MarketWatch: Cash Can Earn 4.5%
Late last week, MarketWatch wrote, "High-Yield Savings Accounts, Treasury Bills, Money Market Funds, and CDs -- Here's Where Your Cash Can Earn up to 4.5%." The article explains, "Cash isn't just the dollar bills you put in your pocket -- in this market, it might seem to be a patch of steady ground. There are multiple options: People can put their money in high-yield savings accounts, checking accounts, money market mutual funds, certificates of deposit, and short-term Treasury debt. As a super-safe alternative to equity markets, these investment vehicles are positioned to reap higher yields from higher interest rates. They may sound like reassuring places to park money while recessions worries persist, and as stocks and bonds try to recover from 2022's pummeling." It continues, "High-yield online savings account are averaging 3.3% annual percentage yields (APY), up from less than 0.5% one year earlier, according to DepositAccounts.com. A one-year online CD is averaging a 4.4% APY, up from nearly 0.6% a year ago, the site said. The average seven-day yield for the 100 biggest money market funds stands at 4.34% and it hasn't been this high for more than a decade, according to Crane Data, which tracks the industry. With maturities under a year, Treasury bills are fetching yields at or above 4.5%." Describing money funds, they state, "These mutual funds are comprised of ingredients like short-term, high-quality federal government and municipal debt, along with high-grade corporate debt that quickly comes due. By the end last year, money market funds had $5.2 trillion in assets under management, according to the Treasury Department's Office of Financial Research. That's well beyond the funds' $4 trillion in assets under management by February 2020, the data shows." The piece adds, "It will be a couple weeks before the latest 25 basis point hike is fully reflected in average yields, according to Peter Crane, president of Crane Data. The last time the biggest money market funds averaged seven-day yields surpassed 4% was in December 2007, according to Crane Data's statistics. 'Their biggest weakness [in recent years] is now their greatest strength. They follow the Fed,' Crane told MarketWatch. As the spread in yields from many savings accounts and money market funds widen, consumers would do well to pay more attention to these vehicles, said Kyle Simmons, founder and lead financial adviser at Simmons Investment Management in the Denver area. Ultra short-term ETFs are another option, he added. Like money market funds, they give exposure to government and high-quality corporate debt that matures quickly.... Treasury bills and CDs lie on the other side of the cash spectrum. They have maturity terms from 4 to 52 weeks. Yields may be higher than money market funds, but you must wait longer to get your money back."
