If you’re an accolyte of Japanese decluttering guru Marie Kondo, you are already familiar with her commandment to get rid of anything that doesn’t inspire happiness. Usually this applies to unnecessary things in your home or office: stacks of books you don’t plan to read again, toys your children have outgrown, clothes that don’t fit or are out of style. You might have accumulated souvenirs from travel — too many magnets on the fridge, or a surfeit of knicknacks on bookshelves — or been overly optimistic about how many old magazines you will actually open. Everyone has some area of their life that could use an anti-clutter intervention.
The same logic can be applied to any sort of encumbrance (do you have a vacation home you rarely visit?). So it’s reasonable to consider your investment portfolio to see if you’re getting the maximum amount of joy out of how you’ve allocated your assets.
Look particularly at the cash portfion of your portfolio. If your cash isn’t earning enough, it’s just like clutter: sitting there, taking up space, and not contributing to your happiness.
Here’s how you can make cash work harder for you:
- Make sure you are earning the highest interest rates on your cash
If you keep your cash in a checking or brokerage account, or in a regular brick-and-mortar bank savings account, chances are you are earning close to the average interest rate on savings accounts of 0.10%. That’s a waste, because online banks are now paying more than 20 times that amount on cash, FDIC-insured.
- Confirm you are not above the FDIC insurance limit on any of your bank accounts
The FDIC limit for deposit insurance is $250,000 per depositor, per account type, per bank. If you have more than that at a bank, the excess is not insured. You can solve this problem by opening accounts at other FDIC-insured banks (ideally those which offer higher interest rates).
- Streamline your accounts to ensure a holistic view of your assets
The best way to gain an understanding of your cash is to be able to see a dashboard view of all your cash, no matter where you’re holding it. Many people don’t think about all the cash they have on hand as money that could be working; they only think about investments in terms of stocks, bonds, or other financial assets. But knowing where your cash is and what it’s earning is a key part of understanding your whole portfolio.
- Automate your accounts to make sure your money is working for you
You can set up multiple online bank accounts, research their interest rates, and move money among them to make sure you’re always getting the best rate. But this DIY approach is a lot of work, and it violates another principle of decluttering your life: simplifying your schedule so that you can spend time doing what you truly enjoy.
Instead, a service called Max can do all this for you. Max helps you link your existing brick-and-mortar checking account or brokerage account to higher-yielding online savings accounts where you can earn more. Max monitors rates daily and automatically moves your funds so that you’re always earning the highest rate. Learn how Max can help you earn more on your cash.