Introducing the Gg CMA
June 1, 2023
6
min. read
Want to simplify your financial life, maintain total liquidity, and earn 5% on your cash? A Gg Cash Management Account (CMA) might be perfect for you.
We’ve had a flood of questions surrounding how to best handle excess cash for savings, emergencies, and short-term capital needs.
While it’s important to plan for the future, we’re excited to provide you a solution focused exclusively on the short-term that makes your financial life simpler, your money safer, and help you earn more in the process.
Like we always say, if we can save you a penny or make you a penny we'll try. A Gg CMA is a great way to do both.
Interest rates have skyrocketed, yet banks are still paying virtually zero on deposits. We contacted our team’s own personal banking relationships (which include PNC, JP Morgan, Stockyards, L&N, and US Bank) to see what rates are currently being offered.
What we found was shocking.
While paying virtually zero on deposits (less than 0.5%), many banks also make it incredibly difficult, and in some cases impossible, to get access to higher interest rates on par with what we can provide for our clients through our custodian Raymond James.
This is an opportunity to help you better manage your cash safely while offering significantly better rates than what might be offered through your existing bank.
We searched for an answer to this question we have received continuously over the last few months. Our solution is the Gg Cash Management Account (CMA).
It’s simple, fully liquid, safer than bank deposits, and is currently paying nearly 5% APY (Annual Percentage Yield). As long as the purpose is a static savings account, there are no fees or cost of any kind to maintain a CMA with us.
It’s important to first understand what a Gg CMA account is and what it’s not.
It is… for excess cash savings for emergencies and near-term capital needs of less than one year. These can also be used for a very specific purpose of set aside funds where liquidity and preservation of principal are paramount for a short period of time.
It is not… a checking account for high volume banking activity or a long-term investment alternative. The current 5% rates are bountiful right now, but they will eventually decrease, and this is in no way an effective replacement vehicle for long-term investing. We're not chasing yield and this certainly is not a replacement for any of the bucket strategy holdings that we have in your existing portfolio.
It's a great option for short-term funds that beats what is offered by existing banks and helps you better align your cash with your financial life plan. For a refresh on our views of cash management within your financial life plan, we wrote about that last month’s blog: Cash Management 101.
For starters, we’re not replacing your existing bank. Your day-to-day banking, direct deposits, and bill paying will stay with your primary bank just as you have it.
We're simply offering you the ability to set up a savings account with Gg and seamlessly connect it to your existing bank.
To qualify, you must be a current Gg client and have $25,000 or more to be deposited into your Gg CMA. We’ll keep your money in a quality, readily available money market fund that can be sold any time before 3pm (ET) with no ticket charges and sent to you the very next business day.
There are no strings attached or restrictions to you, just a better alternative to the minimal yields being offered by standard banking accounts today.
Earn more. We have vetted all money market options available to us through Raymond James and have found a suitable, high-quality fund that is currently earning nearly 5% (as of 6/1/2023).
Liquidity & Flexibility. Many clients have inquired about CDs and the yields available with them. However, they require you to lock up your money for periods of time. With a Gg CMA you always maintain full access to your money.
Enhanced Safety. Our money market option is invested 100% in US Treasury Bills. Treasury bills are the safest short-term asset in the world as they are explicitly backed by the full faith and credit of the US government.
Rates are Temporary. These rates are not guaranteed and subject to change. Last year rates were less than 1%. Since then the Fed has gone through the most aggressive tightening cycle on record. However, the rates are at, or right near, their peak. Once the Fed goes back to cutting these, rates may quickly decline.
Fully Taxable. Like a CD or bank deposits, the interest earned on US Treasury Bills is fully taxable both at the federal and state level. Interest is taxed as ordinary income and will therefore be taxed at your highest rate, unlike that of qualified dividends which have a preferential long-term capital gains rate.
Short-Term Solution. We always connect your money to purpose. A Gg CMA is geared entirely for short-term needs. Meaning anything needed in the next 12 months or less. It does not and will not protect against inflation over the long run.
Cash is not (and never has been) a long-term investment and this is no different.
It is not and never will be a protector of purchasing power and is not meant to keep pace with inflation. Do not mistake this for a long-term store of value and certainly not a replacement for quality long-term investments or a mechanism to "sit out and time the market."
Our goal is to simultaneously help solve a problem many of our clients have had while aligning your short-term cash needs with your long-term financial life goals.
If you’re like most people earning virtually zero yield on your savings accounts, managing multiple accounts chasing the highest yield, or worse, needlessly locking up your funds in CDs; we have a simple, streamlined solution for your excess cash that is currently earning nearly 5%.
If you have additional questions or want to learn more, give us a call at 502-882-7300 or email our Advisory Team at advisoryteam@gleason-group.net and we can see if it makes sense for you.
Have a great weekend,
