What to do with CASH Today? What To Do With Extra Money In The Bank? | Summary and Q&A

TL;DR

Learn how to make your cash work harder in today's low interest rate environment.

Key Insights

• ☠️ Keeping cash in a checking account is unwise due to inflation outpacing interest rates.
• 🙂 Savings accounts offer slightly higher interest rates but are still insufficient to combat inflation.
• 😫 CDs provide marginally higher interest rates but require locking up cash for a set period.
• ✋ High yield savings accounts like Marcus by Goldman Sachs can be a better choice than traditional savings accounts.
• ✊ Bonds, like a Johnson & Johnson bond, can help maintain buying power and offer a fixed yield to maturity.
• 💐 Investing in a bond ETF introduces more volatility compared to individual bonds.
• 😘 With low interest rates, it is essential to explore alternative options to make cash work harder.

Transcript

Hi, I'm Jimmy. In this video, we're  looking at what we can do with cash today.   Since interest rates are so very very low. Perhaps  this cash is something where we have to decide that   we're waiting for a good investment on maybe  it's an emergency fund, maybe it's just sitting   in a savings account. Either way, what can we  do with our cash to... Read More

Questions & Answers

Q: Why is leaving cash in a checking account not advisable?

Leaving cash in a checking account with no interest can result in its value decreasing due to inflation eroding its purchasing power over time.

Q: How do savings accounts fare in today's low interest rate environment?

Savings accounts offer minimal interest rates, insufficient to keep up with inflation rates, causing a decrease in the value of cash saved.

Q: What benefits does investing in bonds offer?

Investing in bonds, like a Johnson & Johnson bond, can help maintain buying power, provide a steady return, and offer a fixed yield to maturity, making it a reliable choice in uncertain times.

Q: Why is investing in a bond ETF different from investing in individual bonds?

Investing in a bond ETF introduces more volatility compared to individual bonds, as bond ETF prices are influenced by market fluctuations and lack a predetermined yield to maturity like individual bonds do.

Summary & Key Takeaways

• Leaving cash in a checking account with low to no interest is detrimental due to inflation eroding its value.

• Savings accounts offer slightly higher interest rates but still fall short of inflation rates.

• Considering bonds, like a Johnson & Johnson bond, can help maintain buying power and provide a steady return.