What the Fed's interest-rate increase means for you
The Federal Reserve raised its short-term benchmark rate by one quarter of a percentage point in March. This widely expected decision increases the federal-funds rate to between 0.25% and 0.50%.
You'll feel the impact of rising rates on an individual level and on a household level. When interest rates go up or down, the resulting changes in other rates impact the way we borrow money, but also how we save money.
High Yield Savings Accounts and Certificates of Deposit
Right now, banks have little incentive to raise interest on savings accounts. During the pandemic, Americans have been hoarding cash, leading to the highest personal savings rate since World War II, then edging down in recent months.
"The traditional view is that rising interest rates help savers, but most people who are savvy are in a broader range of assets," said Caroline Fohlin, professor of economics at Emory University. "For your average person who just has their money in a savings account, you make nothing."
The interest rates offered on savings accounts and many certificates of deposit often move with the federal funds rate. According to the FDIC, the average annual percentage yield on a one-year CD is 0.14%. Goldman Sachs Group Inc.'s Marcus account is now offering 0.50%. Online banks like Ally are also offering 0.50% for their high-yield savings products.
"Low interest rates very much affected savers," said Fernando Martin, assistant vice president at the Federal Reserve Bank of St. Louis. "People were looking for alternative investments and yield, which always implies more risk. As interest rates go up, CDs will go up, which should perhaps help savers a little bit more."
Earn a higher interest on your idle cash compared to bank deposits
Cash management funds are funds that deploy your cash into highly liquid (i.e. easily converted back to cash), ultra-safe (i.e. low chances of losses) instruments that generate yield.
These instruments can range from holding actual cash, to money market funds and short-term bond funds as they move along the risk spectrum. These instruments are all considered low risk investment options.
Features of Cash Management Funds
First, instant deposit and withdrawal. Investors can buy cash management funds using available funds in their securities accounts at any time and can also redeem the funds when they need to use cash available at any time. The redeemed funds can be used immediately for stock trading or IPO subscriptions.
Futu SG may set a single buy-in limit depending on the fund's operation in terms of buy-in amount. At the same time, the fund manager has the right to suspend redemptions to control fund liquidity risk if a large-scale redemption occurs, at which point investors may need to redeem the fund on the next trading day.
Second, low threshold and zero fees. Cash management funds have a very low subscription capital threshold, starting from as low as S$/US$ 0.01. At the same time, the fund company has deducted the management fee from the fund assets, so investors don't need to pay additional fees when they subscribe and redeem.
Third, low risk. Cash management funds' investment targets are mainly short-term government debts, certificates of deposit, and other financial instruments with relatively low risk and high liquidity. However, the fund managers do not guarantee a certain profit or a minimum return.
Fullerton Cash Plus makes it possible to"Easy Trade and Easy Earn"
For one thing, you can enjoy steady growth even when you are sleeping. For another, the fund shares can be redeemed instantly to trade stocks and subscribe to IPOs without margin interests. You won't miss out on the optimal time to trade！