Cash Is Interesting Again. And Safer Than Ever (Updated).
A combination of high interest, huge multi-million dollar FDIC/SIPC insurance, full liquidity, no minimums and zero fees is now available for your cash - if you know where to look.
While a number of choices exist for cash holdings like US Treasury Bills available at the US Treasury website or even via ETF holdings, Certificates of Deposit (CDs) at a bank or money market accounts, one of the best options in my view for liquid cash on hand, emergency funds or $$ intended for any event with less than a two-year time horizon is a high yield savings account with high interest, no fees, no minimum deposit, total liquidity with the ability to electronically link your checking account so that $$ can be moved promptly and effortlessly, no stock market risk and millions of dollars in FDIC or SIPC insurance coverage.
The two high yield savings platforms that I prefer are Flourish and Betterment Cash Reserve, both of whom charge no fees and have recently improved their offerings significantly.
Betterment's Cash Reserve currently pays 5.00% on all deposits with no required minimum balance, regardless of the amount deposited (this rate is subject to change according to the overall interest rate environment within the economy).
It carries up to $4m SIPC insurance on joint accounts / $2m for individual accounts. Two-person households are eligible to receive up to $8m in total SIPC insurance by opening a joint account and one individual account each. This is separate from, and in addition to, the $500k SIPC insurance on stock/bond investments held at Betterment.
There are never any fees for Betterment Cash Reserve accounts and $$ can be transferred online back to your bank checking account in one or two business days for no fee.
Betterment Cash Reserve permits an unlimited number of multiple segregated named "buckets" for different goals, all earning the same interest rate.
Accounts are available to individuals, joint account holders and trusts only, Betterment has no Cash Reserve business account options for incorporated entities or non-profits.
Betterment accounts are available to anyone, by signing up here.
Flourish (owned and operated by Mass Mutual) pays 5.00% on all deposits with no required minimum balance, regardless of the amount deposited (this rate is subject to change according to the overall interest rate environment within the economy).
Flourish carries up to $10m FDIC insurance on joint accounts / $5m for individual accounts. Two-person households are eligible to receive up to $20m in total FDIC insurance by opening a joint account and one individual account each.
One unique aspect of Flourish is that high yield savings accounts that pay its top tier rate on up to $1m and second tier rate for all balances above that, fully covered by $5m FDIC insurance, are also available for all types of business accounts; LLCs, corporations, non-profits, partnerships etc.
There are never any fees for holding $$ in Flourish accounts and your money can be transferred online back to your bank account either same business day (for a small wire fee) or in one business day (for no fee) - depending on exactly what time of day the transfer request is made.
Flourish does not currently permit multiple named "buckets" for different goals although they claim that this is “on their roadmap”, the $$ is managed as one single "lump" of money.
Flourish accounts (personal and/or business) are exclusively available to clients of select financial advisors, of which I am one, BY INVITATION ONLY.
Anglia Advisors clients interested in opening a Flourish account should simply let me know and I can send them an emailed account invitation. To reiterate, there are zero management or any other kind of fees associated with an account, even when you are invited by your Flourish-approved advisor.
In the case of both Flourish and Betterment (neither of whom are banks), these higher FDIC and SIPC insurance coverages are accomplished by spreading client deposits across multiple partner program banks, keeping assets held at each individual bank below their insured limits, but “stacking” them into one much larger limit per customer.
You can see the list of program banks for each platform here and here.
Important: Remember that if you already hold an account in your name with one or more of a platform's program banks, the balance of funds in that account will also count towards your total eligible FDIC or SIPC coverage at that particular bank ($500k for joint accounts, $250k for individual accounts) but will not affect your coverage at other partner banks.
Anglia Advisors clients are encouraged to contact me to further discuss optimization and protection of their cash holdings and implementation of a savings plan.
This post is accurate as of April 2024. I will post updates if and when rates and/or account features change.
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