Time to get your cash working again!

John Robinson |

Let's Start Putting Your Cash Back to Work!...

By John H. Robinson, March 1, 2022

With CD yields hovering close to zero for the past two years, there has been little incentive to reinvest maturing CDs and bonds.  Angst over accumulating cash earning little or no interest has been a regular topic of conversation in this newsletter and in client review meetings.  My frequent refrain has been that cash is not intended to be a long-term holding, but rather we are using it as a placeholder until interest rates begin to rise. That time has arrived. 


Did You Ever Imagine There Would be A Time When You Would Be Happy to Earn 1% Interest?

Interest rates have risen relatively sharply since the beginning of the year, and we are now seeing 12-month FDIC Insured Certificates of Deposit with yields in the .85-1.0% range.  While these rates probably are not enough to inspire investors to uncork the Dom Perignon, it probably is enough to make it worth your while to start getting your money working for you again.

Some clients may ask if it is worth waiting for rates to rise further before locking in.  My advice is that it is indeed too early in the interest rate cycle to buy CDs longer than 12 months or to go back to staggering bond and CD maturities out over 3-5 years as we did in years gone by.  However, I do not have any issue locking in 12-month rates today.  I fully do expect rates to continue to rise over the next year, but I do not think the rate increase will happen all at once in the next few months.  I am guessing that investors who buy CDs today will be renewing them at higher yields a year from now. 


Our Fixed Income Investment Strategy as Interest Rates Continue to Move Higher

In terms of our long-term strategy, as interest rates continue to edge higher, I will eventually begin encouraging clients to extend maturities and begin building bond and CD laddered portfolios again. Less than 3 years ago we could buy 1-3 year CDs yielding 3.0%.  If you are looking for guidance on when I might start recommending extending maturities, that might be a good benchmark to keep in mind.

At this time, Financial Planning Hawaii clients are sitting on more than $50 million in cash from matured bonds and CD in their accounts with Fidelity/NFS and TD Ameritrade.  Please let me know if you would like to start wading back into the CD waters again.


John H. Robinson is the owner/founder of Financial Planning Hawaii , Fee-Only Planning Hawaii, and Paraplanning Hawaii.  He is also a co-founder of fintech software-maker Nest Egg Guru.



Securities offered through J.W. Cole Financial, Inc. (JWC) member FINRA/SIPC. Advisory services offered through Financial Planning Hawaii and J.W. Cole Advisors, Inc. (JWCA). Financial Planning Hawaii and JWC/JWCA are unaffiliated entities.

Fee-only financial planning services are provided through Financial Planning Hawaii, Inc. DBA Fee-Only Planning Hawaii, a separate state of Hawaii Registered Investment Advisory firm. Financial Planning Hawaii does not take custody of client assets nor do its advisers take discretionary authority over client accounts.

The information contained herein is general in nature. Neither Financial Planning Hawaii nor J.W. Cole provides client-specific tax or legal advice. All readers should consult with their tax and/or legal advisors for such guidance in advance of making investment or financial planning decisions with tax or legal implications.