As the Federal Reserve continues to ease interest rates, MaxMyInterest founder and CEO Gary Zimmerman joins Wealth! to discuss how it may impact your high-yield savings account. Zimmerman explains that MaxMyInterest is "an intelligent cash management solution that helps individual investors and their financial advisors earn more on their cash in the bank." The platform helps users secure the highest yield while remaining fully insured by the FDIC. He notes that some of the most affluent US households hold about 25% of their liquid assets in cash. He tells Yahoo Finance, "And so if you think about a quarter of your portfolio, it should always be earning as much as possible. And what really became interesting to me after a long career in finance is that the market for bank deposits is just shy of $18 trillion in size, yet it’s grossly inefficient. Some people are earning nothing on their cash. Other people are earning more than 5% on exactly the same product, which is an FDIC-insured savings account." He adds, "When you think about the power of compounding, it’s really important to make sure that you’re always earning as much as possible, and then it will grow and compound over time." For those looking to open a high-yield savings account, Zimmerman encourages shopping around for the best rate. While many financial planners recommend opening CD (certificate of deposit) accounts, Zimmerman believes that some people may be better off buying bonds. "The value of a bond will go up when interest rates fall, whereas the CD really won’t change," he explains. Overall, he notes that in nearly all market environments, clients have been "better off just holding simple, high-yield savings accounts."
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