Any Bankers/Investors ?

[Daniel Cary]

Another thread prompt a question.

Idk how the Prime Rates dictate Bank/Savings Interest. (Basic 101)
Apx. Early 2000's, A Simple Money Market/Savings yielded good returns. Month, APY.
They had to be >3.5% .. It's sat at .05% for close to the past Decade. They offer 1.20% now, I believe.

Less it's the Bank, if anyone can shed light on how Saving's Interest sit low, while Rates on everything else are catching up respectively.
Many Thanks, Dan.

 

[Rem280]

Another thread prompt a question.

Idk how the Prime Rates dictate Bank/Savings Interest. (Basic 101)
Apx. Early 2000's, A Simple Money Market/Savings yielded good returns. Month, APY.
They had to be >3.5% .. It's sat at .05% for close to the past Decade. They offer 1.20% now, I believe.

Less it's the Bank, if anyone can shed light on how Saving's Interest sit low, while Rates on everything else are catching up respectively.
Many Thanks, Dan.

Do a quick search online for higher savings rates and it should help. Of course look for fees, how is insured, can you withdrawal it, etc. Your local banks sometimes pay very little.

 

[Daniel Cary]

Do a quick search online for higher savings rates and it should help. Of course look for fees, how is insured, can you withdrawal it, etc. Your local banks sometimes pay very little.

Thank you, every little bit helps.

 

[Rimbaud]

Banks make money by lending out their deposits. They try to pay less money for deposits in savings and bank accounts and to charge more money for loans for cars and houses, and so forth. Interest rates have sharply increased over the past two years, and it is possible to earn more money on your deposits - just not in traditional bank accounts (checking, savings and often on money markets). Short-term term Treasury bonds, and even sone money market funds, are paying about 5% and often more depending on the bank/institution. You might want to call your bank and ask what low-risk products that they offer so you can earn a higher risk-free return on your cash. Be wary of small banks that offer such high rates as to be too good to be true. The so-called teaser rates are designed to help banks raise money. In these times - banks are struggling under higher rates - you want your money someplace safe. You can read more about the contours of bank deposit rates if you google cash sorting. Nothing here should be construed as investment advice. This is simply an explanation of banks and rates. Be mindful of bank-specific risks, liquidity risks (tying up money for time), and other factors that could endanger your deposits. In short, be conservative and wary with your money. Good luck.

 

[Rem280]

Banks make money by lending out their deposits. They try to pay less money for deposits in savings and bank accounts and to charge more money for loans for cars and houses, and so forth. Interest rates have sharply increased over the past two years, and it is possible to earn more money on your deposits - just not in traditional bank accounts (checking, savings and often on money markets). Short-term term Treasury bonds, and even sone money market funds, are paying about 5% and often more depending on the bank/institution. You might want to call your bank and ask what low-risk products that they offer so you can earn a higher risk-free return on your cash. Be wary of small banks that offer such high rates as to be too good to be true. The so-called teaser rates are designed to help banks raise money. In these times - banks are struggling under higher rates - you want your money someplace safe. You can read more about the contours of bank deposit rates if you google cash sorting. Nothing here should be construed as investment advice. This is simply an explanation of banks and rates. Be mindful of bank-specific risks, liquidity risks (tying up money for time), and other factors that could endanger your deposits. In short, be conservative and wary with your money. Good luck.

I agree with the too good to be true. Internet can help you find what a good rates are. If someone is offering one much higher, be very skeptical.

 

[Daniel Cary]

Banks make money by lending out their deposits. They try to pay less money for deposits in savings and bank accounts and to charge more money for loans for cars and houses, and so forth. Interest rates have sharply increased over the past two years, and it is possible to earn more money on your deposits - just not in traditional bank accounts (checking, savings and often on money markets). Short-term term Treasury bonds, and even sone money market funds, are paying about 5% and often more depending on the bank/institution. You might want to call your bank and ask what low-risk products that they offer so you can earn a higher risk-free return on your cash. Be wary of small banks that offer such high rates as to be too good to be true. The so-called teaser rates are designed to help banks raise money. In these times - banks are struggling under higher rates - you want your money someplace safe. You can read more about the contours of bank deposit rates if you google cash sorting. Nothing here should be construed as investment advice. This is simply an explanation of banks and rates. Be mindful of bank-specific risks, liquidity risks (tying up money for time), and other factors that could endanger your deposits. In short, be conservative and wary with your money. Good luck.

