Over the past year, inflation has shifted our economy. The effects of inflation and corresponding interest rate increases impact everything from mortgage rates to interest earned in your bank account.
With interest rate hikes expected to continue until inflation returns to lower levels, deploying a laddered treasury strategy can be an effective tool for investors. At Whelan Financial, we’re helping individuals and companies take advantage of this opportunity by identifying their short-term cash needs and pairing them with appropriate treasury bill exposures. The intent is to invest money that would otherwise earn very little into risk-free treasuries to maximize yield, while still meeting cash needs.
Applying a sensible cash management solution today can help mitigate the current impact of inflation on your savings. Working with an advisor at Whelan Financial gives you an advantage in planning your ideal future.
Cash Management Strategies
While increasing mortgage rates have had a cooling effect on the red-hot housing market, higher yields have led to an opportunity that investors haven’t seen in over a decade; money market funds, CDs, and treasuries are now producing notable income. For example, as of the week of Monday, September 26, 2022, one-year treasury bills yielded ~4.2%, whereas in 2020, an investor would have needed to purchase a 30-year treasury bond to receive a yield of just over 2%!
While inflation can make investing a challenge, it provides an opportunity to incorporate new strategies into your financial plan.
Invest in Treasuries
Short-term cash is money that may need to be used within two years. At Whelan Financial, we match your cash flow needs with investments of three, six, nine, and twelve-month treasuries. Investing in treasuries also has the added tax benefit of producing income that is non-taxable at the state level. Should you not need the cash when your treasury matures, the proceeds are then reinvested in treasuries with longer-dated maturities. This allows you to capture greater yield as interest rates increase.
Invest in Money Market Funds
If you are looking to increase yield but need immediate access to your money, then a money market fund may be your solution. While investment yields are greater in laddered treasuries, money market funds typically earn more interest than your savings account.
Invest Wisely with Whelan Financial
Our team of experts offers a comprehensive, collaborative approach to help you and your company receive higher yields on short-term investments. Connect with us today to learn more about how our financial strategies can make a positive impact on your future.