Someone Is Earning Interest

Today's Newsletter:

• My Latest

• The Cash Trap

• Someone is Earning Interest

• A Money Question

My Latest

My latest is a throwback to an older video that covers the biggest tax mistake I see business owners making.

I break down:

• The Reasons Behind It

• Strategies to Consider

• Impact It Has on Your Bottom Line

You can check it out here ⬇️⬇️⬇️

The Cash Trap

“I want to have every dollar invested.”

This was my mantra for much of my early investing journey.

In my defense, my reasoning made sense ~ decades of runway to let my investments outpace my cash.

Yet with each year, I realized life has more unknowns than any plan can account for.

It shifted my mindset to focusing on a combination of:

Peace of mind

Plus

Returns.

So today I hold a year of cash.

Yet that itch to maximize is still there.

The beautiful part is that you can earn a return on that money in 2025.

The frustrating part is that nearly every prospective family I speak with isn’t doing it.

Today, I want to talk to you about how I maximize my cash and what options are worth considering.

Let’s dive in…

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Someone Is Earning Interest

Let me make one thing clear: Someone is making a good return on your cash.

Here is a fun stat:

The average bank account is paying .07%

Yet you can earn of 4% taking zero risk.

Still not settling in?

Well, let’s look at some numbers:

• $100,000 balance in the average account earns $70 yearly.

• $100,000 balance in a maximized cash position earns north of $4,000 yearly.

So, unless you love your bank or financial institution and feel they deserve a tip for outstanding customer service, let’s listen up.

There are three key factors to consider when it comes to cash.

• Liquidity (ease of access)

• Protection (how protected it is)

• Fluctuation (how much it could go up and down)

To choose the best cash position, you need to evaluate those factors.

Here are the three types of cash positions I use (and recommend to clients).

1. High-Yield Savings Account

Everyone has heard of this, but let me make something clear ~ they are not all created equal.

The two factors I look for in these are access to cash and the interest rate.

Now, before you rush to your major bank to open a “savings account,” ~ consider this:

Bank of America markets an “Advantage Savings Program” with an interest rate of .01-04%.

That is…well, laughable to even call a “Savings Program”.

Instead, consider online options such as Ally Bank (3.60%) or Marcus by Goldman Sachs (3.75%).

The benefit of these accounts is twofold:

• They are FDIC insured (the government is backing them).

• They allow for daily liquidity, albeit with a limited number of monthly transactions.

These are a great option if you want additional interest, FDIC insurance, and ease of access.

2. Money Market Mutual Funds

The next step up from a high-yield savings account is a money market mutual fund.

These funds pool investors’ cash into ultra-short-term debt.

I do consider them safe, but they are not FDIC insured.

Here are the three types you should know about and the benefits:

Taxable Money Markets

These funds are paying between 4% - 4.25%.

They are taxable at both the state and federal levels.

They are typically treated as “cash equivalents” at major investment firms.

This matters as it gives you immediate access to transfer the cash (you don’t have to sell it first).

Treasury Money Markets

These are paying around 4%.

They are taxable only at the federal level, but not at the state level.

This is a massive benefit for taxpayers in high-income tax states such as New York and California.

A 4% rate produces closer to a 5% tax equivalent yield.

Muni Money Markets

These are paying around 3%.

They are tax-free federally, but are taxed at the state and local level.

I recommend these for high earners in low state income tax states (Florida, Texas, Tennessee).

A 3% rate can produce a 5% tax-equivalent yield.

3. Ultra Short Funds

The next step up from Money Market Mutual Funds is ultra-short positions.

These positions invest in short-duration (maturing soon) debt of various credit quality.

In plain English ~ They buy everything from US government debt to corporate debt.

In doing so, they take on a bit more risk to provide a higher yield + overall return.

They are not FDIC insured, but provide investors a diversified investment for cash.

I stick to the biggest names in space. Dimensional Funds, JP Morgan, and Blackrock all have funds I have recommended.

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So here is how I position my cash.

Remember, I like to keep a year of spending in cash.

I split my cash between my checking account (earning nothing) to ultra-short funds.

I do this because I am comfortable not having the FDIC protection

I do this because I am not in a high-income tax state like California.

I do this because I am willing to take a bit more risk.

What I want you to hear is that this strategy should be specific to you.

Yet one thing is for sure ~ someone is earning interest on your cash.

Is it you?

Until next time, my friends!

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A Money Question

What is your cash earning?

You don’t need to know the exact percentage, but you should have a reason for where your cash is. If not, chances are someone else is earning your interest.

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3 Ways I Can Help You

💰 Schedule an introductory call with Moment. We help athletes, entrepreneurs, and key employees build and protect wealth.

📹 Check out my YouTube channel. A safe place to get smarter with your money.

📷 Interact with me on Instagram. Where I provide bite-sized daily content to level up your money game.

Moment Private Wealth, LLC is a Registered Investment Advisor, located in the State of Missouri. Moment Private Wealth provides investment advisory and related services for clients nationally. Moment Private Wealth will maintain all applicable registrations and licenses as required by the various states in which Moment Private Wealth conducts business, as applicable. Moment Private Wealth renders individualized responses to persons in a particular state only after complying with all regulatory requirements, or under an applicable state exemption or exclusion. Nothing in this content is intended to be, and you should not consider anything in this content to be, investment, accounting, tax, or legal advice.