2018 started with a complete bang in global financial markets. The Dow Jones Industrial Average broke 25000 and seems well on its way to 26000. Not only did our President say that it could go much higher in 2018, but so did David Tepper. The latter, of course, is one whose opinion matters. He is not only a real billionaire, but has real and tested insight into financial markets.
That having been said, it is still an important time to keep one’s wits and not to be over-exposed to financial markets. Crashes just as severe as the ones that we had in 2000 and 2008 could easily come from excesses like we have today and, as in the past, there will be no warning.
Last week, we suggested that rising rates in 2018 will finally offer a reason for investors to finally move from money center banks or major brokerages – where cash earns basically nothing – to savings and short-term CD rates. We have suggested concentrating on savings rates paying at or over 1.40% and one-year CDs at or over 1.70%.
This week we saw both Synchrony Bank and Sallie Mae Bank raise their online savings and money market rates to 1.45% APY. We also saw Dollar Savings Direct raise its online savings rate to 1.60%. These banks all rank highly on BestCashCow and if you have $2 million to move from Merrill Lynch, Goldman Sachs or Morgan Stanley, you might start by opening an account at each of these. You’ll be covered in a personal account up to $250,000 at each bank by the FDIC (or $500,000 in a joint account). See all of the best online savings rates here.
The first week of 2018 has also brought us our first 1-year CD in years that pays over 2%. Other online banks have recently raised their online on-year CD rates to or above 1.80%. These rates aren’t certain to extend into February, and January could be a good time to lock into a great rate for money that you definitely won’t need until 2019.
Last week, we encouraged investors to be cautious about locking into 5-year CD in a rising rate environment. We reiterate that caution, but we are seeing interesting 5-year CD products and interesting special term CD products in some markets.
Again, Happy New Year!