Where to Park Your Cash After Rate Cuts (RANKED) #Finance

hey everybody welcome back to whiteboard Finance my name is Marco and I’m here to help you master your money and build your wealth in today’s CashNews.co

I’m going to talk about where to park your cash since the FED is going to continue to lower rates um so I did a CashNews.co about this about a week and a half ago uh shortly after that CashNews.co about the FED lowering rates 50 basis points aka. 5% uh my high Yield

Savings account went from 5% to 42% and my Capital 1 account went from 4.25% to 4 1 and it’s only going to go lower so in this CashNews.co we’re going to talk about different asset classes to where it’s actually going to be tiered it’s

pretty cool we have a like tier ranking system that I’m going to show you and use but um I want to tier it from basically s tier the best all the way to D tier being the worst of where to park your cash but before we get into that let’s talk about um how the FED is actually most likely

going to continue cutting rates so this is cmegroup.com uh this is basically showing the probability of November 7 meeting of the fomc uh Federal Open Market Committee they’re basically saying that they’re going to lower rates to 450 to 475 basis point so basically 45% to 4.75%

there’s an 85.9% chance that happening um there’s a 14.1% chance of then maintaining what it currently is right now a little bit easier way to see this is if you go to probabilities and I zoom in here uh you can see basically these are the meeting dates you have November 7th all the way

way to October 29th 2025 so basically a year from now um you can see here that anything blue is the highest percentage or highest probability uh and that shows 86% uh dropping the rate about 25 basis points um same thing uh dropping in December dropping in January dropping in March uh dropping in

June that kind of a thing right there so how does the S&P 500 actually react to these rate Cuts okay and if you watch my last CashNews.co you already know the answer to this uh but basically uh the S&P 500 returns 4.9% on average one year after the first interest rate cut and they see

positive returns nearly 70% of the time so take that into consideration so what are these rates um so typically the FED funds rate is basically what commercial Banks can lend each other money at it’s kind of like the basis at which they get their money uh and then they basically

Loan it out to you at a higher interest rate that’s Arbitrage that’s how Banks make money but uh something you may or may not have heard of is uh the prime rate if you guys that are a little bit older remember liore um Li i o r uh the prime rate is basically at which

banks lend money out to you it’s typically variable so if it’s like a home Equity line of Credit maybe it’s the base rate minus uh 51 basis points sometimes it can be above the prime rate it just depends like if you’re borrowing against the

stock account for example it just depends on what type of Loan you’re asking for or looking for you can see here in 2020 the prime rate was 3.25% and it was as high as 8 1.5% um as of July 27th 2023 right now it’s sitting at 8% so here’s an example here’s

Good Old Third Federal Savings and Loan uh I’m not affiliated with them but I do have a helck with them that I don’t use it’s just an open home Equity line of Credit I just never use it so remember the prime rate

is 8% uh you can see here that their helocs are 7.49% because it’s variable uh annual percentage rate of prime us. 51% that’s an example of uh Prime being used for HELOC so let’s talk a little bit about Inflation uh remember the whole reason we’re parking

our cash is because we want to make sure that we’re actually at least keeping up with Inflation um if not beating it um that’s typically going to be hard uh because typically Savers are losers right we’re losing purchasing power to just keeping cash in the bank um

but you can see here the CPI right now is sitting at 2.5% uh for all items all major categories okay food is 2.1% uh energy is down 4% which is cool and then all items minus food and energy is 3.2% uh there’s many different ways to calculate Inflation CPI is one of them if we

look at uh true Inflation they actually have it at 1.98% believe it or not and during uh 20 excuse me uh 2022 they had it at about 115% okay and then finally I’ll show you the last one is Shadow stats uh typically the way they they compute CPI was changed in 1990 that’s

what this blue line is if they use the same uh criteria as 1990 uh Shadow stats has Inflation sitting at just under I’d say 7% this is only up until like mid 2023 uh but if you look at this one uh this CPI at the time of this chart was just about 4% uh we all know now that

it’s about 2 and A2 so it’s typically a little bit lower right here if this chart were updated um and then for the true Inflation or excuse me the shadow stats Inflation it’s probably going to be closer to 10% if that makes sense so why am I even

showing you Inflation numbers it’s because that’s the hurdle rate that’s what we’re trying to beat if we’re making 5% in these things that I’m about to show you and Inflation is 10% well congratulations we’re losing 5% per

year of uh purchasing power get it okay so here’s a sneak preview of what the tier maker is going to look like so if you guys aren’t familiar with these tier lists we basically have S all the way through d d being the worst s being the best uh and we have some infographics down here but

let’s not pay attention to those just yet uh so what I want to do is I want to actually go into here and uh go to certain asset classes that have provided not necessarily a risk-free rate of return but it’s damn near close to it right some are but there’s always the risk of

regional Banks failing governments not be able to pay back their Loans or their T bills or obligations things like that but let’s just pretend that’s not uh the case so I do have a couple things on this list that are not risk-free um typically people don’t park

their cash in these uh some some do but we’ll get to that later so what I wanted to start with was t- bills so you can see here um this column is the issue date so you can see when the FED uh didn’t cut rates or were just close to it you can see that an 8-week t- bill was

