Do you want to earn more money without taking on more risk? If so, keep reading! With the Federal Reserve raising interest rates to combat inflation over the last few months, and set to raise them about .25% in a few weeks at the February meeting,  we have been seeing a huge spike in short-term rates, CD’s, and money market accounts. At the same time, many clients and prospects we’ve been talking with are actually holding onto a ton of cash at large institutional money center banks that are paying close to 0%, so there’s a large opportunity for those of you in this position to better manage your cash in this type of increased savings rate environment. Let’s take a look.

Many of you might be weary right now about your financial picture given extreme market volatility we saw last year, 4-decade high inflation, and rising rates from the Federal Reserve. The interest rate market has sky rocketed over the last year with the Federal Reserve projecting and telegraphing future hikes in the coming months. With recent inflation data slowing, the Federal Reserve may be slowing the rate in which they increase future hikes, but interest rates are still quite high from the lows we saw in 2020 and beyond. Because of this uncertainty, a lot of people might want to hold on to extra cash in the case of a potential recession or future large purchases. However, because of these rising rates, there’s an opportunity to earn more money risk-free on cash sitting in your savings or checking accounts. 

You can now get FDIC insured savings above 3%, with some even in the 3.25% range now, so make sure you are looking at high-yield savings accounts instead of your traditional ones and are shopping around for the highest rates. If you feel like taking on further time risk, we have also been seeing individuals purchase CDs and Treasury Bills in the 4% range, which was unheard of just a year back. Additionally, for those of you looking for other higher interest rate vehicles, check out our blog on I-bonds as well which have been increasingly popular for many looking to take advantage of higher rates. 

With this changing economic environment, it’s super important to stay on top of your financial plan and make sure you are updating/altering it accordingly. As we kick start 2023, it’s important you are making sure you are taking advantage of all the interest you can earn and that you money is in the right places. If you are interested in re-visiting your financial plan or have questions about your cash management needs, email us at info@shermanwealth.com or schedule a complimentary intro call here. 

You always hear people talking about saving for the future and for retirement. But you may be wondering why is it so important? Well, saving for your future and building your wealth can be quite simple if you go about it in the right way. One of these “right ways” includes STARTING EARLY. 

Starting early is a great savings philosophy and strategy when it comes to building your wealth. When you’re just starting your career, it’s very important to save as much as you can as early as you can. When you’re young, you might not have as many expenses or financial burdens than you will later on as your life becomes more complicated.

However, with sky-high inflation data and the Federal Reserve continually rising interest rates to combat this inflation, many individuals, especially millennials and Gen Zers are finding it more difficult to save money given the high cost of living. In fact, The Deloitte Global 2022 Gen Z & Millennial Survey found that over 23,000 millennials and Gen Zers internationally are living paycheck to paycheck and that cost of living is listed as one of their top concerns. This statistic reinforces the urgency of financial planning as a whole, utilizing financial strategies such as budgeting to save more, and the importance of saving early. Despite inflation and a higher cost of living, starting to save sooner will allow your money more time to grow, which brings us to the importance of compound interest.

As mentioned above, another reason to start saving early is because of the power of compound interest. Compound interest is when you earn interest on both the money you’ve saved and the interest you earn. Increasing the compounding frequency or your interest rate, or adding to your principal, can all help your money grow faster. Also, money invested earlier in time will grow faster than money invested later in time. So if you save as much as you can as early as you can, you will be better off as you near retirement.

The graph above from JP Morgan shows account growth of $200 invested/saved monthly among 4 individuals starting at different times. As you can see, with the same rate of return of 5.75%, Consistent Chloe, who consistently invested her money starting at age 25 to age 65, ended up with the greatest ending portfolio.

Finding a balance between saving, investing, and also enjoying your life is not an easy task, but it tends to be easiest when you start early. Starting when your career is jumpstarting is a great way to get yourself consistently saving and investing and will benefit you in the long run. If you have any questions on how to work this strategy into your financial plan and life, email us at info@shermanwealth.com or schedule a 30-minute complimentary consultation here.

Do you have financial goals? If so, are they short-term or long-term, or both? Maybe you don’t know the difference. That’s okay because we are going to discuss the difference between short and long-term goals and how to strategize for them. 

So, what is the difference between a short and long-term goal? We like to think a short term goal is something that you need liquid cash for in the foreseeable future, maybe within around 12-18 months. A longer term goal is something that you want to save for over a duration of time, maybe achievable within 3+ years or so. 

Now that you know the differences between the two, you may ask yourself, how do I create these goals I have for myself? First and foremost, you want to think about your priorities in life. Do you have upcoming expenses, do you need to save for retirement, do you have enough money in your emergency fund and checking account for your monthly expenses? 

When thinking about your goals, it’s also important to think about your risk tolerance. For example, are you willing to risk your money on investments? Or do you want it to be safe in a FDIC insured account? These are all questions you should ask yourself when designing your goals and thinking about how you want to use your money.

