Where to Park Your Cash
by SGL Financial
Our 2 Cents – Episode #251
Where to Park Your Cash
Today’s episode of Our 2 Cents is your sunshine on a rainy day! The Lewits are covering how to spot Social Security scams, health insights, and smart ways to approach short-term investments. Tune in now!
- Stock Market Update:
- US stocks have climbed to record highs despite war tensions.
- Beware Social Security Scams!:
- Social Security scams are getting smarter—let’s make sure you do too with a few simple ways to stay ahead.
- The Exercise That Can Transform Your Health:
- Find out what type of exercise can cut your risk of developing 8 diseases.
- Short-Term Parking Options:
- Is your cash just sitting there… or actually working for you? Here are some smart ways to park your money in the short term.
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Podcast Transcript
Announcer: You’re listening to Our 2 Cents with the team from SGL Financial, Building Wealth for Life. Steve Lewit is the President of SGL Financial and Gabriel Lewit is the CEO. They’re here to discuss all the latest and financial news, trends, strategies, and more.
Gabriel Lewit: Well, welcome everybody. Back to Our 2 Cents. We’ve got another episode for you here. I just realized actually our last episode was episode number 250 and we didn’t even celebrate it.
Steve Lewit: 250, really?
Gabriel Lewit: The last one was 250.
Steve Lewit: Wow.
Gabriel Lewit: So now we’re here on episode 251. But I wanted to take a moment to say it’s been a wonderful ride for 250 shows with all of you, our ultra valued and most exceptionally special listeners. We really do deeply appreciate you.
Steve Lewit: Well said. Yes, absolutely.
Gabriel Lewit: Well, this year, isn’t this the 250th anniversary of the-
Steve Lewit: Anniversary of the United States-
Gabriel Lewit: The United States this year too.
Steve Lewit: …of America. Yeah. So we’re on track.
Gabriel Lewit: So, we’re right in lockstep here.
Steve Lewit: We’re coordinated.
Gabriel Lewit: Yes, indeed. So we should have had some patriotic music playing or something in the show last time.
Steve Lewit: (Singing).
Gabriel Lewit: Oh man. Well, hey, we hope you’re doing well. We hope you’re off to a wonderful day or week or weekend, whenever you’re listening to our show here.
Steve Lewit: Enjoying… Did you see how green it got outside, like overnight?
Gabriel Lewit: It got green… Well, we’ve had monsoons for three days straight.
Steve Lewit: Yeah, that was some show the other night, wasn’t it?
Gabriel Lewit: A lot of electricity in the air, a lot of lightning.
Steve Lewit: Yeah. Did you get hail? I got hailstones.
Gabriel Lewit: I don’t think we got hail by us.
Steve Lewit: Oh, we got these stones. I mean, they were like size of marbles. It was a little scary actually.
Gabriel Lewit: Some place up north in Minnesota got baseball-sized hail. They were showing pictures of it.
Steve Lewit: Yeah, it’s crazy. Imagine, yeah.
Gabriel Lewit: A baseball.
Steve Lewit: Yep.
Gabriel Lewit: Yeah, that’s good.
Steve Lewit: That’s not hail. That’s a baseball.
Gabriel Lewit: Yeah. Well, let’s see. We’ve got a great show lined up for you today. A couple of quick items here we thought just would be interesting for you. And then we’re going to talk a bit today about, I thought, a really interesting study that’s related to your health actually, not your finances. And as a quick review, we sometimes like to detour into non-financial related topics that we’re about your overall retirement wellness…
Steve Lewit: Sure.
Gabriel Lewit: As well.
Steve Lewit: Sure.
Gabriel Lewit: Then we’ll talk about some places to… Where’s the best place to park your short-term cash? We’re going to talk about today. Okay.
Gabriel Lewit: And we’re going to get a little bit more specific into the investment side than we sometimes don’t get into too many details on the investments. We’re going to talk a little bit about those here today. All right. But to start things off, good news, if you’ve been following the market or maybe you haven’t, it recently surpassed 7,000, big milestone for the S&P 500. Everything here at the moment is pretty much almost at all-time highs across all the major indexes.
Steve Lewit: So, Gabriel, I’m giving you a seminar last night. And the big question was, why is the market going up, Steve? And Steve doesn’t have an answer.
Gabriel Lewit: Well, Steve should have answers to that question.
Steve Lewit: Well, I have an answer. Demand is higher than supply. I mean, that’s the answer. But when you look at the economics, when you look at the situation in the world, and it’s kind of crazy, and we got wars going on, we got inflation, and AI isn’t making any money, and everything is overpriced, and yet the market keeps going up.