Yielding uh 5.99% okay so basically 51% now if we scroll back up that was uh let’s see September 17th now if I scroll back up and look at the same 8we for October 8th it’s basically coming in at 25 basis points less we’re at 4.75 4% so these t- bills are earning

anywhere right now at the time of this recording uh 3.94% all the way to 4.84% uh the thing is with t- bills you you have to kind of you don’t necessarily have to keep your money in there you can always sell the t- bill but for the way most people are using it in the context of this

CashNews.co you are locking up your money for that duration of time okay so is it worth it I don’t know so for me I’m going to put t- bills this is a picture of a t- bill it’s just a really small image I’m going to put this in the C category okay it’s a nice risk-free

rate of return uh typically I don’t I don’t see the USA defaulting on any of their Debt anytime soon uh and we’re going to put that one in the C tier so now that we know what’s going on uh we’re going to get into other things like CDs and uh precious

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they typically uh give you smaller of a return CDs at the time of this recording are earning anywhere from 4 to 5% essentially okay and this is essentially risk-free unless the bank or the lending institution at which you have your money at uh is basically going uh bankrupt and even then you do

have some FDIC Insurance I believe so with all this being said it’s very similar to a t- bill you’re locking up your money for a predetermined rate for pred determined amount of time there are some variable things there are some minimum deposits there are some no um

penalty CDs out there but again they’re typically going to give you a lower rate of return which is going to have me put uh CDs as also very similar to t- bills that’ll be in the C tier as well okay so let’s move on to something that’s kind of an alternative investment off

the beaten path and that is gold okay so in the last 45 years the gold spot price index in US Dollars has had a compound annual growth rate a kager of 5.35% okay so that puts it a little bit above CDs it puts it a little bit above t- bills um yes I’m not comparing them to the same exact time

period but I’m comparing what gold has done in the last 45 years as a kager compared to what your high Yield Savings account or your um uh t- bills or CDs have Yield can Yield right now so with that being said we’re

going to put gold let’s see I feel like I need to give this a little bit of context I’m going to give gold a c plus and the reason for that is because gold although it has been a tangible store of wealth for thousands of years and a lot of people call Gold real money um Fiat US dollar

this is fake money um but I can’t go to Costco and shave off a little bit of gold uh to buy some milk right I can’t go to my local grocery store and take a little uh you know quarter ounce of gold or whatever you know buy groceries with it so well that’d be a lot of groceries

that’d be hundreds of dollars worth right now in 2024 but my point is uh typically there’s a saying that says back in Roman times an ounce of gold could buy you a nice tunic now an ounce of gold can buy you a really nice suit um that suit would probably be about $2,400 at the time of

this recording but that is a really nice suit so it has maintained purchasing power but it doesn’t do anything it doesn’t Yield anything doesn’t give you a rate of return there’s ‘s no interest um and for some people who are against Usery you know

money making money just by being money um some people like Precious Metals for that reason some people don’t because it doesn’t Yield anything so gold is going to be a C+ okay for the long term and you can always give it to friends and family um I’m saving up gold

uh for you know giving to my knock on wood future grandkids so that’s why I buy couple ounces of gold every year now let’s get into what for me has been great uh or high Yield Savings accounts if you’re going to park cash somewhere so high

Yield Savings accounts at the time of this recording are Yielding anywhere from 4.1% to about five and a quarter um when you get into the like 53s and all this other stuff you get into like weird incentives and they only last for three months and

blah blah blah blah blah so right now high Yield Savings accounts they’re Yielding 4.1 to about 5.25 if you get a good one um there’s discover there’s Capital One they’re in the 4.1 range but the customer

service is impeccable and you know they’re legitimate um when you get into the higher Yielding stuff you have like Banks digital banks by Santan there some people are complaining about customer service and things like that I’ve never used it I’ve been with

