Maximizing Your Cash Reserves: Expert Advice

Maximizing Your Cash Reserves: Expert Advice with Anthony Goring, Investment Associate

If you have substantial cash reserves in your account with a low return rate, you may want to consider taking the following actions:

1. Evaluate your financial goals and risk tolerance:

Before making any investment decisions, it’s essential to consider your financial goals, risk tolerance, and investment time horizon. Are you saving for a short-term goal or a long-term goal? How comfortable are you with taking risks?

2. Explore high-yield savings accounts or money market funds:

High-yield savings accounts and money market funds both offer a low-risk place to park cash reserves, but differ in terms of who offers them, FDIC insurance, interest rates, investment requirements, withdrawal limits, and fees. Online banks often offer the best rates for high-yield savings accounts, but it’s important to research the bank’s reputation and FDIC insurance coverage before opening an account. Money market funds are offered by investment companies and brokerages.

3. Consider short-term bonds or bond funds:

Short-term bonds and bond funds can offer higher yields than savings accounts while still maintaining a relatively low level of risk. These investments typically have maturities of a few months to a couple of years, making them a suitable option for those who don’t want to tie up their money for a long time.

4. Look into certificate of deposits (CDs):

CDs are a low-risk investment that typically offer higher interest rates than savings accounts. CDs require you to commit to a fixed term, ranging from a few months to several years, and offer a fixed interest rate during that time.

Overall, it’s important to find the right balance between risk and reward when investing your cash reserves. By exploring your options and understanding your financial goals and risk tolerance, you can make informed decisions about where to invest your money.

No investment strategy or risk management technique can guarantee returns or eliminate risk in any market environment. Although bonds generally present less short-term risk and volatility risk than stocks, bonds contain interest rate risks; the risk of issuer default; issuer credit risk; liquidity risk; and inflation risk. All investments include a risk of loss that clients should be prepared to bear. The principal risks of Vance Wealth strategies are disclosed in the publicly available Form ADV Part 2A