Raising Your Own Rates Even If the Fed Won’t

02.04.2019 - New York

By Jason Zweig, Wall Street Journal

The Federal Reserve signaled on Wednesday that it will be “patient” before raising interest rates again, but you should put your money in motion.

In a few minutes and with a few clicks of a mouse, you can crank up the yield on your cash by two percentage points, often adding hundreds—even thousands—of dollars to your investment income annually. The only hard part is overcoming your own inertia.

The nearly $8 trillion of cash in savings deposits at commercial banks is earning interest at an average rate of 0.09%. The more than $1 trillion of cash at brokerage firms is paying investors just under 0.3% on average, estimates Peter Crane, president and publisher of Crane Data, a firm that monitors cash and other short-term investments.

Meanwhile, savings accounts at online banks and short-term U.S. Treasury securities are yielding 2% to 2.5%. Savings accounts are federally insured against loss, generally up to $250,000; U.S. Treasurys are considered risk-free.

Capturing such higher rates on your cash is “the only place in the whole investment world where you can get additional return without bearing additional risk,” says Greg McBride, chief financial analyst at Bankrate.com.

In all likelihood, the only thing stopping you is you.

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