Fidelity FCASH Alert, 5% Yields, and Trump’s Economy

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If you’re a Fidelity customer and have a money market as your default sweep or your cash, then pay attention. Soon, the new default will be a much lower yielding FCASH. This is not the end of the world. It just means you need to pay attention to your FCASH balance and consider moving it periodically to a higher-yielding money market. But it is a disservice for those who don’t pay attention as they could learn a hard lesson too late. Sometimes, passive investing is too passive. Even “Gone Fishin’” portfolios need to check the hook now and then.

I’ll point out that Fidelity is not a bank, whereas a company like Schwab has a bank division and lends out customer cash. I don’t like the practice of lending your money. Leave fractional banking for the banks.

5% Yields

In my conversations with you, we talk about some of the 5% and higher yields we’re seeing today. Many of you could live out the rest of your retirement life on that without worrying about the stock market. Nice.

But fixed-income investing requires patience and time. Interest rate cycles can take a while. Prices can go up, and prices can go down. The key is to understand the difference between prices and income. Prices are qualitative. Income is quantitative. Collect the cash and ride out the prices. And remember your margin of safety as a bondholder.

Trump Economy

The water is choppy right now.  A lot of moving parts. Make sure you’re evaluating your risk tolerance and investing to meet your needs, not anyone else’s. Risk tolerance is tricky. It’s like a food allergy. It’s often not discovered until after the fact. Don’t let that be you.

Action Line: I believe in you. I want you to have the retirement life you deserve. When you’re ready to talk, let’s talk. But only if you’re serious. Email me at ejsmith@yoursurvivalguy.com.