For Savings, Discount Brokerage Accounts Much Better for Seniors than Banks

[hdanielblank]

I post this in G.D. rather than Investing because I hear about 50% of Villagers who think markets are too risky and have all their money in banks. In 2022, this is simply the wrong thing to do. These options are best for everybody and I'd consider that statement a fact, not an opinion as a compulsive educator.

To name two I use as a customer, (no other affiliation, not a FInancial Advisors, Fidelity Investments and Charles Schwab offer 100% free brokerage accounts giving access to exchange traded mutual funds called ETFs that trade just like stocks but bear a lot less risk than buying shares of individual dividend paying stocks - in fact, there are some I'd classify as next to zero risk, especially if you plan on living another five years or more and want steady income streams you do not want to worry about.
One of the safest in terms of tiny price fluctuations with some yield is ICSH yielding 0.4% and is extremely unlikely for principal to even temporarily go down more than 0.5% (it will recover). A better option for most is BSV from Vanguard, the industry leader in these types of products. Although the price can go down on paper as much as 2% (Extremely rare and it WILL come back, just don't sell then), the underlying holdings are 100% safe and it is currenlty yielding more than 2% (better than 3-year CDs and with no lockup period. Can be withdrawn any time during a business day. There are others you can check on your own just by dropping by either the Schwab of Fidelity offices (across the street from each other at Lake Sumter Landing_ and tell them you want securities as safe as bank deposits but with a decent yield. They'll review these names and a few others with you. You cannot lose 99.5% of your money - even on paper.

There are also options that have some market risk (cyclical principal risk of temporary "paper loss"). Up to 13% yield onRYLD, a small-stock index fund that sells call opttions for income. Good if you hold for at least 5 - 10 years -but certainly more risky.

My only advice is to open the door and learn more. I just hate to see my fellow Villagers exploited by banks when inflation is robbing our purchasing power. Just my opinion and than the vast majority of financial professionals who also knw banks do not want your savings and won't help them grow. For Schwab and Fidelity and other dis count brokers, that IS their business. They make small fractions of pennies on these accounts as their incentives - you make out much better to more than cover that. Big message: This is NOT "playing the market" - just a sounder way to save money and purchasing power.

Good luck to all.

[manaboutown]

This post belongs in a forum on banking and finances such as Investment Talk, not here.

[JohnN]

Good post, the banks offer nothing and are happy to keep your money.
As far as the forum, the moderators will move it anyway if they deem to do so.
thanks for sharing

[Bilyclub]

This post belongs in a forum on banking and finances such as Investment Talk, not here.

I think it's great to be posted here. Beats most of the other threads.

[rjm1cc]

I think the objective is to get opinions from individuals that do not normally invest. You won't do that in an investment form.
In general I would put a discount broker or mutual fund ahead of a brick and mortar bank. From experience the banks are a poor alternative to a broker.

[Blueblaze]

My Fidelity adviser sold me on a "guaranteed" 3% return on a managed portfolio of high-quality bonds, to avoid the market risk of owning bond mutual's. Literally the month after I agreed to it, the covid panic hit and I lost 30% of my investment IN LESS THAN A WEEK. Yes, it came back and I was able to get out in about six months for a mere $3000 loss. But it sure as hell wasn't what I signed up for, so I'm back in cash.

Despite the government's "7%" lie, any Walmart shopper can tell you that inflation is currently running more like 30% on anything you care about, and 100% on staples like gas, meat, and cornflakes. You can't fight the FED, and this time the FED has declared all-out war ON US. A 3% CD right now is about as helpful as a pea shooter in a tank battle.

The solution isn't a brokerage account, it's for government to get out of the counterfeiting business.

Maybe we'll get a say on that next November.

[PersonOfInterest]

I post this in G.D. rather than Investing because I hear about 50% of Villagers who think markets are too risky and have all their money in banks. In 2022, this is simply the wrong thing to do. These options are best for everybody and I'd consider that statement a fact, not an opinion as a compulsive educator.

