Penny Lover - Earning more than savings accounts
I had a paper route. I delivered the Defiance Crescent News every Monday through Saturday from 1980 until 1984. I had a Sony Walkman and was an 80’s pop rock fan. So naturally, I listened to Lionel Richie’s “Penny Lover” while I delivered the paper. And when it came time for monthly payday, I went door to door and gathered up all the pennies for my bank account/college fund.
My mom was teaching me the concept of saving vs spending, and stocks and bonds were not part of the equation. Instead, we invested in Certificates of Deposit (CD’s) at the Henry County Bank.
The money I could save from the paper route didn’t amount to a huge sum, but a 3-month CD yielded 15% (January 1982) or about $40 on $1,000. Today’s rates for a similar 3-month CD are between 0.1 and .035%, yielding 50 cents. 50 cents vs $40!!!!! And you are probably noticing that inflation is back, meaning that your pennies don’t go as far. At the same time, many of us are holding more cash than ever, owing to the fact we’ve spent less over the past year on travel, eating out, etc. and we’ve saved more due to the scariness of the pandemic.
Many of you tell us you have more in your emergency fund than you need and are looking for an option to earn a better return than you can get while in cash or through a CD. While we can’t mimic the “safety” of cash while getting a better return, we developed a portfolio that we believe can deliver 3-5% with far lower risk than the overall market. The portfolio consists of bonds (municipal, corporate, government), high-quality dividend paying stocks, real estate and assets that benefit from inflation. To be clear, this isn’t a perfect comparison to a CD since there is some risk. This is a great option for that cash you have above and beyond your base emergency fund.
If you have money in an account earning a measly 0.01% and you are more than a Penny Lover, give us a call. In case you are wondering, Penny Lover hit #8 on the Pop Charts in 1984, after inflation came back to earth.
Jared
Brian Kellett, brian@kellettschaffner.com. Phone 513-312-6067
Dave Bodnar, david@kellettschaffner.com. Phone 513-258-6973
Jared Kline, jared@kellettschaffner.com. Phone 513-768-2238
Kellett Schaffner Wealth Advisors LLC is a Registered Investment Adviser. Advisory services are only offered to clients or prospective clients where Kellett Schaffner Wealth Advisors LLC and its representatives are properly licensed or exempt from licensure. This website is solely for informational purposes. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by Kellett Schaffner Wealth Advisors LLC unless a client service agreement is in place.