You’d like your cash to earn more — but you don’t want to switch banks.
Enter Max, an intelligent cash management service for intelligent investors. It offers a way to see all your cash at once, while earning you higher yield and obtaining broader FDIC insurance coverage. Max even simplifies tax season, delivering all 1099-INT statements by email in a single password-protected PDF.
Max works with your existing checking account — unless you’d rather open a new checking account or use your brokerage account. Here’s how:
Transactional Checking Account
Most investors have a checking account at a bank that they use to pay bills, accept direct deposit of their paychecks or partnership distributions, and manage their household finances. Many Max members link this checking account to Max, because they value Max’s automated optimization that restores their checking account to their pre-set target balance each month.. For example, if you tell Max that you wish to keep $30,000 in checking, but Max finds only $22,000 at the time of your monthly optimization, it will pull $8,000 from savings to bring you back to your target balance of $30,000. Similarly, if Max finds excess cash sitting in your checking account, it will automatically be swept to your online savings accounts, where it can earn more. We typically advise that clients set their target checking account balance to be slightly higher than their monthly working capital needs, to ensure an ample cash cushion.
Separate Checking Account
Some Max members elect to open a new checking account reserved specifically for Max. They move into this account any funds they wish to optimize, link their online savings accounts, and start optimizing. Often they set a low target balance on this checking account, since they don’t plan to use it for any purpose aside from Max.
This setup functions much like a separately managed account, allowing members to cordon off a specific amount of cash to be optimized, separate from the other cash in their portfolios, and not impacted by their daily transactional activity. They can view and manage this cash from the Max dashboard, and when they need to access this cash, they can move it back to the checking account using Max’s Intelligent Funds TransferSM feature, or wire it elsewhere directly from their online bank accounts. It’s easy to open a new checking account online, without visiting a bank branch.
Many people keep a significant portion of their cash in their brokerage account. Max supports bank and cash management accounts at brokerage houses including Charles Schwab Bank and Fidelity. This strategy takes full advantage of Max to garner additional FDIC coverage and higher interest rates on the cash that’s not currently invested. Most brokerage accounts pay less than 0.1% on your deposits, while the Max average is 1.00%. Historically, investors who chose to maintain cash as dry powder, on hand to deploy when market opportunities presented themselves, typically lost out on the ability to earn interest on these funds. With Max, that’s no longer a problem. You can earn dramatically more while keeping your cash liquid and easily accessible, within reach when it’s time to trade. Since the average HNW investor is holding 23.7% of his or her portfolio in cash, picking up an extra 0.90% of interest income on cash is equivalent to earning an extra 0.21% across your entire portfolio.