Cash: Find Risk-Free Ways to Earn More
Money is not a client of any investment adviser featured on this page. The information provided on this page is for educational purposes only and is not intended as investment advice. Money does not offer advisory services.
What's happening in short-term interest rates? While long-term rates are expected to continue upward in 2014 as the Fed cuts back its bond buying, short-term rates remain in the doldrums.
And with unemployment high and inflation low, the Fed has said it has no intention of raising these rates until at least 2015. Yet more than $900 billion remains parked in retail money funds paying 0.01% on average.
You can do better.
1. For cash you may need to tap
Online savings accounts, such as ones from GE Capital and Barclays, pay 90 times what a money fund does. And federal deposit insurance guarantees your money is safe.
Recent yield of:
Average money fund: 0.01%
Top online savings account: 0.9%
2. For cash you're investing
Find a long-term CD with a lenient early withdrawal penalty, says Ken Tumin of DepositAccounts.com. Barclays' online five-year CD claws back just six months of interest. In a year you can cash out and still be ahead of what you could have earned elsewhere today.
What you earn per year
5-year CD: 2%
If you bail out after one year: 1%
SOURCE: DepositAccounts.com