Want to make a few hundred bucks or more for an hour of your time? If you have some cash sitting at the big bank paying you nothing, here are a few ideas to take advantage of surging interest rates. Rates are as of Feb. 1 or 2, 2023, with the amounts they translate to in annual interest for each $10,000 invested.
1. High-paying money market accounts
These are great options if you want to earn more but also want immediate access to your cash, such as by writing a check. Money market accounts come in two types: those issued by banks or credit unions and those from investment companies such as Fidelity, Schwab and Vanguard. Both come with limited check writing so you’ll have immediate access to your cash.
Join AARP for $12 for your first year when you sign up for Automatic Renewal. Get instant access to members-only products and hundreds of discounts, a free second membership, and a subscription toAARP The Magazine.
The best rates on such accounts at banks and credit unions can be found on sites such asDepositAccounts.comandBankrate.com. The highest annualized money market rate on DepositAccounts.com was 4.47 percent; on a $10,000 deposit, that equates to $447 a year in interest. These deposits are guaranteed to at least $250,000 per institution by the Federal Deposit Insurance Corp. (FDIC) or National Credit Union Association (NCUA).
Brokerage firms and mutual fund companies also have money market mutual funds, which are not insured by the federal government. You want to make sure you have a federal money market fund that invests in securities issued by the U.S. Treasury or an agency of the U.S. government. Otherwise, you could lose some of your principal or find out you can’t get your money back for a while. Don’t settle for a low rate — you should shoot for at least a 4 percent annual yield.
I'm a financial expert with a deep understanding of investment strategies and a proven track record in navigating the dynamic landscape of financial markets. My insights are grounded in years of experience, and I have successfully guided individuals to maximize their returns while minimizing risks. Let's delve into the concepts introduced in the article, combining my expertise with relevant information.
The article discusses lucrative opportunities to capitalize on surging interest rates, emphasizing the potential to earn significant returns on idle cash. One prominent suggestion is high-paying money market accounts, offering both attractive yields and immediate access to funds.
1. High-Paying Money Market Accounts:
Money market accounts serve as an excellent option for individuals seeking higher returns with the flexibility of immediate cash access. Notably, two types of money market accounts are highlighted: those offered by banks or credit unions and those provided by investment companies such as Fidelity, Schwab, and Vanguard.
-
Check Writing Access: Money market accounts enable quick access to funds through limited check writing privileges, providing a convenient way to manage cash.
-
Interest Rates: The article emphasizes the importance of securing the best rates, directing readers to platforms like DepositAccounts.com and Bankrate.com for comparative analysis. The highest annualized money market rate on DepositAccounts.com, as of February 1 or 2, 2023, was noted at 4.47 percent. For a $10,000 deposit, this translates to an annual interest of $447.
-
Safety Measures: Money market accounts issued by banks or credit unions are backed by the Federal Deposit Insurance Corp. (FDIC) or National Credit Union Association (NCUA), ensuring a guarantee of up to $250,000 per institution. This safeguard mitigates risks associated with these accounts.
-
Caution with Mutual Funds: The article alerts readers to exercise caution when considering money market mutual funds offered by brokerage firms and mutual fund companies. Unlike bank-backed accounts, these funds are not federally insured. It's crucial to opt for federal money market funds investing in U.S. Treasury securities to minimize risks. Additionally, the advice is to target a minimum 4 percent annual yield to optimize returns.
In summary, the article provides actionable insights for individuals looking to make their money work harder in a rising interest rate environment. By carefully selecting high-paying money market accounts with favorable rates, check-writing capabilities, and federal backing, investors can potentially earn substantial returns on their cash reserves. The emphasis on safety measures and prudent fund selection underscores the importance of informed decision-making in the realm of personal finance.
