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Investors and savers alike are at a bit of a crossroads when it comes to earning a good return on their money. Although market interest rates have been ticking higher in 2022, the amount paid on bank accounts remains woefully low. Meanwhile, inflation is the highest it has been in decades, driving up the daily cost of living for consumers. In this type of environment, it can take some work to get the most for your money. Here are some options to consider in this difficult environment.
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Check Online Banks for High APYs and Promotions
Savers at traditional banks have earned essentially nothing on their deposits over the past few years. As of Jan. 18, the average savings rate at banks across the country was just 0.06%, meaning many banks paid even less than that. But if you’re willing to bank with an accredited online institution, which carries the same FDIC insurance as your brick-and-mortar bank on the corner, you can typically score yourself a much higher payday. For example, at Marcus by Goldman Sachs, you can get a no-fee savings account paying a 0.50% APY, more than 8x the national average rate. Additionally, Marcus currently offers a $100 bonus if you deposit $10,000 in new money and keep it there for 90 days. Other online banks also frequently offer sign-up promotions, so shopping around can really pay off if you want to earn more than a 0.06% APY on your idle cash.
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Protect Yourself From Inflation With I-Bonds
Rather than worrying about the negative effects of inflation, why not protect yourself with an investment tailor-made for an inflationary environment? The U.S. Treasury’s I-bonds pay a fixed interest rate that also comes with a floating “kicker” rate that adjusts upwards and downwards every six months based on the current inflation rate. Since inflation is at multidecade highs, currently issued I-bonds pay a rate of 7.12% until April 2022. While this rate may dramatically adjust every half-year, if you believe that inflation will continue to run hot I-bonds may be a good place to stash some of your money.
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Diversify Your Holdings With Stocks
If you’ve got a longer-term time horizon with your money, stocks can be a great diversifying tool in a low-rate environment. Although high-multiple stocks have taken a hit in late 2021 and early 2022 on fears …….