I have seen these surface ad's for high yielding % institutions ie.
However, thanks for just clarifying the basics behind Banks/Banking, particularly in today's current state. Taking everything into account is insight, thought for the local manager. But you explained why "High Interest Rates for Loans" do not equal a higher Interest rate for a simple Savings/Money Market .. Many thanks.

 

[thi9elsp]

Having been through the ups and downs from the 1980's to now, as interest rates go up, banks hedge their bets, increase loan rates quicker and savings rates slower. On the way down, they lower savings rates quicker and loan rates more slowly. They are hedging their bets on where rates will get to ensure they have adequate margin to offset loan loss risk.

Our broker is able to purchase short-term CDs at FDIC insured banks on our behalf - saves my wife and I from having to search and manage renewals. We have CD's laddered (maturities every month) out for the next six months and have been doing that for the past year. Our latest funds are getting 5.2 to 5.4% for a 90 - 120 day maturity.

We're very fortunate with our broker as there are no management fees on our fixed income investments: CDs and Bonds. So, we only pay a fee on the securities portion. Therefore, our rates we receive on the CDs and Bonds are pure return.

 

[ActionBob]

Having been through the ups and downs from the 1980's to now, as interest rates go up, banks hedge their bets, increase loan rates quicker and savings rates slower. On the way down, they lower savings rates quicker and loan rates more slowly. They are hedging their bets on where rates will get to ensure they have adequate margin to offset loan loss risk.

Our broker is able to purchase short-term CDs at FDIC insured banks on our behalf - saves my wife and I from having to search and manage renewals. We have CD's laddered (maturities every month) out for the next six months and have been doing that for the past year. Our latest funds are getting 5.2 to 5.4% for a 90 - 120 day maturity.

We're very fortunate with our broker as there are no management fees on our fixed income investments: CDs and Bonds. So, we only pay a fee on the securities portion. Therefore, our rates we receive on the CDs and Bonds are pure return.

You Sir are doing quite well at that!

 

[WAB]

These guys have it spot on. All businesses operate on a spread plus, in some instances, fees. Banks operate on an interest rate spread, refineries operate on the crack spread, etc.

In investments, higher returns come with higher risk. If you are ever told that an investment is zero risk you are being lied to. Even treasury notes are not zero risk, although they are very low risk. If you want to achieve something like a 10% return on investment over time, you are going to take on significant risk and have to have the willingness to watch some pretty significant fluctuations in the value of your portfolio.

 

[ActionBob]

Another thread prompt a question.

Idk how the Prime Rates dictate Bank/Savings Interest. (Basic 101)
Apx. Early 2000's, A Simple Money Market/Savings yielded good returns. Month, APY.
They had to be >3.5% .. It's sat at .05% for close to the past Decade. They offer 1.20% now, I believe.

Less it's the Bank, if anyone can shed light on how Saving's Interest sit low, while Rates on everything else are catching up respectively.
Many Thanks, Dan.

Huge differences between banks/institutions. It also has a lot to do with your ability to leverage and it is certainly worth shopping around. I'd want to put anything outside of FDIC insurance coverage at a well diversified institution. Even clearing houses can fail.

As for Prime rate, there used to also be LIBOR but that has been replaced by SOFR now as LIBOR had some issues. Those rates tend to be significantly lower than Prime. I believe LIBOR stands for London Interbank Overnight Rate. Hard for banks to pay much on regular deposits when those rates were .25% or less. This morning the 30 day SOFR is 5.32%.

Leverage has a lot to do with what you can get also. Many institutions with offer better deals/rates if you bring more business to them. i.e. Business loans, business checking or as our bank calls it, the treasurey accounts,, your personal savings, checking, investment portfolio. And those of any partners.

