked in,” meaning even if interest rates begin to go down, your investments will keep growing at the same rate until maturity. 

3. Treasury bills

4. Money market funds

Yields are closely tied to the federal funds rate and some of the biggest money market funds are paying north of 5%, as of Aug. 18, according to Crane Data

With more interest rate hikes still possible from the Fed, Mellone currently prefers short-term money market funds over CDs for higher rates and more flexibility. “It’s really the best of both worlds,” he said.

However, there are a couple of downsides. Although money market funds aren’t likely to lose value, declines have happened, and investors should know there’s no FDIC protection.

For more on savings accounts, check out CNBC Select’s recent ranking on the best high-yield savings accounts.

FOLLOW US ON GOOGLE NEWS

Read original article here

Denial of responsibility! Secular Times is an automatic aggregator of the all world’s media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials, please contact us by email – seculartimes.com. The content will be deleted within 24 hours.

Leave a Comment