Gabriel Lewit: Well, yeah. I wish it was really simple to point to a quick, “Hey, what’s the market going up for?” And a quick answer, just pick to it and say, “Hey, it’s because of this,” right? But it’s really complicated, right? There’s obviously, there’s swing investors and traders, there’s big enterprise banks, there’s individual investors, there’s countries that invest. I mean, there are so many things that influence the factors of stock prices. But as an example, I just read an article the other day that, because of the Iran war, actually fairly recently, there’s a big drop in… Actually, some of the earnings reports of technology stocks had come back pretty strong recently, and there was a big drop in the price to earnings ratio, and that could have been a reason why, especially big banks and big firms bought back stocks again, right?
Steve Lewit: Yes.
Gabriel Lewit: Even disregarding things like an Iran war or concerns about oil and supply and demand. So there’s a lot of things that go into this and it’s not a really clear cut, point to one thing answer, even though we would like it to be.
Steve Lewit: Which keeps bringing us back, and most other people back, that you cannot time the market. I still have clients saying, “Should I go to cash and wait for the market to drop?” I have same people ask me five years ago the same question. “The market’s going to drop, should I go to cash?” Well, if you had gone to cash five years ago, you’d still be waiting for the market to drop.
Gabriel Lewit: Well, you’d have lost a lot of money.
Steve Lewit: Absolutely.
Gabriel Lewit: So yeah, market timing is still pretty much impossible to do. You can try, but it’s not a science, it’s more of a luck skill. Or maybe a little skill, mostly luck.
Steve Lewit: Is there such a thing as a luck skill?
Gabriel Lewit: A luck skill, maybe. Maybe there is.
Steve Lewit: I’m skilled at luck.
Gabriel Lewit: I think that was luck-comma-skill, question mark.
Steve Lewit: Yeah. Can you build skills at luck?
Gabriel Lewit: I don’t know.
Steve Lewit: I don’t know.
Gabriel Lewit: You could practice getting lucky, yes. Well, there wasn’t much more we wanted to say-
Steve Lewit: Maybe we can patent that.
Gabriel Lewit: Maybe, yeah. Well, we didn’t want to say too much more about that other than it’s exciting.
Steve Lewit: It is.
Gabriel Lewit: Great news.
Steve Lewit: It is great news.
Gabriel Lewit: But folks, keep in mind it could also drop back below that point. So also, yes, I also like to mention markets, they have a habit of always making all-time highs, right? That’s typically what they do. So, people that say, “Hey, we’re at all-time highs.” Well, generally we’re always going to be at all-time highs as the market keeps growing over time.
Steve Lewit: Well, as the market goes up,
Gabriel Lewit: It usually goes
Steve Lewit: Higher.
Gabriel Lewit: So that argument sometimes falls a little bit flat.
Steve Lewit: Flat.
Gabriel Lewit: All right. So the next thing, just a quick reminder, a quick little tip here related to social security scams. There was a recent report here that said the Social Security Administration came out, this was last April 7th, about a week and a half ago. Warning Social Security beneficiaries, meaning people who are collecting their benefits, of an impersonation scam with, according to their words, devastating consequences for retirees. All right. So they had social media posts as well. Typical tips just bear repeating here, never share your social security number with unexpected callers. All right? They say that government imposter scams in which criminals pretend to work for the Social Security Administration or other government agencies are some of the most common scams in the US. In 2025, the FTC recorded a 25% spike in impersonation scams, sending the total over to 330,000 reports of these.
Steve Lewit: Okay.
Gabriel Lewit: And they prey on your fear and a false sense of urgency to steal from you and that can create real lasting financial harm.
Steve Lewit: And they are clever. I just had a client out in Arizona who was scammed just this way. And she’s a smart person and she has quite a lot of money, and wise and with it, and yet she got caught.
Gabriel Lewit: Yeah. So what they do, they’re very sophisticated. Just to give you a little backdrop here, they can send you fake emails, right? Be aware of clicking links in emails. We’ve always talked about that. They can have emails that look like they’re from the Social Security Administration that’s called them spoofing those emails or trying to design it or even making it so that their caller ID appears to be from a legitimate government number.
Steve Lewit: Yup.
Gabriel Lewit: They can give fake badge numbers.
Steve Lewit: Yup, yup.
Gabriel Lewit: They can even send you fake physical documents.
Steve Lewit: Yep.
