Stock prices are getting expensive. The 30-year secular bull run for bonds is likely ended. And commodity prices — especially for oil and gold — are falling, with perhaps more downside remaining.
There is only one asset class that has any certainty of producing a positive return in the short term, and that asset is cash.
Although some investors might cringe at the thought of putting any portion of their portfolio in cash, money market funds and high-yield savings accounts can be a smart diversification tool, especially in pivotal economic and market environments like we are experiencing now.
Plus, there are a few fortunate people who have emergency funds that need to be liquid, but also not just sitting there earning nothing while inflation erodes away at its value. For the ultra-conservative who has more than $250,000 to put in a high-yielding liquid account, and wants full FDIC coverage, using more than one account can be a good idea.
Many of the larger banks don’t offer any high-yielding liquid accounts, and finding brokerage firms with money market funds that yield any higher than 0.05% is not common in the current low-yield environment. However, there are a few options out there for parking your cash while it waits for its next purpose.
Here are the best high-yield money market accounts for your cash now:
High-Yield Money Market Accounts: ableBanking Personal Money Market
Keep in mind that there is a technical difference between a money market account and a money market mutual fund. On a simple level, the prior is a savings account, typically offered by a bank, and the latter is typically a cash holding vehicle at a brokerage firm.
The highest yields available today are coming from the money market accounts from online banks, not the money market funds from brokerage firms.
My search results produced only one money market savings account or fund that is yielding higher than 1%. The ableBanking Personal Money Market account from ableBanking — a Northeast Bancorp (NBN) division — is just above that mark at a 1.02% annual percentage yield, or APY.
The ableBanking money market account is FDIC-insured and requires only an initial deposit of $250. What’s more, the folks at ableBanking will donate $25 of their own money to any 501(c)3 charity of your choosing when you open a new account.
High-Yield Money Market Accounts: GE Capital Online Savings
GE Capital, a subsidiary of General Electric Company (GE), offers a savings account with a current APY of 0.95%.
This might be the most flexible of the money market and high-yield savings accounts offered today. There are no transaction fees, there is no minimum initial deposit, and the rate is variable and can change after the account is opened.
Floating variable rates are an advantage in a rising-interest-rate environment when yields are expected to go up along with rates. Account holders also may make up to six withdrawals per statement period. So this high-yielding savings account can serve many purposes.
The GE Capital Online Savings account is also FDIC-insured.
High-Yield Money Market Accounts: Ally Bank Money Market Account
The Ally Bank Money Market Account is another flexible account option for holding your cash. A subsidiary of Ally Financial (ALLY), Ally Bank offers this money market at a current APY of 0.85%.
The flexible options include no minimum deposit to open, no monthly maintenance fees, unlimited deposits and ATM withdrawals, and up to six additional transactions. You can also deposit checks remotely with Ally eCheck Deposit, and deposits are insured by the FDIC up to the maximum $250,000.
Like other online banks looking to compete withe the traditional brick and mortar banks, Ally is best known for its high-interest savings accounts, No-Penalty CDs, and “no-fees” policy, as well as its popular advertising campaigns. Customer service includes live telephone service with an Ally representative.
Money market rates change frequently and are usually updated daily, so you can always do a quick search on a good money rate site such as Bankrate.com, or a personal finance site such as NerdWallet.
As of this writing, Kent Thune did not hold a position in any of the aforementioned securities. Under no circumstances does this information represent a recommendation to buy or sell securities.