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I have $20K that needs to stay in cash. What's a better option than cash right now?
For personal reasons I need $20K I've saved in cash at least for the next 2 years. I got an email from my bank saying that savings rates are going from 0.4% to 0.2% next month. Are there any other options that are better than a savings rate but offer the same type of safety? I'm not a fan of CDs-don't like the idea of having my money locked up. TIA!
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K
I think your high yield savings account is still the best bet. I would shop around to see what other rates you can get. Heard about magnify money on here and bookmarked it. Here's the website: https://www.magnifymoney.com/blog/earning-interest/best-online-savings-accounts275921001/
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B
@Kyle794 I agree with that. If you need it in cash a savings account with a good rate seems to be the safest way to go. Although I think rates are going down across the board.
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G
@Kyle794 That's a good blog. @Alina427 Have you thought about moving to one of those banks listed? Several of them are offering savings rates of 0.5%.
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R
Here's an option for you. Look into $ICSH to see if you think it suits. I invested some cash in December into this ETF called the BlackRock Ultra Short-Term Bond ETF. The ETF invests in short-term investment grade bonds denominated in USD. 12-month trailing yield is 1.09% (not bad), the price of the ETF has been very stable, and it's liquid. Fee for the ETF is 0.08%, not bad. Fact sheet: https://www.ishares.com/us/products/258806/ishares-liquidity-income-etf. It's not a money market account and there is some risk compared to a savings account. But if you are looking for something that has a much higher yield than 0.2% and you're willing to take a tad bit more risk, this could work.
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Good stuff here. I'll add that I bank with Chime, a neo bank. They used to have a 1% APR savings account but it's 0.5% now. I'd suggest looking at some neo banks that are offering higher APR on savings if you do certain things to get rewarded higher savings rate, such as getting direct deposit, spending a certain amount on their debit card or using some auto-saving feature. I think Varo's savings rate goes up to 2.8% if you do those things but they cap it at $10K.
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A
Great ideas here, I'm definitely going to look into them!
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This is interesting. I had to respond as someone forwarded me a new type of bank called Onjuno today- it's www.onjuno.com. They have a checking account offering 2.15% for deposits up to $5000. They also have a paid checking account offering 2.15% for deposits up to $30,000 (but there is a 6 month free promo). Has anyone heard of them? This seems really good. I haven't signed up but I am thinking about it as I'm not sure if there is a catch!
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J
@Paula552 There's another one of these bank like apps called One Finance. Similar deal, and it comes with in-app budgeting though and you get rewarded for higher savings rate of 3% as long as you do some of the same things Varo requires. I signed up in January and testing it out but so far so good.
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