Gabriel Lewit: So as always, you have to be very, very cautious and aware. The Social Security Administration encouraged you to be on the lookout for red flags, such as people using pressure tactics, demanding immediate payments, sending unsolicited attachments or download links, making threats or offering to move one’s money to protect it, right? These are all red flags.
Steve Lewit: Which is exactly what this scam was on my client, is they painted a picture where she had to move her money to a different account to protect it. And they had a whole story and backup data, and they knew all about her. And she just said, “Oh, okay. I got to do this.” And lost a lot of money.
Gabriel Lewit: Yeah. The other big one here is the Social Security Administration, they will not email you your statement. They won’t email it as an attachment. So be wary of emails that say, “Click here to download your statement or open attachments that say this is your statement.” So there’s just a lot of things here to be aware of. And if you’re ever in doubt, ever, right, just walk away. You don’t have to ever respond to someone calling you or emailing you. You could always go to a legitimate website directly. You go to Google, you go to ssa.gov, you get a real number off the real website.
Steve Lewit: Absolutely. That’s what you do, folks.
Gabriel Lewit: You call it-
Steve Lewit: You call and say, “Okay-”
Gabriel Lewit: …And you verify.
Steve Lewit: You say, “I’ll call you back and they’ll give you a number. Don’t call that number.”
Gabriel Lewit: Yeah. Yeah.
Steve Lewit: You call the number on the website.
Gabriel Lewit: On the real website that you know is real.
Steve Lewit: And they’ll give you the real scoop.
Gabriel Lewit: Yeah. So that’s the quick takeaway. Just be on guard, folks. It’s important. It’s out there. There’s going to be more and more spoofing attempts in the future with AI and voice recordings and people that can sound like your family members even. You just have to be cautious in this world that we’re living in.
Steve Lewit: Yeah.
Gabriel Lewit: What a world.
Steve Lewit: It is interesting, isn’t it?
Gabriel Lewit: Mm-hmm.
Steve Lewit: I mean, AI is so fascinating, the good things it can do and the really bad stuff it can do.
Gabriel Lewit: Well, and this isn’t just AI. This is just scammers who have been around since the dawn of time.
Steve Lewit: Well, it’s people.
Gabriel Lewit: But yeah.
Steve Lewit: People can do good things and people can do bad things.
Gabriel Lewit: They sure can.
Steve Lewit: Yep.
Gabriel Lewit: Yeah. All right. So let’s see here. Do you want to talk about health or you want to talk about investments for short-term savings first? What would you like to talk about, Sir Steve? You got yourself a preference?
Steve Lewit: I do. I do. I quickly want to talk about health because if you don’t have your health, Gabriel, you can invest all the money in the world and doesn’t mean anything.
Gabriel Lewit: Yeah.
Steve Lewit: So, let’s dive into that for a few minutes. I know it’s not financial again, but if you ask people what’s the number one priority, there are two priorities we have in life. One is we want health and peace of mind. I mean, those are the two priorities for everybody.
Gabriel Lewit: Well, I think you could also ask it this way, just to emphasize what you’re saying, if you could have 10 million, $20 million, but you were ridiculously unhealthy and sick…
Steve Lewit: No way.
Gabriel Lewit: Or would you rather have $100,000 and be healthy as you could possibly be and able to enjoy life? And I think people would choose the healthy.
Steve Lewit: Absolutely. Absolutely.
Gabriel Lewit: I mean, I would.
Steve Lewit: Everybody. I think everybody would.
Gabriel Lewit: And that gives you a sense of the value over money.
Steve Lewit: Yes.
Gabriel Lewit: Okay.
Steve Lewit: Yeah, definitely.
Gabriel Lewit: So, I really, really… Actually for myself as well, when I saw this article, I just thought it was really interesting. So the label here, the headline says, “One type of exercise can cut your risk of developing eight diseases.”
Steve Lewit: Yeah, and this is not… I mean, this is around. This isn’t like revelation, but it is important-
Gabriel Lewit: Well, this particular variation of the topic is new, which we’re going to talk about. All right? So basically what the study came to conclude is that vigorous, intense exercise, which we’ll talk about what that is, is very important. Not just that you get up and move around. Okay? The traditional studies that say-
Steve Lewit: So, eating breakfast would not be a vigorous exercise.
Gabriel Lewit: Intense exercise.
Steve Lewit: Intense exercise. That would not qualify?
Gabriel Lewit: No, that would not qualify.
Steve Lewit: Right.
Gabriel Lewit: Okay?
Steve Lewit: Okay.
