Well, I’m very excited to talk to you about a particular topic today because it means that some of you are at 00:08icom, have some money saved up and you’re asking the question, “Where can I stash cash to keep it safe with the economy in such a mess.” I mean we’ve got a credit crunch out there. We have a weakened dollar. We have rising food costs, rising fuel costs, people losing their jobs. I mean it really makes people start to think that, “I need to be safe with my money.” So, I’m glad you have some money to be safe with and here are some ideas for you as to where to stash your cash until the economic downs turn is over with.
So, here we go. Number one, if you have some cash, I know the rates are not great but we’re going to keep it simple stoop it. We’re going to look at CDs at your local banks, look at it through a brokerage firm because often times they will buy bundle of CDs from banks that are looking for cash infusion that offer a little bit better rate. You won’t pay brokerage or huge brokerage commission on this but check out certificate of deposit rates. And if you have a large sum of cash, stager maturities, don’t put it all into one. If you do put it into one, I would suggest that you keep it rather short term because I think that you’re going to see the inflation is going force these interest rates higher whether they wants to make them higher or not.
Another option and this has just gotten even better and more affordable for people, treasury securities, treasury bills in particular. They come with a government guarantee of repayment, of principle and interest. And the government on this seventh of April I believe it was just made it even more affordable for small investors. You can now buy treasury bills for as little as a hundred dollars each. It was $10,000.00 for years and years and years up to $1,000.00 now a $100,000.00 only will get you a T-bill. You can get more information or buy them directly by going to treasurydirect.gov.
Now, for others that want a little bit of an opportunity for potential growth in their money not just interest income coming to them, take a look at some dividend yielding stock, dividend paying stocks. I mean some of the--in fact three quarters of all the stocks listed in the SNP pay some dividends. And mind you, a dividend is only taxed at 15% I supposed to that interest on the CD that’s tax it whatever your tax bracket is. So, for the current time, dividends are still treated with a better tax climate than basic interest paying. The only good thing about the treasuries versus the CDs is if you live in high-tax estate treasuries are tax-exempt from estate taxes. But do take a look, I mean for example you’ve got entities like Con Edison tat has a very good and I’m not making specific recommendations here because they don’t know your particular needs but you give me an idea of some of the better paying dividend stocks that have consistently raised their dividends through the years.
Another one is Altria Group. Now Altria, for those of you that are anti-tobacco etcetera may not want to invest them but that is the company that owns Phillip Morris long with craft foods and other entity or had craft foods so there is great growth potential in the dividend there. There are others and if you don’t feel comfortable looking at individual stocks then I might recommend that you check out the universe of equity income mutual funds where you’ll get great diversification without you having to pick the winners in the group. For example, you can look at T. Rowe Prices Equity Income Fund—Cards Equity Income Fund. They’ve been around a long time. They’ve great track records, low expenses and if you’re looking for something more than that, you can always go to morningstart.com. They rank all of the universe of equity index funds—equity income funds as well as just mutual funds in general.
If your cash is being swept into a money market account at your local brokerage or money market fund at your local brokerage, make sure they’re putting it into the best option for you. Normally, they’ll just sweep it into the lowest yielding money market they have. Check with them. Ask if you have tax-free money market option that I can out to have this swept into because with the current rates on municipal bonds, even the short term, the tax-free money market funds are yielding better than the taxable one. So, check with your broker if you have a brokerage account to make sure you’re getting the most out of your money market sweeps. And that’s it, some ideas for your cash.
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