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Online Savings & Money Market Account Rates 2022

Online Savings & Money Market Account Rates

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Four Steps to Prepare for A Russian Cyberattack on the US Financial System

I practiced law in Moscow in the 1990s.   While there, I learned that Russian law is an oxymoron.   I also learned a lot about Russia and its strengths.  I am certain that in spite every precaution that US financial institutions have taken, Russian hackers are extremely talented and have the ability to initiate a wave of crippling cyberattacks on the US system.

Now is the time to take preventative measures to avoid leaving yourself exposed.

First, maintain your liquid bank accounts across multiple banks.   We should not assume that the country’s largest banks (Chase, Citibank, Bank of America, Wells Fargo) will be immune to attack.  Likewise, do not assume that you local bank will be immune.  No matter where you bank principally, you should be opening multiple online bank accounts and transferring assets to them.   This will also enable you to take advantage of rising rates on savings and money market accounts in 2022.   Compare online accounts and rates here.

Second, do the same thing with your online brokerage accounts.   If you trade through Etrade or TD Ameritrade, consider opening an account with the other to be sure that you will continue to have access to financial markets in the event of an outage.   After all, we know that online brokers are prone to going down without an attack.  Imagine what can happen if they are deliberately targeted by the best hackers in the world.   Heck, you might even want to have accounts with multiple online brokers, and depending on your asset balances, this could be a good chance to qualify for some nice cash balances.   Compare online brokerage accounts here.

Third, keep detailed records on your liquid accounts and online brokerage accounts so that you can recreate any missing or removed records.   Download your most recent statements monthly or take screenshots.

Fourth, consider carrying credit cards issued by multiple issuers.   Lots of folks are loyal to Amex or Chase cards for their great sign up bonuses.  The loyalty is understandable, but you need to carry multiple personal cards in case there is an attack that knocks one or more issuers entirely offline.   Since there are plenty of cards that do not have annual fees the first year, you may want to focus on one or two of these.  And, again, you might even be able to take advantage of bonuses, cash-back options or point earning capabilities that you had not previously known were available to you.

If we are fortunate and do not experience a Russian cyberattack on our system in 2022, you will have done no harm to yourself through these simple four steps.


Fed Ends January Meeting Planning to Raise Rates, but Not Until March

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The Federal Reserve is going to be raising rates in 2022.  This action is desperately needed to fight inflation.  But, it isn’t ready to act now.

It has been clear that Federal Reserve Chairman Jay Powell has been about as wrong on inflation as imaginable.   He may have acted appropriate in moving the Fed Funds rate as low as possible and flooding the market with liquidity in early 2020 when COVID-19 became a reality.   But, for almost two years, he has failed to respond to economic circumstances.   Continuing to leave interest rates at zero while inflation diminishes (damages) the real value of the dollar to depositors, has thrown people into wildly inflated assets. 

The longer the Fed waits and the more it claims that it is acting slowing and deliberately in order to be transparent, the more pain the economy will risk encountering.   And, if Powell is concerned about whether the economy can tolerate a move in the Fed funds rate from its current 0/0.25 to 0.25/0.50, then it is hard to see how it will respond as the Fed funds rate moves much higher which is what it will need to do in order to contain inflation.

For savers, we’d expect to see online savings rates begin to become a little more competitive as we get closer to the Fed’s first and very well projected move in March.   And, we’d continue to steer clear of both long-term and short-term CDs.

Meanwhile, it remains a good time to look at looking into a home loan, or to consider refinancing your mortgage if you haven’t done so recently.


2022 Is Signaling Wealth Preservation Mode

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I am old enough to remember October 1987.   I was a college freshman then and I remember my floormates calling their parents to inquire whether they would be able to stay enrolled in college.

I also have vivid memories of 2001 and 2008 and 2009.   In the 2000-01 period, I was working for a telecom venture capital firm in Europe where valuations on major carriers and CLECs were bananas.

What I am not old enough to remember is any time when the valuation of US stocks was so distorted from reality.   In fact, Charlie Munger recently said basically the same thing and he has several decades on me.

If I learned nothing in two years studying equity valuations during my MBA, it is that there are only two or three ways to ultimately value an equity issue.  One is its price to earnings (PE) and the other is its price to earnings to growth (PEG).  A reasonable PE multiple is 12 or 15 or maybe 18 and not 100.  And, a PEG multiple should be a lot closer to 1 than to 3 (or sometimes now 10).  You can also use price to revenue, but that metric really only works if there is some sort of plan for the company to ultimately become profitable (I’d note that it is absolutely the valuation metric that you would have wanted to use when analyzing Amazon, Netflix or Spotify one or two decades ago).

But, as a whole, this just isn’t that complicated.   Multiples on US stocks make no sense.   They have reached this point from bringing interest rates to zero and flooding the market with liquidity.   But, for a world where all of that is being withdrawn, they are just bonkers.   Most smaller tech stocks, including virtually all that have recently been taken public, have no basis in valuation.   Even many smaller companies that have been around for some time that have great and meaningful products, such as Exact Sciences or Box (where stock pundits have argued for Amazon, Netflix or Spotify-type valuations), may face market circumstances where they have no path to profitability.  

The market has been led to these levels because of extraordinary growth that we have seen in companies like Apple and Microsoft, and super extraordinary growth in stocks like Marvell and Nvidia.  Make no mistake, these are the companies that you want to own and that you probably should not sell (I am not selling them), but you need to have a very long term view because the valuations are now three times higher than where they were in 2015 or 2016.   Apple was a great investment at 10x earnings less cash in 2016; it may still be a good long-term investment at 28x earnings (less cash) in 2022, but it may not move up from here quite as easily as it has for the last 25 years.

And, then there are cryptocurrencies.  It is also difficult to predict the immediate trajectory of crypto.  But, in spite of losing half of their value, crypto remains the biggest and most widespread Ponzi scheme in the history of mankind.

Take it from someone who can remember the not too distant past.  I am not saying there is going to be a crash, and I am not saying that the stock market isn’t the best place to be for the long term.  I personally will remain very heavily exposed to large tech, major pharm and European wind stocks, but these aren’t positions that I would be selling for the next 10 years.  

I am just saying that everything is dramatically elevated.  If you absolutely need to protect your wealth here, there is only one safe way to do that in 2022 and that is cash.

Compare the best online savings and money market rates here.