The Simplest Way to Put Your Savings to Work Safely

High-Yield Investing, Income Investing, Investing Strategies

A recent Wall Street Journal article stated that Americans missed out on $42 billion of interest income because of where they keep their money.

The culprits are the low-yielding savings accounts offered by America’s big banks.

As luck would have it, there are much better places to put your money. Places that will generate much more yield, without much added risk.

Let me show you where I put my savings to earn more…

Before I discuss how to earn more from your cash holdings, let’s look at an excerpt from the article:

The $42 Billion Question: Why Aren’t Americans Ditching Big Banks?

Americans are missing out on billions of dollars in interest by keeping their savings at the biggest U.S. banks… In theory, savers could have earned $42 billion more in interest in the third quarter if they moved their money out of the five largest U.S. banks by deposits to the five highest-yield savings accounts—none of which are offered by the big banks—according to a Wall Street Journal analysis of S&P Global Market Intelligence data.

The five banks—Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co., U.S. Bancorp and Wells Fargo & Co.—paid an average of 0.4% interest on consumer deposits in savings and money-market accounts during the quarter, according to S&P Global.

The Journal highlighted the $42 billion number for its shock value. The five listed banks didn’t have that much profit for the quarter. The article points out that in this new era of higher interest rates, you can earn much more on your savings.

The article also discusses how banks can set rates at whatever they think they can get away with. The listed banks have billions of dollars of customer deposits earning very little. Going to another bank account that offers a higher rate may not be the solution. The new bank could lower the rates it pays as soon as it has enough deposits.

I suggest looking at money market mutual funds to earn higher yields on your cash savings. These funds hold a stable $1.00 share value and pay interest based on the yields of short-term securities like Treasury bills. For example, I am using the Schwab Treasury Obligations Money Fund, which currently yields 3.52%. That means on $100,000, the fund would pay almost $300 per month in earnings. That same amount at a 0.40% yield would pay just $33.33 per month.

If you have funds you don’t want to comingle with your investments, it is easy to set up a new brokerage account. I have four accounts with Schwab, so I can see in dollars the results of the different investment strategies I recommend to my subscribers.

For my next Dividend Hunter newsletter, out January 1, I will show subscribers how to earn even higher yields with investments that secure the principal invested. This strategy lets investors earn 6% to 7% annual yields.

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