Cash Is King

Netflix just dropped Season 5 of The Crown on November 9, for those of us who are riveted by the storied history of the British royal family. It comes out just two months and a day after the death of Her Majesty Queen Elizabeth II, on September 8, marking the end of her 70-year reign and ushering in the third Carolean era; that of her son, now King Charles III. It's the first time Britain has had a king since Elizabeth's father, King George VI, died in February 1952.

It's an interesting coincidence, after years of historically low interest rates not just in the United States but across the globe, that cash is king again, too. As the Federal Reserve has raised rates to temper inflation, it has had downstream effects for borrowers and savers alike. Borrowers have found that the cost of servicing debt has gotten more onerous, having a cooling effect on the economy as intended. On the flip-side, though, the dollar has gotten considerably stronger and we're finally seeing some yield on our cash reserves.

Indeed, according to the New York Fed, the effective federal funds rate is currently at 3.83% — up 0.75% from last month. Some larger banks, citing lack of competition from consumers and continued surpluses of cash, have been slow to pass those rate increases along to their account holders; others have been more nimble. In other words, now is not a time for complacency. Regardless of whether you've had a long-standing relationship with your bank or credit union, it'll make sense to shop interest rates to see if you can get your cash to work harder for you than it has in nearly a decade and a half.

In addition to comparing rates from your bank or credit union, you can do the same thing with your investment accounts. In all of our investment accounts (whether taxable accounts, Traditional, SEP, or Roth IRAs), as new money is deposited or dividends and interest pay out, cash defaults to a "core sweep" position — essentially a short-term money market fund. Most brokerage firms — including for your accounts at oXYGen — give you multiple options from which to choose. You may be surprised to find that you could be earning 2-3% more on your cash than you were previously if you make a couple quick changes to that core account.

Take a look at your own investments both within and outside of oXYGen and have a conversation with your advisor to see what changes might help you eke out a little more return in spite of how the markets have struggled year-to-date. And, as always, let us know how we can continue to help you and the people you care about.

God save the King!

If you would like to receive more information on making smart money moves for your future, be sure to contact us today!