Gabriel Lewit: It says, even as little as 4% of whatever activity, physical activity that you do, if it’s vigorous activity, can give you major health benefits, just 4%. Okay? And what does vigorous exercise mean? It’s an exercise that gets you breathless. Okay? And that can vary by person depending on your physical exercise levels. Okay? So if it’s running, stairs, fast walking, walking upstairs faster, swimming. Right? There’s a lot of different options here we can get into. And here’s what they found, okay?
Steve Lewit: Did they say in there, Gabriel, how you… Because breathless, it’s not heart rate, it’s breathless that they’re saying?
Gabriel Lewit: Yeah. Well, let me expand upon that. Yes. Okay, so this was an interview and the interviewer asked the authors of the study, “What counts as vigorous physical activity?”
Steve Lewit: Yes.
Gabriel Lewit: And the author here, Nguyen, let’s see, what’s her full name here? Dr. Leanna Nguyen said that-
Steve Lewit: When was this written? No pun. Was it-
Gabriel Lewit: This came out two days ago.
Steve Lewit: So, it’s recent.
Gabriel Lewit: This is very recent. Yes.
Steve Lewit: Yeah, I really didn’t mean that as a pun. Yes, I did.
Gabriel Lewit: Well, yeah. Vigorous activity, Nguyen says is generally defined as exercise that substantially raises your heart rate and breathing. A simple way to gauge it is the talk test. If you can speak comfortably in full sentences while exercising, you are likely in the low to moderate range. If you are so out of breath that you can only say a few words at a time, that is vigorous.
Steve Lewit: Ah, interesting. Interesting. Yeah.
Gabriel Lewit: She says here, “It depends on people’s baseline fitness.” So for me, I have to jog to… like if I just walk, even a fast walk, I’m not going to be-
Steve Lewit: Nothing happens.
Gabriel Lewit: Not going to be breathless, right?
Steve Lewit: Right.
Gabriel Lewit: I’ve got to physically start jogging and then I start sweating. I’m like, “Eh.” It’s like you can’t talk.
Steve Lewit: So, I do interval training. Interval training is you do half a minute on… Well, a minute high speed and then half a minute off speed, but I don’t reach the point where I can’t speak a full sentence.
Gabriel Lewit: Okay. Well, we’re going to talk about that here, okay?
Steve Lewit: Yeah.
Gabriel Lewit: So, it doesn’t have to be part of even a structured exercise plan, it could be rushing to catch a bus, carrying heavy groceries upstairs if that were to happen to make you breathless or raise your heart rate. Now here’s what they found, folks.
Steve Lewit: Now I’m worried about myself.
Gabriel Lewit: They said here, the numbers were stunning with the participants having the following results. 63% lower risk of dementia, 60% lower risk of type two diabetes, 48% lower risk of fatty liver disease, 44% lower risk of chronic respiratory disease, 41% lower risk of chronic kidney disease. Just like a whole bunch… 46% lower risk of death from any cause.
Steve Lewit: No, now-
Gabriel Lewit: That’s what it says.
Steve Lewit: From any cause?
Gabriel Lewit: That’s what it says right here.
Steve Lewit: Like getting run over by a car.
Gabriel Lewit: Sure.
Steve Lewit: Right.
Gabriel Lewit: Maybe if you’re faster, you can escape the car better. Okay?
Steve Lewit: That’s a little broad.
Gabriel Lewit: That’s what the article says. I’m reading from the article summary.
Steve Lewit: It’s a little broad. I mean, it’s like ridiculous, not any cause.
Gabriel Lewit: You can outrun lightning when it hits you. Yes, you got better chances.
Steve Lewit: You’re Superman.
Gabriel Lewit: Okay.
Steve Lewit: Jesus.
Gabriel Lewit: Right. And I actually liked what it said here. Imagine if someone created a medicine that would do all those things, you’d be like, “Holy minoli,” right? Except for they did.
Steve Lewit: Did you say…
Gabriel Lewit: Holy minoli?
Steve Lewit: Holy minoli.
Gabriel Lewit: Cannoli? What do you want me to say? I don’t know.
Steve Lewit: I don’t know. I just … That tickled me somewhere. Holy minoli.
Gabriel Lewit: I don’t know where that came from.
Steve Lewit: I have no idea.
Gabriel Lewit: It rhymes.
Steve Lewit: I like it. Okay. Well, holy minoli. Yeah, that’s what I’ve been saying to myself. Gee, holy minoli, this is great.
