Higher interest rates means government-bonds and FDIC insured bank accounts can provide yield without the risk inherent in owning equities.
Because U.S. government bonds are considered to be safer than even blue-chip stocks, some investors say it is difficult to justify putting money in the relatively risky stock market. The extra yield from a dividend-paying stock isn’t worth the added chance that a company will endure a business slump, they say, especially because of the uncertain economic outlook.
“There’s no reason whatsoever to buy a risky company just because it’s in the same yield ZIP Code as cash,” said Macro4Micro editor Glenn Reynolds, who said he has more than 80% of his portfolio in cash.Dividend Stocks Have New Competition: Cash – WSJ
Given all the news since last week over SVB I’m sure loads of people are spooked. There are many Internet banks that are providing interest rates of 4% or above in high yield savings accounts. Here are a few where I park some of my cash.
- Ally Bank – 3.6% APY
- Synchrony Bank – 4.0% APY
- CIT Bank – 4.05% APY