Setting goals can oftentimes get tricky because it’s hard to find a balance between wants vs. needs. Is your goal a necessity? Or a Want? Ask yourself some questions about the importance of your goals and think about how reasonable each one is given your financial situation and lifestyle. Deciphering wants vs. needs is a great starting point when creating goals.  When creating shorter-term goals, be sure to ask yourself when you will need the money you are reaching for so you know exactly how to strategize and save. 

Once you’ve clearly identified a realistic goal and determined the amount, timeline, and urgency of the goal, it’s time to start working towards it. Be slow and steady and stick to your plan once you make it. Goals and the methods of savings will be different for every individual, so it’s important to drown out the noise and do what is best for your personal situation. With the help of a financial advisor, you can easily put your priorities and strategies in place to reach your goals.  If you find yourself needing clarity on goal-setting and achieving your milestones, email us at info@shermanwealth.com or schedule a 30-minute consultation here.

​​Are you utilizing a high-yields savings account? If not, let’s explore why you should.  With much higher interest rates, high-yield savings account can help you build your wealth much faster than a regular savings account would. Here’s why you should open a high-yields savings account. 

You can make more money

The average yield on a traditional savings account is just around 0.09% or less per year. However, high-yield accounts have much higher interest rates, closer to 1%. 

There are options with no fees and minimum balance requirements

We know everyone hates accounts with fees and minimum balance requirements, so we want to let you know that there are accounts out there where this is not the case. 

Monthly fees, minimum balance requirements, and interest rates can all vary widely from one bank to another, so make sure to do your research before picking one that is best for you. Below you will find some of CNBC’s top picks for high-yield savings accounts. 

Your money will be better protected

Most major banks and credit unions are insured by the FDIC or National Credit Union, meaning your money is protected and will still be there if something happens. 

Many people don’t think twice before putting their money into a savings account. But when doing so, it’s crucial to consider and find a high yield savings account to maximize your savings and build your wealth. The big banks pay close to zero, so there’s no point in keeping your money at that type of  institution.  If you have any questions about opening a high yield savings account, reach out to us at info@shermanwealth.com or schedule a complimentary 30-minute intro-call here.  

In response to recent studies and data, we have found that women are contributing more and more to their family’s finances, and that the younger generation is increasingly claiming the title of breadwinner, according to a recent study by Wells Fargo. 

The study, released in conjunction with International Women’s Day, included 2,195 women. It found that more than half  of all partnered women reported greater or equal earnings to their spouse. And nearly one-third of millennial and Gen X women reported being the primary breadwinner, versus the 20% rate reported by baby boomers and traditionalists. 

Despite these gains in financial contributions to their households, the study also revealed that many women are intimidated by financial concepts and many did not learn enough about finances in school or growing up. With International Women’s Day just passing and financial literacy month upcoming, we want to use this new data as an opportunity to encourage and motivate women to take control of their finances and better educate themselves to become financially independent. 

As a financial advisor who works to empower women to become confident to make their own financial decisions, we have found that many women are often met with anxiety when it comes to having to make financial decisions on their own. For that reason, it is extremely important to start educating yourself about financial concepts from a young age, along with passing that on to the next generation, such as your children or grandchildren. At Sherman Wealth, we strive to educate all of our clients, no matter gender, age, or background, to become financially independent and feel confident to make their own decisions. If you have any questions or would like to talk to us about ways to educate others about financial concepts, please reach out to us at info@shermanwealth.com or schedule a 30-minute complimentary introductory call here. 

Staying on top of your finances and tracking your expenses can seem like a daunting task. When your life continues to get busier, it’s often easier to push aside your finances. However, due to the great technological advances in society, you now have access to simpler and immediate tools that will help you manage your overall finances. 

Luckily, there are various ways you can track your own expenses, depending on what works best for your lifestyle. Some consumers like a more hands-on approach in which you log each transaction as it happens, while others prefer creating a spreadsheet to capture a big-picture look at their monthly expenses overall. There are even budgeting apps that automate the process, making it easy to keep tabs on your cash. In one of our previous blogs, we touched on the technologies we provide our clients with that help them see their overall net worth and all the pieces in between in one snapshot. 

Our biggest recommendation in managing your expenses and finances is automation. As mentioned earlier, our world today has made it so simple to have access to your finances at the click of a button. Using software and automating your bank statements and payment schedule, credit cards, and more can not only save you time, but help keep you more organized and on top of your spending. It’s easy to swipe your credit card without thinking twice, but with new features such as purchase notifications, you can see in real time how much you are spending and where your credit card balance lies at all times. 

How you manage your money is a personal decision that only you can make. While some may prefer logging each of their transactions manually, others may like an app that syncs to their accounts and tracks expenses for them. No matter what route you choose, make sure you are setting aside routine time to check on your spending and evaluate your financial progress as you go. If you have any questions on how to better manage and automate your finances or would like a free trial to our technological software, please reach out to us at info@shermanwealth.com or schedule a complimentary 30-minute consultation on our site.