To name two I use as a customer, (no other affiliation, not a FInancial Advisors, Fidelity Investments and Charles Schwab offer 100% free brokerage accounts giving access to exchange traded mutual funds called ETFs that trade just like stocks but bear a lot less risk than buying shares of individual dividend paying stocks - in fact, there are some I'd classify as next to zero risk, especially if you plan on living another five years or more and want steady income streams you do not want to worry about.
One of the safest in terms of tiny price fluctuations with some yield is ICSH yielding 0.4% and is extremely unlikely for principal to even temporarily go down more than 0.5% (it will recover). A better option for most is BSV from Vanguard, the industry leader in these types of products. Although the price can go down on paper as much as 2% (Extremely rare and it WILL come back, just don't sell then), the underlying holdings are 100% safe and it is currenlty yielding more than 2% (better than 3-year CDs and with no lockup period. Can be withdrawn any time during a business day. There are others you can check on your own just by dropping by either the Schwab of Fidelity offices (across the street from each other at Lake Sumter Landing_ and tell them you want securities as safe as bank deposits but with a decent yield. They'll review these names and a few others with you. You cannot lose 99.5% of your money - even on paper.

There are also options that have some market risk (cyclical principal risk of temporary "paper loss"). Up to 13% yield onRYLD, a small-stock index fund that sells call opttions for income. Good if you hold for at least 5 - 10 years -but certainly more risky.

My only advice is to open the door and learn more. I just hate to see my fellow Villagers exploited by banks when inflation is robbing our purchasing power. Just my opinion and than the vast majority of financial professionals who also knw banks do not want your savings and won't help them grow. For Schwab and Fidelity and other dis count brokers, that IS their business. They make small fractions of pennies on these accounts as their incentives - you make out much better to more than cover that. Big message: This is NOT "playing the market" - just a sounder way to save money and purchasing power.

Good luck to all.

Thanks for telling us what we should and shouldn't do with our Money.

[MidWestIA]

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had them for awhile or try Ally - they pair to your regular account and you transfer in and out as you want. Takes a couple days for money to move

[popbaby2]

This post belongs in a forum on banking and finances such as Investment Talk, not here.

Not necessarily. I peruse this forum daily, but not the Investment Talk. I found this interesting, as we were thinking of going to Fidelity as we have some cash to protect....... This confirms my inclination

[jimjamuser]

My Fidelity adviser sold me on a "guaranteed" 3% return on a managed portfolio of high-quality bonds, to avoid the market risk of owning bond mutual's. Literally the month after I agreed to it, the covid panic hit and I lost 30% of my investment IN LESS THAN A WEEK. Yes, it came back and I was able to get out in about six months for a mere $3000 loss. But it sure as hell wasn't what I signed up for, so I'm back in cash.

Despite the government's "7%" lie, any Walmart shopper can tell you that inflation is currently running more like 30% on anything you care about, and 100% on staples like gas, meat, and cornflakes. You can't fight the FED, and this time the FED has declared all-out war ON US. A 3% CD right now is about as helpful as a pea shooter in a tank battle.

The solution isn't a brokerage account, it's for government to get out of the counterfeiting business.

Maybe we'll get a say on that next November.
The problem in the 1st paragraph involves the word "advisor" and the "managed" part of managed portfolio. These so-called "advisors" are mainly interested in sales commissions and will put you into the financial instrument that gives THEM the greatest commission. Your needs are secondary. The thread starter mentioned ETFs, which are basically UNMANAGED funds set up to avoid individual stock risks and "managed" funds. ETFs are a large basket of stocks that work to decrease risk. They work well for older investors and risk-averse young investors.
.......As far as the "hate government" and the FED aspects......there is always going to be a government of some kind as long as there are modern humans alive. No or little government would mean anarchy, which would only be desired by less than 1% of the people - and even then it could not last for very long. The French Revolution eventually stopped and a government took over. November will not make us all financial geniuses.