Cash is an important part of any investor’s financial portfolio because it provides liquidity and reduces volatility. While there are various asset allocation models, cash allocations are often 15% or more of some portfolios. When protected by FDIC insurance, cash returns can be considered risk-free and used as a baseline for other investment opportunities.
If you’re earning almost 0% on the cash in your portfolio, you are losing out on easy money and will be inclined to take more risk. Investors can easily earn 1.70% or more from a savings account and 2.20% APY on a 12-month CD. To ensure that you get the best yield on your cash and your deposits are protected by the FDIC, work with your Enso | Sonoma financial advisor. They can advise on interest rates, pricing, and bank promotions that aren’t advertised.