Cash isn’t just the dollar bills you put in your pocket — in this market, it might seem to be a patch of steady ground. There are multiple options: People can put their money in high-yield savings accounts, checking accounts, money market mutual funds, certificates of deposit and short-term Treasury debt.
As a super-safe alternative to equity markets, these investment vehicles are positioned to reap higher yields from higher interest rates. They may sound like reassuring places to park money while recessions worries persist, and as stocks and bonds try to recover from 2022’s pummeling. High-yield online savings account are averaging 3.3% annual percentage yields (APY), up from less than 0.5% one year earlier, according to DepositAccounts.com. A one-year online CD is averaging a 4.4% APY, up from nearly 0.6% a year ago, the site said. The average seven-day yield for the 100 biggest money market funds stands at 4.34% and it hasn’t been this high for more than a decade, according to Crane Data, which tracks the industry. With maturities under a year, Treasury bills are fetching yields at or above 4.5%. Of course, those numbers aren’t outrunning inflation. December’s yearly inflation rate was 6.5%, down from a pandemic-era high of 9.1% in June 2022. But consider these cash returns compared to the performance on the stock market. Even with January’s strong start, the Dow Jones Industrial Average
is down more than 4% year over year. In that time, the S&P 500
is off 9% and the Nasdaq Composite
lost nearly 17%. A major part of the downward pressure has been the Federal Reserve’s fast-paced increases for its bench …