Capital One for years if not decades not decades plural but a decade um or more and then also um I use M1 Finance high Yield Savings account

as well so for me the piggy bank will let’s let’s let’s bump this up we’re bumping this up to B tier for high Yield Savings accounts and the reason for that is because it’s liquid and it’s also FDIC insured and some of these are

uh FDIC insured way more than $250,000 these days which is good so uh cash is liquid it’s not locked up and you’re getting a higher rate of return than a t- bill or a CD um and potentially over gold close to Gold a little bit less at 5.25 versus 5.35 but it’s right in the

neighborhood and it’s very liquid and you can use it at Costco it’s called the US dollar now here’s where I wanted to get into some stuff that’s a little bit more alternative it’s not I mean it’s literally considered alternative but to you to your ears to the

audience it may not be that’s Real Estate stocks and we’ll get to the next thing uh when I’m done talking about Real Estate and stocks so Real Estate from 1968 to 2009 the average rate of appreciation for existing homes increased

around 5.4% per year meanwhile the S&P 500 averaged a 7 1.5% return small cap stocks averaged 11 half% per year the rate of Inflation was around 4.6% during this period so with that being said yes Real Estate can average significantly more than 5.4% per year

typically uh it’s kept up with Inflation depending on your Market if you’re in San Francisco it’s a little bit more like this boom and bust if you’re in Cleveland in the midwest it’s a little bit more like this keeped up with Inflation

right uh and then anything in between your tennesses your sun belts your uh Florida because you know you name it right so that’s why I’m going to put Real Estate also with the high Yield Savings account a lot of people use their primary

residences as a forced Savings account by AKA paying off their mortgage right um there’s a ton of tax benefits that come with investing in Real Estate you can write off a lot of Taxes so that’s not that’s not that 5.4% is not

including that but you also have to work for it right if you want to be a landlord you you either have to be a really good manager of property managers or you have to be a really good property manager yourself right that entails work and effort uh sometimes it’s a lot of work and effort

sometimes it’s not but that 5.4% is just nominal uh but there’s a ton of other benefits that come with owning Real Estate now if you look into stocks I’m a big proponent of index funds text-decoration: none;">ETFs you know getting the typical 7 and a half% all the way up to 10 11 depending on what the ETF is um with the small caps for example but I’m going to put stocks this for me my friends is going into the a tier and the reason for that some people love stocks some

people hate stocks some people love Real Estate some people hate Real Estate but I’m putting stocks in the a tier because it is 100% passive uh there are no toilets there are no tenants there is no headache um depending on how you invest I invest the majority

of my Net Worth in index funds and ETFs and I set it and forget it and I enjoy my life there’s other people that trade stocks 8 million times a year uh to eek out a a 8%

gain wow congratulations or day Traders lose money make money taxable events lot of headache for me I’m set it and forget it that’s why I’m considering Real Estate and stocks even as a part of this conversation on where to park your cash right uh it’s not

going to be risk-free um but that’s also why you’re getting higher returns you’re compensated for the amount of risk uh you’re putting into it uh so finally for me S tier what could s tier be is Bitcoin a d tier is it C tier is it B tier is it a tier Bitcoin is s tier baby

let’s go and the reason for that is this compound annual growth rate in the last 12 years the Bitcoin index and US Dollars had a compound annual growth rate of 10.68% oh wow look at that 100% kager interesting yes you do have to live with a lot of ups and downs yes you do have to live with a

lot of four-year Cycles yes you have to live with a lot of speculation a lot of manipulation a lot of bad press a lot of whatever that is not Bitcoin these are exchanges these are human beings these are things that are affiliated with Bitcoin Bitcoin itself is the greatest Savings

account ever created in human history and the greatest currency ever created but I do sound a little bit biased um I don’t want to turn this into a Bitcoin CashNews.co if you want to read more about it there’s a ton of different books I have a million tweets about it uh but I would just

read the bullish case for Bitcoin I would read inventing Bitcoin I would read the Bitcoin standard I would read uh there there’s a bunch of stuff I can tell you maybe I’ll link some of it in the description down below but for me if I go to S tier and see who our winner is it is Bitcoin

my friends and in the words of the famous uh sat well Infamous Satoshi Nakamoto if you don’t believe me or don’t get it I don’t have time to try to convince you sorry uh you can learn about it more yourself but for me it is the hardest form of money ever created and the greatest

Savings technology ever created by humans so let’s recap let’s zoom in a little bit not the progressive lady use policy genius uh Bitcoin s tier stocks a tier High Yi old Savings account right now B tier uh Real Estate B+ in my opinion

uh Treasury bills CDs and gold anyone can invest in these very simple set it and forget it uh right now the Yield ah we’re not really keeping up with Inflation true Inflation CPI yes we are when you look at Shadow stats and

the way things were recorded such as Real Estate and things like that Inflation is a lot more uh ask any 20 something trying to buy a house right now in 2024 uh thank you so much for watching share this CashNews.co These take a lot of time and effort to create

organize and research um algorithm does not like my Channel right now because I was taking a little bit of a break I was working with nerd wallet I was on I was in Europe for about 2 and a half three weeks uh start sharing my CashNews.cos the algorithm hates me right now and I feel like I provide a

lot of value and a lot of good content thank you so much and have a prosperous day don’t forget to check out whiteboard Finance University thank you so much bye-bye Marco Bitcoin is a

scam I don’t buy it it’s fake money