Cash is King: How to Profit From Rising Rates

While Max members have always earned much more on cash than the typical American depositor, as interest rates rise, the benefits of using Max are increasing even further. Since 2014, the incremental yield, or alpha, that Max has generated for its members has increased from 0.76% to 1.23%.

According to Bankrate.com, the national average interest rate earned on savings accounts is 0.09%. Max members, however, are earning dramatically more — 1.42% on balances up to $250,000, and an average 1.32% on larger balances up to $1,000,000.

Why does earning more on cash matter? Because interest compounds over time, meaning that the gap between those who manage their cash wisely and those who don’t widens as years go by.  Since all FDIC-insured savings accounts carry a government guarantee and are essentially risk-free, focusing on the banks that can deliver the highest yield makes sense. Leaving your money in a brick-and-mortar savings account that pays the national average — or worse — means you are missing out on the opportunity to earn an additional 1.23%, on average, without taking any additional risk with your money. In fact, because of Max’s feature that helps spread cash across multiple banks to maximize FDIC insurance coverage, many Max members are earning higher yield while taking less risk.

While online banks have gradually raised rates over the past several months, brick-and-mortar banks have yet to do so in a significant fashion. Online banks are able to offer higher interest rates to savings-account holders because they don’t have physical branches to maintain. This means that if you don’t keep your cash in online banks, you likely aren’t keeping pace with rising rates.

For financial advisors, the ability to help clients earn more on their held-away cash — typically cash that advisors don’t see — is a major reason why many are recommending Max to their clients. As a fiduciary, charged with looking out for their clients’ best interest, many advisors feel it is imperative to offer Max to their clients. Incremental yield on cash is, after all, the same as incremental yield anywhere else in a client’s portfolio — but in the case of FDIC-insured cash, it comes without risk.

To learn more about how Max can help you or your clients earn more on cash, visit MaxMyInterest.com or MaxForAdvisors.com.

The Battle of Financial Attitudes: Old vs. New

The new way of thinking brings transparency and simplicity to investors.

The new way of thinking brings transparency and simplicity to investors.

We invited our friends at FeeX, a service that helps investors figure out what fees they’re paying on their retirement accounts, to contribute this guest post.


By Molly O’Brien

Community Manager, FeeX

Unless you’ve been living under a rock lately, things in the finance world aren’t what they used to be. We’re living in an era when it’s never been easier to make your money work for you, and with the new ways we manage our finances also come changes in the way we think about our finances.

Working at FeeX, an online tool that helps people find and reduce fees that are hiding in their retirement accounts, I’ve noticed that prevailing financial attitudes are transforming in a good way.

“Research sucks” vs. “Research…is…easy?”

If you wanted to research your investment strategy or hunt around for a better interest rate, you had to do it the old-fashioned way — digging through prospectuses, crunching numbers, and spending way too much time comparing performance and fees from different institutions. If you wanted to check out the fees in your investment accounts, you needed to grab a magnifying glass and find your funds’ expense ratios, plus see if any extra fees were tacked on, then add your financial advisor’s cut if you had one. Are you getting a headache just thinking about this?

Now technology has enabled people to do the research without putting in the elbow grease — whether it’s comparing interest rates for checking and savings accounts, finding the right way to manage your cash (as Max does), or scanning your retirement investments for fees to find lower-fee options (which is what FeeX does), doing the research is now often as simple as clicking a couple of buttons.

“I’m sure it’s fine to leave this account alone” vs. “There are things I can do to maximize my savings”

Like Newton’s law says, an object at rest tends to stay at rest, and that’s true for the way some folks have been managing their money in the past. Settling on one particular strategy and sticking to it forever won’t necessarily hurt you, but with all of the options we have today, it doesn’t make any sense to let the status quo rule your money.

Max is a perfect example of this—sure, cash can sit in your accounts for all time without doing anyone any harm, but if you had the opportunity to use a service that let your cash accounts earn more money for you, wouldn’t you do it, especially if you could increase FDIC insurance along the way?

Likewise with FeeX: retirement accounts can easily sit for decades as-is, but with a free FeeX account, it becomes incredibly easy to see the changes you need to make to save more money. A few changes can be all it takes to save hundreds of thousands of dollars in fees over the long run.

“These fees are probably normal” vs. “If you don’t know what you’re paying, you’re paying too much”

If there’s one attitude that has become particularly apparent in the recent past, it’s this: you should always question what you’re earning versus how much you’re paying to earn it. FeeX was created with the mission of delivering clear information about how much it really costs for the privilege of investing. If you know more about your fees, you can make better decisions about how to invest. If you make better investment decisions, you’ll end up saving more money. If you end up saving more money? Well, that’s a good thing—and that’s one attitude about finances that’ll never change.