Gabriel Lewit: Yeah. So again, they said that once people reach more than about 4% of their total activity, as vigorous, the risk of developing chronic diseases drops substantially. Okay? Now, keep in mind here, it does say it’s hard if you have mobility issues, right? It’s still relative to your baseline.
Steve Lewit: Do they say how to find out what your baseline is?
Gabriel Lewit: Well, again, it’s saying if you’re out of breath.
Steve Lewit: If you’re out of breath, that’s your baseline.
Gabriel Lewit: Now, I still think what this doesn’t say, but I have to imagine if you only do this one day a week or one day a year, I’m not sure it’s going to have the same benefit. It didn’t quite get into that, but I believe this is part of any sort of regular exercise routine you might otherwise have. Probably. Who knows?
Steve Lewit: Well, I think it’s really interesting, Gabriel. I like the article. I have some questions about it. And everybody has a different theory on how to stay healthy and what your heart rate should be and what you should eat, and all of that kind of… But this is very simple. I like it. It’s simple. You can do it, just get breathless. And you walk up-
Gabriel Lewit: Well, yeah, just-
Steve Lewit: Walk up a flight of stairs, if you’re not breathless, go down and walk up again.
Gabriel Lewit: Well, or if you traditionally walk, right? Just-
Steve Lewit: Walk faster.
Gabriel Lewit: For 4% of your walk, if you walk every day, if you play pickleball, just little bits, get yourself your heart rate up and it has big benefits. Yeah. Indeed.
Steve Lewit: Yep.
Gabriel Lewit: All right.
Steve Lewit: And not only physically, but psychologically. When you feel better, physically, when your body is moving, psychologically, you feel better too. In fact, I don’t know when I was reading this article, it might have been 10 years ago, but a lot of folks that have depression or tend to have depression that exercise do much better.
Gabriel Lewit: Indeed.
Steve Lewit: Yep.
Gabriel Lewit: Indeed. Proven fact. They also say, which they don’t actually also say, that if you are really healthy and well, you invest better.
Steve Lewit: Yeah, they do say that. Maybe Nguyen wrote about that, Nguyen.
Gabriel Lewit: You’re a better investor too, right? It’s a superhuman power.
Steve Lewit: Super. Right. No losses if you exercise.
Gabriel Lewit: Exactly. You can time the market, you can… No, just teasing. Okay. Well, yeah, if you have questions on that, call Dr. Nguyen because we don’t know more than you do, other than what we just read.
Steve Lewit: That’s very close to Dr. No.
Gabriel Lewit: If you would like a copy of that article for any reason, please let us know. You can email us info@sglfinancial.com. Had a lot more great stuff in it in case that was curious or interesting for you. Okay. Well, let’s talk money. Typically what we focus on here. The best place is to park your short term investments.
Steve Lewit: Now this is real question right now because with interest rates kind of moderate, they’re still pretty good. With gas prices just skyrocketing, which is not pretty good. And a lot of unknowns in the world and the economy, and in your daily job, having this money liquid, but still performing for you is a very important decision to make.
Gabriel Lewit: Yeah, it sure is. And what’s interesting is I thought this was a good traditional article because it was from Morningstar and it has all the very traditional options that we’re going to talk about here for where to park your investments in safe short term money. But it’s funny, every time I … I have clients that ask me this, “Where should I put my savings, my short term money, my cash reserves?” And we walk through all the options of which there are probably eight or even nine options. And people still look at me, I sometimes feel like, and they’re like, “That’s it? Where’s the magic one where you can make 100% a year and no risk?”
Steve Lewit: And liquid.
Gabriel Lewit: And liquid.
Steve Lewit: And liquid. And I can get it anytime.
Gabriel Lewit: Right. And so, folks, it really is a finite pool and we’re going to jump into that pool here today, and perhaps it’ll take the rest of our show. If we have time, we’ll get to our other topic, but perhaps we may not.
Steve Lewit: So, Gabriel, before you jump in, could you say a little bit about what liquidity means?
Gabriel Lewit: Yeah. Well, liquidity means you have access to the money when you need it without a significant cost or penalty to access.
Steve Lewit: Now that last part that you added on, without significant cost or… Or what was the last part of… cost?
Gabriel Lewit: Or penalty.
Steve Lewit: Or penalty, is the real… Because folks, everything is liquid as long as you’re willing to pay the price of the liquidity.
Gabriel Lewit: Well, just about everything’s liquid.
Steve Lewit: Most everything is liquid.
