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Online Savings & Money Market Account Rates 2019

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Money Is On Sale

If you turn on the TV, open the Sunday newspaper, or log on to anything, you’ll see that while the holiday season is about family and friends, it is also about savings money and getting the best deals (when spending money).

What is being overlooked is that you can also get great deals now on savings money.   For the first time in a decade, online banks, brick-and-mortar banks, and credit unions are all competing hard for your cold, hard cash.

Over the last couple of months, we see not just promotional rates but a campaign of attractive incentives competing for your hard-earned deposit dollars.  Ally recently offered depositors bringing new cash a 1% bonus up to $1,000 (that promotion has now ended).

The Federal Reserve will have raised interest rates four times in 2018, and may raise them two or three more times in 2019.    As banks (and credit unions) review their 2019 deposit goals, the “sales” are vigorous and ongoing and likely to continue.

The sales are in savings rates.   You can find them on BestCashCow’s online savings page.    Be sure to check rates at local banks and local credit unions as well.    You’ll find that many smaller and less well-known institutions are also running sales too. 

Sales are also in CD rates (where some 1-year rates are now pushing 3%).  The especially pronounced sales in long-term CD rates, are especially impressive, where many local banks are offering 5-year CD rates that look and feel astronomical compared with what the public has been conditioned to seeing over the last decade.  Be sure also to check BestCashCow’s list of special CDs.   (BestCashCow continues to recommend extreme caution signing up CDs longer than one-year).   

Sales are real today.  The special deals on interest bearing accounts and deposit products can generate 5 times, 10 times, and, in a few cases, 20 times the national average rates.  With rates as amazing as those highlighted on BestCashCow, you need to ask yourself why one would continue to let Chase, Citibank, Wells Fargo, Bank of America and others take your money for nothing now?


Federal Reserve Chairman Jerome Powell Bows to President Trump, Setting Dangerous Precedent

Jerome Powell in his speech this morning at the Economic Club of New York stated that the Federal Reserve is “just below” its neutral rate.

The Federal Reserve is poised to raise the Fed Funds rate by 25 basis points to 2.25% to 2.50% in December.   The Fed had previously indicated that it would bring the rate above 3% in 2019, meaning that there would be another 25 point move in March, one in June, and at least one more in the second half of the year, perhaps two.

By so publicly moving away from the 3% neutral rate, Chair Powell has bowed to pressure from a President, adjusting his policy to accommodate a man who is browbeating him on Twitter, expressing his regret at having chosen him for the position, and publicly musing about firing him.

I suggested earlier that Trump could successfully and legally fire Powell.  At the bare minimum, what Powell made clear today is that he likes his job and doesn’t want to be fired.

However, Powell also crossed a line and created a dangerous precedent.   A strong Federal Reserve is data dependent and takes action to protect the economy, not to protect a President, a dictator, or his family’s real estate empire.

It is my view that we are likely to face tremendous inflation over the next year.  Inflation is already apparent in the costs of goods and services, the result of an hourly minimum wage that is now $15 in most of the country, and increased costs of transportation that will likely escalate unless oil and gas prices continue the precipitous decline we have seen the past two months.

Raising the Fed Funds rate, perhaps well above its neutral rate, could very well be necessary to stomp out inflation, and failure by the Federal Reserve to be responsive could result in a decline in the real value of just about every asset class (except perhaps precious commodities like gold).   By bowing to pressure from the President, the specter has now been raised that we could find ourselves in 12 months time with a Federal Reserve that is not acting independently but rather responding solely to a dictator’s interests.

It is a dangerous precedent indeed. 


Ray Dalio’s Advice is Not For You

Rate information contained on this page may have changed. Please find latest savings rates.

Ray Dalio is a Greenwich-based hedge fund manager.   I don’t know Ray, but by all accounts he is a very successful operator with excellent performance and a smart guy.

Dalio has recently been playing his hand at making far out comments in order to gain attention.  Dalio is generally very discrete and responsible (for example, he did not go on CNBC when Bitcoin hit 19,000 and say it was going to 40,000 like other frequent CNBC guests).    Nonetheless, his latest piece of advice is not for you.

You see, Dalio stated to CNBC that saving money in cash is “the worst thing you can do.” 

Dalio correctly stated that cash is tax disadvantaged and that you are taxed on interest at ordinary income rates, making cash a less advantaged asset class from a tax perspective than many of other alternatives where income generated has favored treatment (dividends from equities, for example) and where capital gains can be achieved.

But, Dalio overlooks the fact that cash is always going to be there from day to day.   You won’t loose 2/3rds of it as you did in 2000 – 2002 or as you did in 2008 – 2009, or as many of his Greenwich-based hedge fund brethren have done in a rising stock market over the last several years.    And, if you aren’t old enough to remember those periods or familiar with these types of losses, you can read about the losses people have recently had on bitcoin or look at the market’s fall in just the week after Dalio’s comments.

For those people who aren’t billionaires and who are dependent on maintaining their current asset levels in order to secure the education of their children, cash is a necessary and appropriate place to be and it can be an appropriate place to be with a substantial part of your portfolio for long periods.

To boot, cash doesn’t earn the 0.09% that Dalio assumes that it earns when he says that it doesn’t keep up with inflation.  The leading online savings accounts are paying upwards of 2.25% at the moment, and 1-year online CDs can be found at 2.70%.   Dalio needs to familiarize himself with the rates on BestCashCow (or our competitor’s sites) before he makes incorrect statements such as that.

Note to Ray Dalio, as of the date of this article, cash, even if it were only earning 0.09%, has outperformed the stock market, the bond market, EM, bitcoin and real estate in 2018.   It is certainly looking like it might outperform these asset classes in 2019 as well.