US Treasury yields have risen again, which means you don’t have to look too far to safely get a return on your cash holdings. The yield on six-month Treasury bills exceeded 5%, and even the rates on one-month Treasury bills exceeded 4.5%. Those juicier yields look even more appealing to income-focused investors, given that Intel just cut its dividend payout by more than 65% and blue-chip names like Coca-Cola are offering dividend yields. by 3.1%. “The fact is, rising interest rates create short-term opportunities to earn higher returns on liquid assets,” said Michael Sonnenfeldt, founder and chairman of Tiger 21, a network for wealthy entrepreneurs and investors. . Line US6M US1M,US3M 1Y US Treasury yields look attractive. “As an example, if you want to put money in for six months, there is relatively little risk in switching from cash to a Treasury bill that pays 4% and change,” said- he added, noting that band members always put money to work long-term in real estate and equity. Bond laddering – that is, building a portfolio of issues with different maturities, then reinvesting the proceeds as the bonds mature – allows you to manage interest rate risk. interest. Plus, you can use the same concept with short-term treasury bills to get a little more return on your money and do it safely. Risk management and ladders When interest rates rise, you can reinvest the proceeds of maturing bonds in your ladder into a longer-dated issue. In a falling rate environment, you can rely on bonds that have already locked in higher yields. For investors playing on the shorter end of the yield curve, it might make sense to do so with Treasuries, ranging up to six months. Jordan Benold, Certified Financial Planner and Benold Financial Planning Partner, has used this strategy to help clients save for near-date goals, such as a down payment on a house or a wedding fund. Older investors also like the strategy, as they prioritize income and security over growth. Short-term scales are also worth considering since the Federal Reserve has been resolute in its fight against inflation, leading investors to speculate on the likelihood that interest rates will stay higher for longer. “(Investors) get income when the Fed raises rates, and they get safety and negative correlation to stocks,” Benold said. “It’s almost a slam dunk.” Once the shorter end of your scale matures, you can decide to put the money back into another treasury or use the proceeds to buy stocks. You can also build a ladder from certificates of deposit. Some banks offer yields above 4% on one-year CDs, according to Bankrate.com. Morgan Stanley recently predicted that bank CD rates could climb to 5.5% later this year. The trade-off with the CD ladder is that you lose liquidity. This means that you are subject to a penalty for early withdrawals. Be aware of your time horizon so your scale works the way you want it to. “The best place to look for short-term savings returns depends on your priorities and what they are,” said Amy Arnott, portfolio strategist at Morningstar Research Services.
Six-month Treasury yield tops 5%. Here’s how you can put your idle cash to work
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