Bloomberg has a chart showing the expected path of the Fed funds rate… it now peaks at about 5.4% by September-October
I have a Discover online savings account, currently 3.50% APR.
It’s nice because I also have the Discover credit card, and when I log in, I see both.
I’m sure there are higher rates out there – I don’t feel like chasing them for this account.
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NOT FDIC INSURED, and SIPC insurance does not cover any investment losses (“money market breaks the buck”). People conflate FDIC and SIPC… they are NOT the same !!!
I should start a new thread
So I do like Ally? I’m about to take the plunge to an online HYSA - have to admit I’m a little jiggety - Never have done a brick and mortorless savings account…yikes!
I’ve been at Ally for eight years, I haven’t had problems, but their customer service has been lacking at times, it has gotten worse over the last eight years, as it has everywhere I suppose. I find the website and app to be very usable. They don’t offer the very highest rates. I’d read on this post what other people recommend. When you take the leap to online only, you need great customer service. I don’t think Ally is there any longer, but most of our money there is my wife’s and she’s happy where she is.
What I do personally is I buy US Treasury Bills at Fidelity and Schwab, or the SGOV Treasury Bill ETF at those same places. I’m getting 5.5%, and totally safe, but… it’s more work.
Great to hear! Thank you for your input…nope for me on the US Treasury Bills~ the returns you get bonds just aren’t impressive, especially when compared to mutual funds, because they barely out pace inflation. But thanks for your perspective!
Me too. I really like their 24/7 CS phone, and it’s a US number
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Make sure they sign up for Alliant with the Suze Orman promotion on savings accounts…make monthly $100 deposits into a savings acccount for 1 year and get $100.
https://www.alliantcreditunion.org/help/suze-ormans-favorite-savings-hack-the-ultimate-opportunity-savings-account
Surprised to hear that opinion , the T-Bills beats every other option for short term savings. 5.5% and as safe as the bank
Yes, this is the way I understand it…
Bonds are kind of like the [certificates of deposit (CDs) of the investing world: easy to set up, relatively low-risk, but quite often, low-reward.
In return for your loan to a government or company, you get consistent interest payments from the borrower until the bond reaches its maturity date—that’s the date they’ve agreed to pay you back for the original loan amount.
If you decide to jump into the bond market, here’s what to expect.
Let’s say you buy a $1,000 bond from your local government. The term of the bond is 20 years with a fixed annual interest rate of 5%. In this scenario, you’d receive $50 in interest payments each year (nothing to write home about!) from the city throughout the bond’s term. At the end of 20 years when the bond matures, you’d get your initial $1,000 back. That means after two decades, your initial $1,000 investment turned into $2,000.
Getting a 5% return per year is not good growth when you compare it to the 10–12% [return on investment you could earn in the stock market. Plus, bonds do not use the power of compound interest. A $1,000 investment with 5% compound interest would yield $2,650 at the end of 20 years.
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It’s great that you’re looking to maximize your parents’ savings. Alliant, Ally, and Capital One are solid choices. Consider Discover Bank and Marcus by Goldman Sachs as well; they often offer competitive rates. Diversifying across these options aligns with a smart bi strategy, spreading risk while earning more interest. Always check current rates and terms to make an informed decision.
You cannot compare an investment in a 5% Treasury with a potential return in the stock market. They are not even in the same ballpark from a risk perspective.
I have used them for years. My fave part: they have a 24/7 CS number in America and I’ve never had to wait more than one minute.
Back of envelope calculation here. I have switched more to buying Treasury bills and laddering months versus keeping money in a CD or money market. My state tax rate effectively makes a 5.5% Treasury rate equivalent to a 5.8% CD or money market rate (ignoring federal taxes). I am OK with those numbers for short term gain if you are looking at getting better bang for your buck. Long term, I own mutual funds which hopefully will do better than 6% annualized. I do buy Inflation bonds on Treasury Direct too for savings that defers taxes ( state tax exempt too).
Whenever I have money burning a hole in my brick and mortar bank account, I’m motivated to buy 1 month or longer Treasury bills.
Point exactly!!! That’s why I don’t do Bonds!!!
Depends on your situation. I was never good at the stock market and need to ride herd on my retirement.