The refrain goes something like this:
“I’ve got $5 million in cash at Merrill Lynch. It is earning me zero. I don’t know what to do. We may just elect in the very near future a truly unprepared and unstable President and the stock market is at an all time high. I for one am not getting in now. And, interest rates are at an all time low, so I cannot buy bonds. My broker calls me and tries to sell me crap that neither he nor I understand. I have no way to earn anything.”
The answer to this refrain is pretty simple. At the moment, BestCashCow’s savings tables show that there are eight online savings accounts that currently pay at least 1% interest. Depending on where you live, you may also find as many as another four or five local banks and credit unions servicing your market that are paying over 1%. You’ll then find another eleven online banks - not including those banks you have already identified from the savings tables - that pay over 1% on 12-month certificates of deposit (CDs).
If you put $250,000 in each of 12 of so banks paying over 1% on savings accounts that are either online or in your market, you will put $3 million to work safely. By putting another $250,000 into eight other banks that will give you over 1% in a one-year CD, you will be safely stocking away another $2 million. Between now and next Labor Day, you will generate at least $50,000 that you would not otherwise make over the next year, albeit that money is fully taxable and the money in CDs cannot be accessed without paying an early withdrawal penalty.
There is a second Labor Day refrain in the Hamptons and it goes something like this:
“I cannot believe that I need to write another check for $45,000 to Horace Mann for my 12-year old’s tuition for next year.”
The answer to this refrain is also pretty simple. By opening these accounts, you will generate much of the money to cover those annual tuition payments, even after you pay your Federal and New York State and City taxes.