Where to Stash Your Cash - Fall 2011 Edition

Last Updated Oct 4, 2011 11:04 AM EDT

With stocks and even gold plunging, investors are looking for a safe harbor. This drove US Treasury Rates to near zero with the six month Treasury yielding 0.04 percent annually. Vanguard's Prime Money Market is yielding 0.03 percent annually, while Fidelity's is yielding 0.01 percent annually. Luckily, we small investors have ways of safely earning much more by stashing our cash at banks and credit unions.

By the way, I don't just write about these things. I put roughly 80 percent of my fixed income money where my mouth is in CDs and bank money markets, with the remainder mostly in low cost bond index funds. Here's how I go about the analysis and where you too may want to stash your cash, after carefully checking each out, of course.

Best choices for savings accounts
Though savings accounts offer liquidity, rates can change. In selecting my choices for the highest savings rates, I exclude any institutions that require things like a minimum number of debit card transactions, as that's really just cross subsidizing the profitability of one product with another. Finally, I choose institutions that I see have a history maintaining high rates since I suspect you have better things to do with your time than change accounts every month. I started my research with DepositAccounts.com.

The highest paying savings accounts from institutions with a great track record are:

  • Alliant Credit Union - 1.15%
  • SmartyPig - 1.10%
  • Salie Mae Bank - 1.00%
  • American Express Bank - 1.00%
  • Discover Bank - 1.00%
  • ING - 1.00% (1.10% for $50K and 1.15% over $100k)
  • Ally Bank - 0.99%
These rates may not seem like much but look at the difference in interest over a year for each $10,000 invested vs. the one year Treasury. For example, a $100,000 investment at Alliant Credit Union would earn $1,150, or $1,110 over at six month Treasury. That's not bad pay for an hour's worth of time, in my opinion.

Turn the page for best CD choices

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    Allan S. Roth is the founder of Wealth Logic, an hourly based financial planning and investment advisory firm that advises clients with portfolios ranging from $10,000 to over $50 million. The author of How a Second Grader Beats Wall Street, Roth teaches investments and behavioral finance at the University of Denver and is a frequent speaker. He is required by law to note that his columns are not meant as specific investment advice, since any advice of that sort would need to take into account such things as each reader's willingness and need to take risk. His columns will specifically avoid the foolishness of predicting the next hot stock or what the stock market will do next month.