Investing for Interest 102: Super Safe Savers

The average person is risk-averse, meaning they do not want to take a chance in the markets. I understand the philosophy, but it’s time for us to grow up and move into investing slowly. If this sounds harsh, it’s meant to get us moving.

Welcome back to the Investing for Interest series (101), where we discuss building a fixed-income product portfolio. Today, I want to start with the lowest amount of interest we can obtain; high yield savings accounts, certificates of deposit, and savings bonds from the US Treasury. Let’s begin.

High Yield Savings accounts. When I started blogging, I loved my high yield savings account with Discover. It came with an online-only checking account and a 1% cash back debit card

Cash Flow 101: How Much Money Do You Need For Retirement?

When I signed up for the card in June 2019, the interest rate was 2.0%. That’s not a bad amount of interest for a checking account. However, today the interest is 0.4%. With inflation at  6.8%, I am losing a ton of money by keeping my money here.

However, I like to keep roughly $3,000 in this account. Since I use my debit card for $800 of monthly expenses, I receive $8 in cash back. This bumps up my account to a reasonable rate of return. 

Certificates of Deposit. You can get CDs from banks, savings and loans, and credit unions. You allow the bank to hold a specific amount of money (say $1000) for a specific amount of time (say 1 Year) to get a specific interest rate (say 1%). 

People used to use a CD Ladder to keep their money flowing continuously. A CD ladder is buying a CD every year, stacking on another. This method allows your money to free up into a new financial environment every year.

You could buy a new CD or invest differently depending on the new environment. I see no need for CDs in your account. There are much better ways to lock up your money (like staking). 

Cash Flow 102: Creating Passive Income for Retirement

Saving “I” Bonds. The US Treasury has two types of savings bonds “I” and “EE.” “I” bonds are popular because they also include an inflation kicker. There are two rates that the bonds combine to form an interest rate. 

The first rate is the fixed rate, and the second is the semi-annual inflation rate. The fixed rate never changes and is usually relatively low. However, the inflation rate makes the “I” bonds special. 

Today, in this high inflation environment (6.8%), the semi-annual inflation rate is 7.1%—this is incredible. I expect the next few years to have inflation rates over 5%. I have a ton of “I” bonds and plan on buying more every month. Read more about “I” bonds on the TreasuryDirect website

Series “EE” Bonds. The second type of US Treasury savings bond is “EE” bonds. “EE” bonds have a small interest rate, sometimes 0.1%. However, if you hold them for 20 years, they double in value.

Cash Flow 103: Choose Your Wealth Generator

I did the math; this equals a fixed interest rate of roughly 3.5%. You take a lot of risk by holding something this long; however, a 3.5% interest rate is pretty solid. Remember, you are not taking a considerable risk, so you will not get an enormous reward. 

I have a few “EE” bonds; however, I favor “I” bonds. Read more about “EE” bonds on the TreasuryDirect website

Using the Super Safe Savers in your portfolio. You may have heard of building an emergency fund of 3-6 months of income. You want to use these investments to build your emergency fund.

I love to use a credit card as my first line of defense. No, if you aren’t debt-free, this is NOT an option. If you are debt-free, you can use your credit card as a portion of your emergency fund.

Cash Flow 104: Create Your Long Term Strategy

The invisible budget comes for all of us, so we have to have something to prevent these minor events from ruining our savings rate. For example, if your car breaks down, I would use my credit card to pay the $2,000. 

I would attempt to pay the card off over 2-3 months using cash flow from work, investments, and business. If I can’t pay it off that quickly, it’s time to tap into my high yield saving account. 

I would keep roughly $3,000-$5,000 in a high yield savings account. Imagine the worst scenario that can occur and plan around it happening. The air conditioner is probably your most significant liability if you are a homeowner. However, you can first pay that with a credit card. 

Cash Flow 105: Diversify Your Passive Income

The only scenario I can think of for keeping a large amount of cash in a high yield savings account is sending money to family. Again, everyone is different, and you may like to save more money on hand. 

From there, you can keep $10,000- $15,000 in US bonds. But don’t go crazy yet; we also have bonds that pay you interest semi-annually directly to your checking account. I’ll get into those in the following article. “I” and “EE” bonds pay interest but keep it in the bond.

The building blocks. These instruments are the first step in becoming a bonafide investor. You may not beat inflation with these; however, your money isn’t just sitting around doing nothing. You are putting your money to work. 

As you build these accounts up, you’ll find that your confidence will start to rise. You won’t worry about losing your job as much. You may also want to start investing a little cash into the market

Becoming an adult means taking your spending, saving, investing, and passive income seriously. They all belong in your cash flow portfolio. I just finished an article titled “5 Steps to (Financially) Running a Household” that explain more about the cash flow mindset.

Cash Flow 106: Why You Need a Job

Take the Super Safe Savers very seriously if you are running your household. The integrity of your family may depend on how well you construct this safe portfolio

Conclusion. The Super Safe Savers step is vital to your growth as an investor. When you invest in these products, you tell yourself that money is valuable to you and your family’s future.

Get comfortable with watching your money grow via interest. Track how much interest your high yield savings account and bonds pay you. But, don’t get stuck at this step; we still have more Investing for interest to conduct. 

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Disclosure: I am not a financial advisor or money manager, and any knowledge is given as guidance and not direct actionable investment advice. I am an Amazon Affiliate. Please research any investment vehicles that are being considered. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it.  I have no business relationship with any company whose stock is mentioned in this article. All Right Reserved Military Family Investing


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