With interest rates on the way down, clients who had been earning 4% on their cash in money markets and short-term Treasuries are starting to ask what comes next. The Federal Reserve’s latest 25-basis-point rate cut, with more reductions likely before year-end, means today’s yields won’t be around much longer. So for this week’s Barron’s Advisor Big Q, we asked advisors: Where are you telling clients who want a good, safe yield on their cash over the next six to 12 months to put it?
Paul Jarvis, financial advisor, Prime Capital Financial: We have Goldman Sachs Select Savings, which we found to have an exceptionally competitive rate—currently 4.25%—FDIC insured, with no minimum balances, no fees, and no transfer restrictions. You can also renegotiate with your local bank on higher rates, which some people are willing to do. We like to see six months of savings in cash for someone with a steady job and income, and closer to a year if you have a commission-type of job or you’re approaching retirement. If you’ve got that as your emergency fund, you have a nice pool of liquidity, and when you’re planning additional purchases, let’s say you’re buying a house, then you want to have the down payment in that cash or high-yield savings account in addition to the six- or 12-month cushion.
Want to read the full article? Check it out here. Please note, a subscription may be required to read.
