The Cash Flow Clock: For Retirees - Book - Page 14
The Cash Flow Clock
investment banks offer high yield savings accounts such as Marcus by
Goldman Sachs.
Money Market Accounts offer higher interest rates than savings accounts
and are offered by custodial banks like Vanguard, Fidelity, Charles Schwab,
etc. The money market is a sector of the financial market where short-term
borrowing and lending occur, typically involving instruments with maturities
of one year or less. Common instruments in the money market include:
•
Treasury Bills (T-bills): Short-term government securities issued at a
discount and maturing in a year or less.
•
Commercial Paper: Unsecured, short-term promissory notes issued
by corporations.
•
Certificates of Deposit (CDs): Time deposits offered by banks with a
fixed interest rate and maturity date.
•
Repurchase Agreements (Repos): Short-term loans where securities
are sold with an agreement to repurchase them at a later date.
Fixed Certificates of Deposit (CDs) – Unlike the previous options which
are completely liquid and can be accessed within a few business days, CDs
are not liquid for a certain amount of time. This can be months or even
years. By locking up this money for a set amount of time, the bank is
willing and able to provide higher rates of return in CDs than liquid assets.
Fixed Annuities/Multi Year Guaranteed Annuities (MYGAs) – These
annuities are exactly like CDs except they are offered by insurance
companies instead of banks. Because insurance companies have higher
reserve requirements than banks, they tend to have better investment options
and can offer better returns for longer periods of time. Many MYGAs also
offer the ability to pull out 10% per year while CDs do not.
Safe Money
The next section of the Cash Flow Clock covers up to 10 years of our
income needs. There will be some overlap between Lazy and Safe Money
as they are almost identical. The only difference is that Safe Money should
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