Gabriel Lewit: Yeah. So the concept here is you have access to your money without significant cost or penalty. So as an example, is a highly aggressive stock fund liquid? Yes.
Steve Lewit: Absolutely.
Gabriel Lewit: Is it an ideal option for a short-term saving, safe investment? No. Why? Because let’s say the market was down 20%. You could access that money, but it would come at a significant cost or penalty, right? You could have lost money you needed, right? So there’s definitely, there’s safety considerations, there’s liquidity access considerations. And then typically people like, on their safe and short-term investments that have some form of guarantee. Okay, and we’ll talk a little bit about that here. That’s really what qualifies as emergency fund money, safety money, short-term money is safe, liquid, sometimes with guarantees or various levels of guarantees. Okay? And of course, with all investments of any level of risk, you want to maximize your return. Nobody wants to have less return for a certain level of risk, right? So let me just say it this way. If you had 100% safe CDs and you had an option between a 2% yielding CD and a 4% yielding CD-
Steve Lewit: And they were both 100% safe.
Gabriel Lewit: And they were both 100% safe. No one’s saying, “Give me the 2% CD.”
Steve Lewit: Unless the 4% CD is four years and the 2% CDC-
Gabriel Lewit: I’m saying all else being equal.
Steve Lewit: Oh, all else equal. Okay, yeah, absolutely.
Gabriel Lewit: So what everybody is looking for is given any given level of safety and liquidity being the same, we want to maximize and get the highest return. That’s called optimizing your investments.
Steve Lewit: Yes.
Gabriel Lewit: And we can do that for market classes, right? If you have a stock fund, that’s risky, right? You want a stock fund that’s better return for that same level of risk.
Steve Lewit: Yes.
Gabriel Lewit: So, as we go through this, that’s really what we’re looking for. So let’s go through some of the traditional options. You’ve of course got the worst option is your bank’s checking account.
Steve Lewit: Terrible. .001…
Gabriel Lewit: 001% yield.
Steve Lewit: Yield.
Gabriel Lewit: You get one penny per month of interest. You don’t even have to…
Steve Lewit: Maybe.
Gabriel Lewit: Yeah. Or maybe, maybe not even.
Steve Lewit: Maybe.
Gabriel Lewit: Okay. Yeah. So it’s safe. It’s FDIC guaranteed. It’s liquid. But the yield is terrible, okay? So generally that’s going to be crossed off the list.
Steve Lewit: So, it satisfies one piece of your criteria.
Gabriel Lewit: Two pieces.
Steve Lewit: Two pieces.
Gabriel Lewit: Safe-
Steve Lewit: Safe and liquid.
Gabriel Lewit: Safe guarantees liquid.
Steve Lewit: No growth.
Gabriel Lewit: No yield.
Steve Lewit: No yield.
Gabriel Lewit: Really low yield, okay? Now, the brother or sister to your checking account would be the bank’s default savings account, which is also generally terrible.
Steve Lewit: Let’s say better, but not good.
Gabriel Lewit: Yeah, okay. Most banks, especially brick and mortar banks, savings accounts, general default savings accounts are like 0.3% yield, right?
Steve Lewit: Not good.
Gabriel Lewit: Yeah. Okay. Now, the next cousin to all of these is the high yield savings accounts. So some online banks have these, some brick and mortars have them, not as many, but you have to physically open up a separate high yield account and move your money into it. These are typically going to be, at least in the current environment today, around three to three and a half percent range, right?
Steve Lewit: About. Yep, yep.
Gabriel Lewit: Three and a quarter, three, 275. And of course, if you can get a little higher return here, FDIC insured, liquid, easy to access, you’d want to go for whatever gives you the highest rate.
Steve Lewit: Yeah, just move your money from your high yield savings to your checking account.
Gabriel Lewit: And back and forth-
Steve Lewit: That’s at the click of a button, that’s easy.
Gabriel Lewit: Yeah. Now, so those are all pretty simple.
Steve Lewit: Yep.
Gabriel Lewit: Everybody’s generally pretty aware of those, but maybe you wouldn’t be surprised to hear this, but most… We encounter a lot of people just leaving that money in basic accounts, just throwing away interest.
Steve Lewit: It’s just, they don’t pay attention.
Gabriel Lewit: Yeah.
Steve Lewit: And the money… Here’s what happens. It’s not intentional, Gabriel, the money just happens to accumulate, accumulate, accumulate, and all of a sudden you got $75,000 in a checking account and it’s like, why don’t you move that to something else?
Gabriel Lewit: Exactly. Yeah. I mean, I had a client once that had 250,000 in a checking account.
