Cash or Equities?

In a financial environment where low interest rates have become the norm, the prospect of return on cash may appear to be akin to coming across a mythical unicorn. However, there are specific paths that can potentially lead to this seemingly lofty figure among the conventional avenues of saving and investing.

Recognizing the Current Situation

Interest rates on traditional savings accounts and certificates of deposit (CDs) in the United States have been historically low for some time. Banks typically offer low interest rates, frequently hovering around, as the Federal Reserve's monetary policy aims to stimulate economic growth through low borrowing costs.

Investigating Alternative Routes

High-Yield Savings Accounts: Some financial institutions or online banks offer high-yield savings accounts with interest rates that are higher than the national average. These accounts may yield 0.5% to 1.5%, occasionally higher, but fall short of the coveted 5% threshold.
Certificates of Deposit (CDs): Longer-term CDs may provide slightly higher returns than traditional savings accounts. However, achieving return solely through CDs may be difficult, as these rates typically vary depending on the duration of the CD and market conditions.
Money Market Accounts: Money market accounts, like high-yield savings accounts, may offer marginally higher returns, but they may not reach.
Investment Opportunities: Investing in specific investment products such as corporate bonds, certain government bonds, or specialised funds may yield return higher. However, these options are frequently riskier than traditional cash savings and necessitate a thorough understanding of market dynamics.

Consider the Following Factors

While return on cash is appealing, such opportunities must be approached with caution:

Risk Exposure: Higher returns are frequently accompanied by higher risk. Investment products with high yields may be subject to market volatility or credit risk.
Terms and Conditions: Certain financial products with higher interest rates may have restrictive terms, lock-in periods, or tiered rates that change over time.
Promotional Offers: Financial institutions may present limited-time offers or promotional rates that may provide higher returns initially but revert to standard rates after a certain period.

Getting a Glimpse of the Financial Landscape

A balanced approach is essential for individuals seeking higher returns on their cash reserves. Exploring a combination of traditional savings options, higher-yielding accounts, and cautiously venturing into investment avenues can help you get closer to the coveted return.

Last Thoughts

In a low-interest-rate environment, pursuing higher returns on cash necessitates a careful assessment of risk tolerance, financial goals, and market conditions. While a return on cash is unlikely in traditional savings accounts, alternative options and prudent investment strategies can bring you closer, albeit with additional risks and considerations.

Understanding the various options available and the nuances associated with them remains critical in making informed financial decisions.

NOTE: Past performanceis no guarantee of future results. A rist of loss is involved with investments in capital markets. Commentary in this summary constitutes the general views of NorthStar Portfolio Investments LLC and should not be regarded as personal investment advice. In addition, no assurances are made regarding the accuracy of any forecast made herein.

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