Don’t Let 5% Savings Accounts Distract You From Investing for the Long Term

Welcome back to the Dollar Wise Podcast. In this episode, Jason Gabrieli, CFP®, discusses the current trend of keeping money in cash. With high-yield savings accounts offering around 5%, many investors are unsure whether to invest or leave their money in cash. Jason highlights the importance of understanding historical returns and differentiating between short-term and long-term financial goals. He demonstrates how long-term investments in bonds and stocks have historically outperformed cash, despite recent attractive yields. The episode encourages listeners to align their cash holdings with their financial objectives and offers insights into market trends and behavioral finance.

Tune into this episode to also learn:

• The psychological factors influencing our financial decisions.
• The historical returns of cash, bonds, and stocks over 30 years.
• The potential risks of relying on high-yield savings accounts for long-term goals.

What we discussed

• [00:01:17] The current trend of keeping money in high-yield savings accounts.
• [00:04:07] Behavioral finance and the fear of losses over potential gains.
• [00:07:21] Historical returns of cash, bonds, and stocks over 30 years.
• [00:10:50] The importance of aligning cash holdings with financial goals.
• [00:14:40] How to balance short-term and long-term financial objectives.

3 Things To Remember

1. High-yield savings accounts offer short-term benefits but might not be ideal for long-term goals.
2. Investing in diversified assets, like bonds and stocks, has historically provided better returns over time.
3. Aligning cash holdings with financial objectives is crucial for effective financial planning.

Memorable moments:

(00:02:34) “We are seeing some returns in cash to offset, of course, some of the high lending costs for anybody getting a mortgage or a car payment or anything like that. And so there is always a double-edged sword to everything.”

(00:10:44) “Don’t get lulled in by those 5 percent current rate on a high yield savings or money market account or a CD.”

(00:14:20) “I can’t drive home enough that everybody’s situation is different, you know, is different based on what their goals are and what the job of this cash is.”

Useful Links

Connect with Jason Gabrieli: [email protected] | LinkedIn

Listen to EP.39 “Let’s Talk About Cash” – Apple | Spotify

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