Data by the Federal Reserve Bank of St. Louis (FRED) reports the national average on non-jumbo money market accounts deposits (i.e. less than $100,000) is a miserly 0.08%. It’s only marginally higher for jumbo deposits at 0.12%.
CD rates have also plummeted. The current national rates for CDs are only 0.22% for 1-year, 0.49% for 3-year and 0.78% for 5-year. That’s a far cry from the 4.1% I’m currently receiving for a 7-year CD that is finally coming due in March, 2017.
Given the low rates, investors have bid up income producing assets such as rental properties, REITs, and bonds. Stocks have certainly been a beneficiary as well. The question on every investor’s mind now is: how much have income producing assets risen due to fundamentals versus a Fed-induced frenzy?
Cash Optimization Plan
I’ve conducted a deep dive on my current cash holdings and am aggressively saving in anticipation of a two-year fade. Given I’m in cash hoard mode, I’ve been looking for better ways to optimize my $200,000+ in savings. As destiny would have it, a Capital One representative reached out for me to partner with them in support of its 360 Money Market Account (360MMA) and to profile one of their brand ambassadors, Katie Linendoll.
I had already spoken live for them at one of their downtown SF cafe events for Millennials, so I was happy to oblige.
Current cash balance earning less than 0.2% a year.
The quick skinny is the Capital One 360MMA pays a 1.00% interest with no fees for account balances of $10,000 or more and 0.6% interest for balances less than $10,000. That’s a great rate compared to the <0.2% I’m currently earning at Citibank.
Now that I think of it, I’ve already forgone over $1,500 in savings interest income because I’ve been so focused on saving cash and forgot that I should also be optimizing my cash as well!
My plan is to keep $200,000 – $250,000 in savings through the end of 2018 in order to potentially buy a higher end home that has declined by 10% in value or take advantage of other investment opportunities. Any cash accumulated beyond $250,000 will be used to pay down mortgage debt or invest in tranches when there is a greater than 3% correction in the S&P 500.
If I get word that Uber or Airbnb will IPO before end of 2018, then I will make a judgment call and potentially buy assets before their thousands of employees get liquid and reignite the real estate market again.
If I don’t optimize my $200,000 – $250,000 savings over the next two years, I’ll be missing out on $4,000 – $5,000 in interest income. What a waste. It’s time to make a change.
Interview with Katie Linendoll
As part of Capital One’s outreach I got to interview Katie Lindendoll, a TV host, speaker and journalist, focused on technology and gadgets. Katie is best known in her role as tech contributor to the TODAY Show and for winning an Emmy Award for her work on ESPN’s SportsCenter. In addition, Katie owns her own content production business, hosts a tech podcast (www.katie.show) and travels the world as a keynote speaker. It’s always fun to learn from successful people in different fields.
Katie Linendoll
You’ve had quite an exciting career. Tell us about a couple of your most memorable and unusual work experiences.
I am always on the hunt for a captivating story that I can share with my audiences.
Some of the most unique opportunities include:
- Meeting with a native tribe in the Serengeti. I am fascinated by cultures and I was so intrigued to learn they sustain on a half a cup of blood and half a cup milk everyday until late evening.
- I’ve covered a lot of unique underwater reports including diving with NASA and European Space Agency astronauts in the world’s only underwater laboratory off the Florida Keys in a semi annual program called NEEMO (NASA Extreme Environment Mission Operations) where astronauts live underwater to simulate microgravity and perform select tasks and operations from 6-18 days.
- Lived cumulatively for several weeks on the island of Bermuda to tackle a story for CNN on the invasion of the lionfish (an invasive predator species native to the Pacific and now devastating Atlantic eco-systems).
- What I find interesting and an on-going challenge is packing for these adventures – compact technology is key for long days and unique terrains. The breadth of options to film with alone these days still blows my mind and fortunately now I can pretty much get hands on anything I need from drones to custom underwater housing as its incredibly important to bring back the best visuals to fully tell the story.
Often my curiosity leads to the next story. I have to be truly fascinated in the piece to cover it.
What do you love about Capital One that led you to partner with them?
I’ve been a Capital One client for years. I have nearly 30+ freelancers working under me and finances must be kept organized. When I have a finance question, I don’t have a lot of time to get to the bottom of it. Capital One has always made it easy and accessible for me.
Describe two of your own financial hacks that can help people achieve financial freedom faster.
1. Declutter and digitize. How many people have stacks of magazines cluttering up their house? Why not get an unlimited digital subscription to more than 175 top magazines (including back issues) for just $10 a month (vs. nearly $10 for each year-long subscription) – which is even accessible on up to five devices! Not to mention eco-friendly.
2. Automate your bill payments. You work hard for your money. Don’t lose it to late fees! By scheduling automatic payments with features such Capital One’s Online Bill Pay, you’ll have better peace of mind that your bills are being paid on time, every time.
What are some ways we can leverage technology to improve our financial well-being and happiness?
Technology is continually evolving and giving people more ways to make their lives easier so you can enjoy what matters most to you. Voice-activated technologies hold a lot of promise to make our lives easier. With Amazon Alexa-enabled devices like the popular Amazon Echo, you can download “skills” that allow you to get the weather, sports scores and even news updates.
What changes would you like to see in the realm of personal finance in the U.S.?
Outliving means is certainly a problem. Swiping a credit card in the moment will work, but in the long term, many face the reality of accumulated debt.
I would love to see people be more responsible in their purchases and spending. Using alerts, like the personalized account alerts from Capital One, allow you to keep up on all your banking activity, and will help keep you honest and accountable.
How do you use technology and gadgets to keep your own finances in check?
I’m a very visual and hands on learner, but it can be hard to stay organized when I’m always traveling on-the-go. I best comprehend my spending habits when I can see where I should be cutting back and when it is all laid out for me. When it’s in front of me in a pretty chart, it’s hard not to acknowledge!
I like to use something called Capital One Enhanced Transactions, which helps me track my how much I am REALLY spending and when.
What are some valuable lessons you’ve learned from starting your own business?
It took me a few years to really understand the cycles of technology. It’s pretty much always busy, but sometimes like during Q4, it can be especially crazy – I know I cannot book any downtime during this time. It’s the opposite with summer months. Things slow down a bit but pick up every year after Labor Day signified by iPhone’s new launch. It’s important for me to get family time but also know in advance when is best to schedule so I can truly have off and not have to work through breaks.
What are some of your top tips on building one’s personal brand?
Stay true to you. I will never do anything I am not comfortable with or that doesn’t sit right with me. In the early stages of building your brand you will be challenged – people have opinions and you don’t want to come off like a diva. However, it is always the right answer to stay true to you.
Readers, what is the current rate on your money market account? Have you been so focused on saving cash that you forgot to optimize your cash returns like me?
I’ll be in Seattle on Thursday, October 13 to watch Capital One’s CapX panel about money. It’s like an interactive TED talk to help younger folks get their finances in order. The event will be streamed live from 10am – 11am PST via this link http://capxtalk.fora.tv/ if you’d like to watch. You can also follow the event via Twitter with the hashtag #CapXTalk.
It’s great there are large financial institutions like Capital One who are making an effort to reach out to younger generations in a grass roots way to help them plan for their financial future. I’ll be publishing a post about my experience up in Seattle as well. Who knew being a personal finance blogger could be so much fun!
from Financial Samurai http://www.financialsamurai.com/does-your-money-market-account-beat-the-capital-one-360-mma/
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