Why I Don’t Use a Savings Account Anymore (Earn 4.3% Instead)

About this Video

• Video Title: Why I Don’t Use a Savings Account Anymore (Earn 4.3% Instead)
• Channel: ClearValue Tax
• Speakers: The speaker's name is not explicitly mentioned in the transcript.
• Duration: 10:22

Introduction

This video explains why the speaker no longer uses a savings account, advocating for investing in short-term US Treasury Bills (T-Bills) as a superior alternative for holding cash. The speaker details how to achieve this using an ETF, ESGV, and outlines the pros and cons of this strategy.

Key Takeaways

• High-Yield Alternative to Savings Accounts: The speaker suggests using short-term US Treasury Bills (T-Bills) or the ETF (ESGV) as a higher-yield alternative to traditional savings accounts. The current yield is noted as above 4%.
• ESGV ETF Explained: ESGV is an ETF that invests in short-term T-Bills, offering a convenient way to earn interest without directly dealing with T-Bill purchases. The ETF pays dividends monthly.
• Pros of Using ESG (ESGV): Low risk due to US government backing, solid yield (around 4.8% at the time of recording), liquidity (easily sellable), monthly income (dividends), protection from interest rate risk (due to short-term nature of holdings), and tax advantages (exempt from state and local taxes).
• Cons of Using ESG (ESGV): No FDIC insurance, yield sensitivity to interest rate changes, requires a brokerage account, not suitable for long-term growth, and a 0.09% annual fee.