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Where Do You Keep Your Money In The Current Low Interest Environment?

I mentioned this topic in my previous post. But since then I developed this “cash storing” a bit beyond the original post.

In the older post, I mentioned that I was buying a short-term bond ETF which was able to keep the value consistently over time. Even during the 2020 stock market slump, it dropped only 4% while the entire market dropped almost 40%. And, it recovered fast.

On top of this feature of preserving value, it pays a nice dividend, yielding about 2% (or slightly more). Definitely, a lot better than the current high yield interest savings accounts pay. Why saving money in a savings account that pays you barely 0.80% annual interest, when you can use this ETF and get 2.20%?

However, I did a bit more search to find what other similar ETFs are there available. I found an article on Seeking Alpha providing me with a better insight into this type of savings.

And that led me to create a savings plan and abandoning savings accounts:
 

SPY LEAPS trade
 

Is saving in this type of investment safe compared to a savings account?

If you believe that the stock market is flawed and everything, even bonds, and Treasuries, are doomed to an irreversible crash, then stay with a bank and their products when they borrow money from you, pay you 0.80% annual interest rate, and then charge you 16% annual rate on credit cards or other types of loans (if you qualify in the first place). Just make sure, these same banks survive that irreversible market crash.

I personally believe that these types of ETFs are relatively safe. Just look at the long term chart of those ETFs. The price fluctuations over time are minimal and well offset by the dividend.





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