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Interest rates have gone up quite a bit recently and are expected to continue to go up. Rates are currently higher than they've been in many years. Bad news for borrowers. Great news for savers.

Sadly, bank interest rates are often only around 0.20% per year, which is, frankly, ridiculous!

Alternatives?

Consider a CD, but before you do investigate the penalty for early withdrawal in case you need the money for an emergency before the CD expires.

Another alternative is a money market fund at a brokerage firm like Charles Schwab, Vanguard or Fidelity. These money markets have virtually zero risk. I can't speak for all of them, but the one with Schwab (Symbol: SWVXX) is available to you in just 1 business day with no penalty whatsoever should you need the money. The minimum investment is only $1. Oh yeah, it is currently paying 4.95% and that rate is likely to go up over the next several months as the Feds continue to raise interest rates.

So, a million dollars in cash could be earning you almost $50k a year. Not too shabby!

If your bank has been paying you a tiny rate of return and hasn't openly told you that there are ways to earn SUBSTANTIALLY MORE MONEY, you ought to consider that carefully before you have future dealings with the bank.

Assess to risk:

Risk of return on capital.
Risk of return of capital.

Its your million. Balance having a win of $50k/yr income or a loss down to $0 capital.

I have an account with Synchony bank that has been doing well. I use the interest proceeds to buy more stock.

Good post. I had a fair amount of cash not earning anything and did put it in some CD's and money market at fidelity. Feels good to get something for a change. As mentioned many of the money market accounts are FDIC insured, so where is the risk?

Best plan: 1-2 months expenses in checking account. Another 4-6 months expenses in something highly liquid such as a money market account. All else invested as you see fit. I prefer high quality mutual funds with at least a 10 year track record equal to or better than the S&P 500.

I bought a few ETFs - JEPI and SCHD. They write (sell) covered calls on dividend paying stocks. I reinvest the dividends. If the stock price goes down, I get more shares when I reinvest the dividends. The crazier (volatility) things get, they make more money from writing covered calls. Historically they have returned about 10%-12% a year. YMMV.

JEPI will throw off taxable dividends so its best to hold in a tax advantaged account like an IRA. SCHD has a blend of dividends and capital gains.

Lemon Thrower wrote:I bought a few ETFs - JEPI and SCHD. They write (sell) covered calls on dividend paying stocks. I reinvest the dividends. If the stock price goes down, I get more shares when I reinvest the dividends. The crazier (volatility) things get, they make more money from writing covered calls. Historically they have returned about 10%-12% a year. YMMV.

JEPI will throw off taxable dividends so its best to hold in a tax advantaged account like an IRA. SCHD has a blend of dividends and capital gains.

I like to sell covered calls and have over 1,000 options trades under my belt. I will frequently sell a call for, say, $1 and then put in a Good Til Cancelled order to buy it back for perhaps 10-20 cents. You have to be willing to sell your stock to do this strategy.