With the first half of the year behind us, the most frequently asked question still remains, where should I place my money? The answer to that is very complicated since it depends on many factors. Faith-based and religious people believe that “where your treasure is, that’s where your heart is also.” If that principle guides your money management, then looking at your portfolio, what are your options for the second half of the year?
While we cannot assume the past is any predictor of the future, if you had money invested in the stock market you should be feeling pretty good about your investments for the first half of the year. According to the reports from several sources such as Bank of America and CNBC Financial reports, the stock market on average provided a rate of return on securities of 15.9%. Will that continue through the second half of 2023 is anybody’s guess. But what factors may impact our finances in the second half of 2023 and what information is out there regarding cash?
Budget talks in Washington, D.C. may present the some of the main threats. Thankfully Congress addressed the deficit issues earlier this year and we don’t have to witness another fight until after the presidential elections next year. However, that issue fails to solve the budget for the next fiscal year. Just so that you know, the federal budget could be divided into three sections, to keep it simple: mandatory spending, discretionary spending, and interest payments. Mandatory spending, refers to spending required by law. Discretionary spending sometimes includes special projects and spending for certain members of Congress. Interest expense, as is implied, must be paid monthly on borrowed money. Budget matters remaining unresolved by the end of September lead to another economic impasse. Start putting a plan in place to address your financial needs should this event happen.
During the first half of 2023, we faced a few banking crises. Just because you’re not hearing about them does not mean that they have disappeared. You will still have to be mindful of some fundamentals before you start or consider transferring or retaining money in some bank accounts. Despite those challenges, some banks are offering good rates on their money market and certificate of deposit accounts. What seems to be the impetus for these rate increases is the Federal Reserve raising interest rates in an attempt to lower inflation. Therefore, the good news for us is, if you have cash sitting in your savings account and could shift it to some short-term account such as a one-year certificate of deposit or money market, it may be worth considering those opportunities.
Here are some examples as of the month of May 2023.
Money Markets Accounts
I am going to assume you know about these accounts and how they work. For example, CFG Bank, which is based in Maryland (cfg.bank), was offering in May 2023, an annual yield of 5.02% on money market accounts with a minimum deposit of $1,000. There were other banks offering 5%, or close to that amount, in interest on money market accounts without a required minimum deposit. These would include UFB Direct (ufbdirect.com) a California bank and Newtek Bank (newtekbank.com) a Florida Bank.
Certificates of Deposit
I am also going to assume you know about these accounts and how they work. For example, Forbright Bank, which is based in Maryland (forbrightbank.com), was offering in May 2023, an annual yield on a one-year certificate of deposit account of 5.20% on a minimum deposit of $1,000. There were other banks offering greater than 5.20% on a one-year certificate of deposit account with lower minimum amounts required. These would include Merchants Bank of Indiana (merchantsbankofindiana.com) and BrioDirect Bank ( Briodirectbanking.com) a Connecticut Bank.
Whatever you do in the second half, continue to be watchful and vigilant.
Today’s What’s Up is about Apple. Apple products are in many households today from iPhones to watches. But in April 2023 in partnership with Goldman Sachs, the company launched its latest product – Bank Apple. Not only are they selling products and gadgets, but they want to get more into your finance, budgeting, and spending. Bank Apple provides a new savings account, offering interest rates of 4.15% on your savings. With confidence in traditional banks falling and the current average bank savings account yielding only .39%, some have speculated that the partnership between Apple and Goldman Sachs may be the future of banking. Apple’s savings bank accounts are Federal Deposit Insurance Company( FDIC) Insured. So if you are looking for a better yield on your savings account, take a look at Apple Bank as you weigh your options.
And that’s what’s up!
Ruthven R. Phillip, Esq., is a tax attorney, Stewardship and Philanthropy Ministry Assistant, and CEO of Give2Getrich, LLC. Give2Get Rich, LLC 2023. All Rights Reserved. Any distribution or reproduction of part or all of the contents in any form is prohibited.