Over the past year, rising interest rates and growing fears of a recession have driven investors to consider allocating more of their savings to cash. In using the word “cash” we aren’t just referring to dollars kept under the mattress (a terrible place to keep your money given the record high inflation rate!). The term “cash” can imply a variety of financial instruments, including CDs, high-yield or traditional savings accounts, money market deposits, money market funds, and U.S. treasuries. Of course, each instrument bears it’s own risk and return potential.
Savvy investors seek to keep their cash in a place that (1) ensures liquidity, (2) maximizes yield, and (3) maintains FDIC or NCUA insurance. Recent events with Silicon Valley Bank, Credit Suisse, and First Republic have raised concerns about the health of the broader banking sector. While we believe events surrounding these institutions were isolated incidents, they quickly reminded investors that FDIC and NCUA insurance limits matter. “The standard insurance amount is $250,000 per depositor, per insured bank, for each account ownership category,” the FDIC explains on its website.
Where should investors put their cash?
It’s a question we’ve been hearing more often, so we answered it in April’s Market Update edition of our Wealthy Behavior podcast. Listen in as Heritage Financial’s CIO, Bob Weisse, explains the difference between keeping your cash at a bank vs. a custodian, and describes the differences between investment vehicles.
(Click the play button above to hear the excerpt)
Click here to listen to this month’s April Market Update in it’s entirety. Or listen wherever you get your podcasts!