In 2023 cash is definitely trash. Even though we have made tons of progress on tamping down a nasty bout of inflation, inflation remains elevated by historical standards. That means if you are sitting on a lot of cash – the value of your US Dollars is rapidly declining.
For example, in the last 12 months, the value of the US Dollar Index (DXY) has fallen by almost 5%. That means if you held cash in a savings or checking account that offers little interest, your purchasing power probably fell by about 5%. Take a look at the chart below.
Most investors holding a lot of cash are doing so for an important reason: they probably need that cash in 12-24 months for an important purchase like a house and they do not want to risk potential weakness in the stock market. This completely makes sense.
Today I am going to share a great solution to this problem with two awesome investment strategies that offer two primary benefits.
-no risk of losing capital.
-inflation beating interest and dividends around 5% annually.
Better Cash Option #1: Interactive Brokers Offering up to 4.8% on Cash Balances
Interactive Brokers is the primary broker I use for my wealth management business. Interactive Brokers is one of the largest and most respected brokers in the world with a market value of 37 billion and shares are traded on the New York Stock Exchange.
Interactive Brokers is currently offering up to 4.83% annual interest on cash balances.
This might seem too good to be true but I can assure you it’s real – I have dozens of clients who are currently participating and picking up some very satisfying interest payments. Below is a link to landing page from Interactive Brokers with more details, and a calculator you can play with to estimate interest payments on cash balances.
Interactive Brokers Cash Balance Rewards
Here is a recent press release from Interactive Brokers on its cash balance rewards.
Interactive Brokers Expected to Raise Interest Rates on Cash to 4.83%
Better Cash Option #2: iShares 3-Month Treasury Bill (SGOV)
This is a short-term, government bond, and it has two primary features that make it a great alternative to holding cash.
Virtually no risk of capital loss: Unlike some other bonds, the price/value of this bond will hardly ever move. This is a great fit for investors holding cash who don’t want any capital risk. For example the value of this bond has barely moved in the last three years, with a price range of just .6% in 36 months. Take a look at the 3-year chart below.
Annual Dividend Yield Around 5%: These bonds are also offering some incredible monthly dividend payments, currently offering an annual yield of around 5%. For example, investing 1 Million dollars into these bonds would yield about $4,000 in monthly dividend payments for an annual total of about $50,000 in dividend payments.
The Big Picture
Holding cash isn’t a great way to protect the value of your money. I see two much better options that carry very little capital risk and also make some very large interest and dividend payments. Take a look at these options if you want to boost your returns and fortify your financial position.
I’ll be back with another update next week – have a great day!
Disclaimer: This is not investment advice. This report is for entertainment purposes only. Every investor should consult with an investment advisor before making investment decisions. The Vodicka Group, Inc. is not a broker/dealer. We do not receive compensation for mentioning stocks. At various times, the clients, publishers and employees of Vodicka Group, Inc., may buy or sell the securities discussed for purposes of investment or trading.
