Happy New Year! 2018 is going to be a great year. Will it be another barnburner on the stock market like 2017? Maybe, but you sure cannot bet everything on it.
What you can be sure of is that savings rates have moved up. There are many online banks that are beginning the year paying 1.40% on savings accounts. There are now many 1-year CD rates at or above 1.70%. (Longer-term CD rates have also recently moved up and are worth watching in 2018, but we would begin the year by exercising some caution here.) Depending where you live, you may even find local rates at banks and credit unions that are much higher.
For many years, I have heard the constant refrain. “Why bother? I may be making 0.01 at Chase or Citibank or Wells Fargo or Morgan Stanley or Merrill Lynch, but it just isn’t worth my time.” I often hear this from people who have millions sitting in cash.
If you have $2 million spread across 8 or 9 online savings accounts and short-term CDs (to stay below FDIC and NCUA limits), you can easily earn $30,000 pre-tax in 2018 on this money - and more as rates go up from here. Even if you are lucky enough to be in a high tax bracket and to live in a blue state and be severely impacted by the Trumpian tax law, you are still likely to net $16,000 or $17,000 after tax on this money.
We think that there is a lot you can do with that $16,000 or $17,000 in “free” money in 2018. You can put it towards a new car, take your family on a trip to Hawaii or save for your kids’ education. You could also give it to any small charity that will also be severely impacted by the tax changes.
It will take you 30 minutes online to open the accounts and set up the transfers. Just don’t let the bank make (or take) the money for free for another year.
Make a New Years' Resolution and fix this now.
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