By Chief Investment Officer Tom Kelly, CFA.
Interest rates are up everywhere. Except perhaps your bank account. While the Federal Reserve's rate hikes and skyrocketing mortgage rates dominate headlines, the fine print in your bank account statement, revealing the interest rate on your savings, isn’t making the same amount of noise. Perhaps it should, and for all the wrong reasons.
The national average rate for a bank savings account is a paltry 0.45%, as of September 2023.[1] While these rates have been low for quite some time, there have not been obvious and safe alternatives… until recently! One-month Treasury Bills now yield 5.55% on an annualized basis as of September 29, 2023.[2] Additionally, one-year rates are at 5.46% as of September 29, 2023.[3] These are short-term rates we haven’t seen in over 20 years.
See Important Disclosure Information.[1][2][3]
One of the key roles of an advisor is to identify opportunities in the market. And while they don’t always exist, or persist, we believe that this is an important area to pick up yield if you have excess cash on the side. You can consider putting that excess cash into a higher-yield money market fund, short-term U.S. Treasury bonds, or a short-term bond mutual fund / ETF. Please reach out to us to discuss the best options for your situation.
Important Disclosure Information & Sources:
[1] “National Deposit Rates: Savings, Percent, Monthly, Not Seasonally Adjusted”. FRED, September 2023, fred.stlouisfed.org.
[2] “Market Yield on U.S. Treasury Securities at 1-Month Constant Maturity, Quoted on an Investment Basis, Percent, Monthly, Not Seasonally Adjusted”. FRED, September 2023, fred.stlouisfed.org.
[3] “Market Yield on U.S. Treasury Securities at 1-Year Constant Maturity, Quoted on an Investment Basis, Percent, Monthly, Not Seasonally Adjusted”. FRED, September 2023, fred.stlouisfed.org.
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Advisory services are provided by SJS Investment Services, a registered investment advisor (RIA) with the SEC. Registration does not imply a certain level of skill or training.
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