Steve Lewit: Oh yeah, really should-
Gabriel Lewit: Paying 0.01%.
Steve Lewit: Yeah, really should. Yeah, that’s a good idea.
Gabriel Lewit: They shortly moved it out of there.
Steve Lewit: Yeah. And shortly and quickly.
Gabriel Lewit: Yeah, okay. So yeah, the next thing up is going to be CDs. That’s the cousin, right? You’re still in the bank world.
Steve Lewit: People love CDs.
Gabriel Lewit: You have to apply for it. Typically, online applications, paper applications if you go down to see your teller.
Steve Lewit: Easy to do.
Gabriel Lewit: Yeah. The bank will transfer it usually internally. There are also third party online banks where you can transfer your money or write them checks. The CDs world typically is going to have a little less of what though, Sir Steve?
Steve Lewit: A little less yield to them. Growth? No. A little less-
Gabriel Lewit: It’s a pop quiz for the morning for you.
Steve Lewit: Liquidity.
Gabriel Lewit: Yes.
Steve Lewit: Yes, thank you.
Gabriel Lewit: They’ll typically have a little less liquidity and what will they have in exchange for a little less liquidity?
Steve Lewit: A little higher rate of growth.
Gabriel Lewit: Yes, there it is. A little higher yield.
Steve Lewit: Yes.
Gabriel Lewit: Okay, you could do… Let’s say your standard default money market at high yield savings money market account is paying you at three and a quarter, but fully liquid. Let’s say you did a six-month CD, you might be able to get 375.
Steve Lewit: Three seven, three eight.
Gabriel Lewit: A one-year CD might be four.
Steve Lewit: Right. And a five-year might be four-
Gabriel Lewit: Still might be four. 405.
Steve Lewit: 405.
Gabriel Lewit: But you’re locking it in for longer in case rates drop.
Steve Lewit: Right. Okay.
Gabriel Lewit: So yeah, you start to get some benefits there with CDs, but what comes with the liquidity limitations? You’ve got possible early withdrawal penalties, generally smaller if you needed to take your money out before the end of the term.
Steve Lewit: So, to get a higher rate, Gabriel, here’s what I think that we have to understand, I think everybody does understand, is that to get a higher rate, we lose something on the liquidity end of the spectrum.
Gabriel Lewit: Well, yeah, there’s no free lunch.
Steve Lewit: Because you can’t have it all.
Gabriel Lewit: Yeah, of course. Everyone just, “Well, give me the 4% in my money market account.”
Steve Lewit: Yeah, so I can get it out anytime I want.
Gabriel Lewit: Yeah. So now another cousin even to the CDs, so this is like a distant cousin, is something called a MYGA, multi-year guarantee annuity. If you’re over 59 and a half, these are generally better for you. There are some available if you’re younger than 59 and a half. These generally have higher rates yet again than CDs. Maybe you can get five and a half percent right now on a five year and 5.3 on a three year.
Steve Lewit: Yeah, 5.65 actually.
Gabriel Lewit: Okay. But they come with slightly less liquidity as well. Slightly higher penalties if you need to get the money out more than 10% typically in a given year, you might have a penalty. So higher yield, slightly higher restriction on accessing your money, okay? Then there’s some of the lesser commonly thought of options here. Some bonds are very safe. You can do I bonds, which are not as popular as days, inflation adjusted bonds. You could do treasury bonds or treasury funds.
Steve Lewit: Yep.
Gabriel Lewit: Those are backed by the full faith of the US treasury. By the way, MYGAs are offered through insurance companies. They stand for multi-year guarantee annuities, so just like a CD, but through an insurance company.
Steve Lewit: Just like a CD except offered by an insurance company.
Gabriel Lewit: Which are generally very, very, very safe, but not FDIC protected.
Steve Lewit: Yes.
Gabriel Lewit: You’ve also got, you can do what are called ladders. Bond ladders, CD ladders, MYGA ladders, where you do one year, two year, three year, four year, so some of your money comes liquid at different times. And there’s also, the other thing that we use a lot that you don’t hear very often out there is something called a 40% buffer fund where your money is invested in basically an investment account with tax deferral. It’s got high liquidity, fully liquid at all times. Now it does have some very small amounts of principal fluctuation to it, potentially, but so can bonds. But your downside protection is up to 40% based on the S&P 500. The advantage here is you could earn up to 9% at the moment in an up year, which is substantially higher than CDs and savings accounts. But those aren’t guaranteed yielding rates, but they should average over time higher than any of the other accounts that we typically see.