For the regular guy with a job, house mortgage, car loan... the best savings is to utilize fully a 401K or other tax advantaged savings plan. Then pay off personal loans starting with the highest rate ones but also to pre pay the mortgage.

 

[Manny R]

Here is my 2 cents....Bask Banks pays 5.10% APY on their Interest Account. Its a solid bank owned by Texas Capital Banks and are a member of FDIC.

 

[fourfive8]

Simple, as has been posted. Risk - Reward are in proportion to each other. Right now 1-2 year CDs are 5% more or less. Looking for 10%??? No thanks. My rule of thumb learned long ago. If your advisor/broker says, “We like______”. RUN! IMO, Slow, steady, low risk compounding plan is the way to go. Unimproved land with potential is also possibility for long term investment but takes knowledge and some work to learn.

 

[Rimbaud]

I agree with the too good to be true. Internet can help you find what a good rates are. If someone is offering one much higher, be very skeptical.

There are moments in economic time when the return OF capital, rather than the return ON capital becomes the primary concern. Now, is arguably such a time. Make sure that any investments are liquid, and capable of being withdrawn should the funds be needed. To discuss markets and risk in terms all hunters understand, approach investments as you would if you were on a dangerous game hunt, and going after a wounded buff or cat, in poor light and heavy cover.

 

[ActionBob]

Simple, as has been posted. Risk - Reward are in proportion to each other. Right now 1-2 year CDs are 5% more or less. Looking for 10%??? No thanks. My rule of thumb learned long ago. If your advisor/broker says, “We like______”. RUN! IMO, Slow, steady, low risk compounding plan is the way to go. Unimproved land with potential is also possibility for long term investment but takes knowledge and some work to learn.

Are you saying that the more you work with a Broker, the broker you get?

 

[Daniel Cary]

Even CD's I've refrained, liquidity. (Tomorrow is guaranteed to No one) ;
Just the understanding how @Rimbaud diluted: Saving's Interest Rates correlating to Bank's Loan Rates. (I was under the impression as Interest rates increase, so would Money Markets) Pretty clear, Banks are not making Money ..

Good advice & research, Thank You!

Any thoughts on Gold & Silver? ..

 

[baxterb]

Even CD's I've refrained, liquidity. (Tomorrow is guaranteed to No one) ;
Just the understanding how @Rimbaud diluted: Saving's Interest Rates correlating to Bank's Loan Rates. (I was under the impression as Interest rates increase, so would Money Markets) Pretty clear, Banks are not making Money ..

"Always Trust a Bank Manager" with due respect to Bankers, little facetious.

Good advice & worth research, Thank You!

You mean you’ve refrained from getting CDs because of lack of liquidity?

We can get out money out of our CDs any time, yes there is a fee, but it’s only on the interest gained and a capped amount at that. Laddering the CDs monthly as indicated above is smart smart.

The 6-12 months CDs at 5%+ now are damn nice. Even our high yield saving is almost at 5.

 

[Daniel Cary]

You mean you’ve refrained from getting CDs because of lack of liquidity?

We can get out money out of our CDs any time, yes there is a fee, but it’s only on the interest gained and a capped amount at that. Laddering the CDs monthly as indicated above is smart smart.

The 6-12 months CDs at 5%+ now are damn nice. Even our high yield saving is almost at 5.

Their offering 1.20% now, opposed to this .65 Money Market. I will definitely enquire about the CD's mentioned above foremost. Thank you! .. The Local Bank certainly doesn't broadcast or offer much information for the benefit of their customers ..

 

[wesheltonj]

Might I suggest you look at Bankrate.com you will find regular savings rates of better then 5% APY. CDs even higher. Generally Credit Card banks offer the highest rates all FDIC insured.

 

[Finprof]

Depending on how much you have to invest, you can buy T- Bills from the FED through the FED Direct program. They are completely liquid and technically they are safer than FDIC insured bank accounts that are only insured by an agency and not full faith and credit.

 

[mdwest]

My firm has started putting a significant amount of its liquidity into t-bills… pays a little north of 5.3… secure.. and fast/easy to turn back into cash when needed…