Invest Your Weekly Cash Wisely: A Guide To Getting Started

Investing your money is a great way to build wealth and save for long-term goals, such as retirement. However, it can be challenging to determine the best strategy, especially when deciding between investing weekly, monthly, or yearly. The best approach depends on your financial situation, goals, and risk tolerance.

One key consideration is the impact of compound interest, which is higher when investing more frequently. For example, investing $250 a week amounts to $13,000 a year, whereas investing $1,000 a month only totals $12,000. As such, investing weekly can result in a higher overall return.

Additionally, investing weekly can smoothen the investment curve and provide an advantage in terms of time in the market. However, it is essential to note that transaction costs can also play a role, as investing monthly will result in higher transaction costs than investing annually.

Ultimately, the decision to invest weekly, monthly, or yearly depends on various factors, including your financial goals, risk tolerance, and the specific investments you choose. It may be beneficial to consult a financial advisor to determine the best strategy for your unique situation.

High-yield savings accounts

When choosing a high-yield savings account, it is important to consider the APY, minimum deposit and balance requirements, monthly fees, and withdrawal limits. Some accounts may offer higher APYs but require a higher minimum balance, while others may have no minimum balance requirement at all. It is also important to note that some high-yield savings accounts are only available online and may not offer the same level of face-to-face customer service as traditional banks. Additionally, some accounts may restrict withdrawals to a maximum of six per month, so it is important to consider your needs and choose an account that meets your specific requirements.

• Barclays Tiered Savings Account: This account offers a solid interest rate of 4.50% APY for balances under $250,000 and 4.80% APY for balances of $250,000 or more. There are no monthly fees or minimum balance requirements, and Barclays also offers a tool for setting savings goals. However, it does not offer a checking account.
• SoFi Checking and Savings: This account combines checking and savings, offering an APY of 4.20% on the savings portion and 0.50% on the checking portion. To earn the higher APY on savings, you must set up direct deposit or make manual deposits of at least $5,000 every 30 days. There is no minimum deposit requirement or monthly fee for this account.
• CIT Bank Platinum Savings: This account pays a competitive APY of 4.55% on balances of $5,000 or more. However, if your balance dips below this amount, the APY drops significantly to 0.25%. There is a minimum opening deposit of $100, but no monthly fee.
• Openbank High Yield Savings: With an APY of 5.00%, this account offers one of the highest yields currently available. The minimum opening deposit is $500, and there are no monthly fees. However, this account is not available to residents of certain states, and there are restrictions for existing Santander Bank customers.
• UFB Portfolio Savings: This account offers a competitive APY of 4.31% with no minimum balance requirement and no monthly fees.
• American Express High Yield Savings Account: This well-known credit card company offers a savings account with an APY of 4.00%, a $0 monthly fee, and no minimum balance requirement. American Express also offers a competitive rewards checking account, making it a good choice for those looking for both checking and savings options.
• Capital One 360 Performance Savings: This account offers an APY of 3.90% with no minimum deposit or balance requirements and no monthly fees. Capital One also offers an interest-earning checking account.
• EverBank Performance Savings: With a competitive APY of 4.75%, this account helps your money grow faster. There is no minimum deposit or balance requirement, and no monthly fees.

Cash management accounts

The key features of a cash management account include the ability to deposit and withdraw money, write checks, make electronic transfers, and sometimes access automated teller machines (ATMs). Many CMAs also allow you to earn interest on the cash held in the account, with interest rates that may be higher than those provided by traditional savings accounts.

CMAs are extremely liquid, and money can be withdrawn at any time. They are often invested in safe, low-yield money market funds, so there is not a lot of risk. They are also safe and insured by the Securities Investor Protection Corporation (SIPC) or the Federal Deposit Insurance Corporation (FDIC).

In addition to the features mentioned, cash management accounts often come with additional features like automatic cash sweep (where excess cash is automatically moved into an investment account or money market fund), debit cards, and overdraft protection.

The choice between a CMA and a brokerage account should align with your personal financial goals, risk tolerance, and banking needs. Many people may find it beneficial to have both a CMA for day-to-day money management and a brokerage account for long-term wealth growth.

Money market accounts

• Quontic Bank — 5.00% APY, $100 minimum deposit
• Vio Bank — 4.90% APY, $100 minimum deposit
• CFG Community Bank — 4.80% APY, $1,000 minimum deposit
• UFB Direct — 4.31% APY, no minimum deposit
• EverBank — 4.30% APY, no minimum deposit
• Sallie Mae Bank — 4.20% APY, no minimum deposit
• Ally Bank — 4.00% APY, no minimum deposit

Short-term corporate bond funds

When choosing a short-term corporate bond fund, investors should prioritise those with low expense ratios or fees. Fees reduce returns, so it's crucial to opt for low-cost options with modest returns by nature. Here are some examples of short-term corporate bond funds with low expense ratios:

• PGIM Short-Term Corporate Bond (expense ratio: 0.38%)
• Vanguard Short-Term Corporate Bond (expense ratio: 0.05% for the mutual fund and 0.04% for the ETF)
• SPDR Portfolio Short-Term Corporate Bond ETF (expense ratio: 0.04%)
• IShares 1-5 Year Investment Grade Corporate Bond ETF (expense ratio: 0.04%)
• Schwab 1-5 Year Corporate Bond ETF (expense ratio: 0.03%)

Short-term US government bond funds

When considering short-term US government bond funds, it is important to prioritize those with low expense ratios or fees. Fees can eat into returns, so opting for low-cost funds is generally advisable. Some examples of short-term US government bond funds with low expense ratios include the Schwab Short-Term US Treasury ETF (0.03% expense ratio) and the SPDR Portfolio Short Term Treasury ETF (0.03% expense ratio).

Compared to long-term investments, short-term investments like US government bond funds offer lower potential returns. They are, however, ideal for those seeking stability and low transaction costs. These funds provide investors with access to their cash while earning a yield, making them a good choice for those with near-term financial goals.

Frequently asked questions