Steve Lewit: So, a little more risk-
Gabriel Lewit: With liquidity though.
Steve Lewit: But with liquidity. Right. And the risk is very low because the chances of the S&P going down 40% are very low, but nevertheless, it is a risk.
Gabriel Lewit: Yeah. Now we also have some combination, like mini portfolios here that we can help you assemble where if you’re okay with a little bit of risk, right? It doesn’t have to be 100% safe. So what I mean here is you could take, let’s say you had $200,000 in cash or $100,000 in cash.
Steve Lewit: Or even in savings.
Gabriel Lewit: Or savings, right? You could take, you figure out how much you really want to keep in reserve, like in a money market or high yield savings account, maybe it’s 25,000 or 30, and then you take the additional amount and you still put in something very conservative, but with higher growth potential. So we have this little mini model we create from time to time where maybe about a quarter of the portfolio model is a high yield money market account. Another quarter of the portfolio is a 100% buffer ETF, and another certain percentage of the portfolio is what we call an uncapped buffered ETF. Long story short, we can tweak the percentages, but we can create a model that has generally very low downside risk targets, but if the market goes up, you might even be able to earn seven to 12% in a given year.
Steve Lewit: Right. Still meets all the criteria. High liquidity, high safety, but a little bit more risk, but higher growth.
Gabriel Lewit: Yeah. So what we’ve covered here is actually a wide range of choices. I think there is maybe nine or 10 options in this space, and it can go from very simple to a little bit more complex, but the goal of the additional options here is to get you higher returns, make you more money, but still make sure you have the cash reserves and the emergency funds and the safety reserves that you feel comfortable with.
Steve Lewit: Yeah. And this is especially important, Gabriel, for very conservative investors who tend to buy a lot of CD Fees and savings who don’t approach the market because they just don’t want to take risk.
Gabriel Lewit: Yeah.
Steve Lewit: And here are options where you can get much better returns at nominal risk that a lot of CD holders, we found folks are willing to take that risk because it’s so nominal.
Gabriel Lewit: Yeah, exactly. And so of course if you want 100% protected, there’s options there. If you want just a little bit of risk exposure, we have options there. And if you want to split into two buckets in your cash reserves, some 100% safe, some little bit of risk, but still higher return potential, we can pull that together for you. Let’s put your cash to work. Let’s put your safe money to work, your emergency fund to work. Let’s make you more money. That’s, at the end of the day, what we’re looking to do.
Steve Lewit: Gabriel, all I can say about all these options is, holy minoli, I didn’t know there was so many options.
Gabriel Lewit: For one little slice of your portfolio, right?
Steve Lewit: Exactly.
Gabriel Lewit: Now, yeah, standard disclosure here. We’re not recommending any of these for you here without us specifically reviewing your situation and your planning.
Steve Lewit: Definitely worth looking out there. Just look at it.
Gabriel Lewit: …Things for you to explore and consider, be aware of. Some of the rates here are subject to change. Some of our standard compliance related disclosures we’ve got to say. But if you have questions on this, we’re here to help you. Set up a time to speak with us about your financial plan, about your retirement, about your investment options. Let’s get you more to work here, put your money to greater good.
Steve Lewit: So, are we going to go jogging now? What are we going to do now? You and I-
Gabriel Lewit: I wonder if I speak fast enough on the show and it raises my heart rate-
Steve Lewit: Get breathless. Right.
Gabriel Lewit: Does that count?
Steve Lewit: Sometimes I can’t speak anyway, so sometimes the words just get stuck there. Does that count?
Gabriel Lewit: Maybe. Maybe. Well, we hope you have a wonderful show or had a wonderful show with us here today. Call us 847-499-3330 or go to sglfinancial.com, click contact us or email us anytime info@sglfinancial.com. Next show, we’ll cover a couple listener questions as well.
Steve Lewit: Yeah, we have a few.
Gabriel Lewit: Overdue on some of those.
Steve Lewit: Yeah.
Gabriel Lewit: All right, guys and gals, have a wonderful rest of your day, week or weekend. We’ll talk to you on the next show.
Steve Lewit: Y’all stay well.
Gabriel Lewit: Bye-bye.
Steve Lewit: Bye.
Announcer: Thanks for listening to Our 2 Cents with Steve and Gabriel Lewit. For any questions about your finances, give SGL a call at 847-499-3330 or visit us on the web at sglfinancial.com and be sure to subscribe to join us on next week’s episode.
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