Money Markets & CDs: Stepping Out Of Cash

By Gary Walker, Newburyport.Com Correspondent
Gary Walker serves as New England Sales Director, Founding Partner and Wealth Manager for Seacoast Wealth Management of Steward Partners located in Portsmouth, New Hampshire. Gary brings 20 years of experience in creating financial planning strategies, asset allocation models as well as support with corporate retirement plans. Gary’s practice focuses primarily on high-net-worth individuals and families as well as business owners. Gary works with clients by first listening to clients’ financial situation, goals and aspirations. He then assists clients in designing a long-term investment plan based on the fundamentals of asset allocation, and provides guidance in choosing investments best suited for a client’s needs. Gary earned his BS in Accounting and Finance from Worcester State College. He also earned the designation of Chartered Retirement Plans Specialist (CRPS) from the College of Financial Planning. Gary, his wife Kim and two children, Grayson and Kolby, reside in Kensington, New Hampshire. In his free time, he enjoys golfing, fishing and volunteer coaching for youth sports.
Seacoast Wealth Management of Steward Partners
Money Markets and CDs, Seacoast Wealth Management, Portsmouth NH

With the 10th interest rate hike in 14 months, the Federal Funds Rate is currently 4.75%-5% and, unlike some investments, Money Market and Certificate of Deposits have benefitted tremendously.

For many years, money market funds and certificates of deposits were highly sought out investments. But, as we experienced a low interest rate environment during the market’s previous 10+ year bull run, they had decreased in popularity as they were subsequentially low-yielding investments and other investments were comparatively more attractive. Now that rates are on the rise and are projected to be elevated for longer, these investments have re-gained in popularity. Here’s why:

What are today’s rates (as of 5/5/2023)?

  • Money market mutual funds: 2-5%
  • 1-year CD: as high as 5%

What is the risk profile of these instruments?

Money market funds can be comprised of a mix of underlying investments that are generally high-quality, short-term debt securities.  Mutual Fund Money Market Funds are designed to maintain a net asset value (NAV) of $1.00/share and provide interest distributions to the shareholder as the primary source of an investor’s return. Unlike a CD, the yield or interest an investor receives is variable and will change with the yield of the underlying securities. While Mutual Fund Money Market funds are considered a “cash equivalent”, they are not insured by the FDIC.

Certificate of deposits are issued and held at banks, which means they can be insured by the FDIC up to $250,000 per bank. Unlike a money market fund, the yield or interest you receive is a fixed rate that is determined at the time of purchase. Established by the Banking Act of 1933, the FDIC insures your money in the event of bank failure.

How do I get my money back?

Money markets and certificate of deposits have different liquidity profiles. Money market funds are liquid daily, meaning you can pull your money out at any time and will take one day for the trade to settle. If an investor redeems before market close, their funds will be available the next trading day.

Certificates of deposits cannot be accessed until maturity date, so they are considered less liquid. The trade-off is that you will be locking in the interest rate at the time of purchase. Keep in mind, brokered CDs sold prior to maturity may be worth less or more than face value.

Where do these fit in my portfolio?

Money market funds and certificate of deposits have been a great “first step” on the risk ladder for clients sitting on high cash positions. As inflation continuously erodes the value of cash, these have been a great way to hedge elevated inflation and take advantage of interest rates we have not seen since May of 2006. For money market funds, we have been utilizing short-term cash in low-yielding interest rate accounts. This way, if a client needs their money, we can get it back to them next day.

Certificate of deposits have been great for investors sitting on cash with a longer time horizon given their liquidity profile. If a client wants to hold onto their money for over a year, a CD might make sense.

Now what?

We are advising clients to assess their idle cash positions to ensure they are taking advantage of the low-risk, cash management opportunities while rates remain elevated. In an inflationary environment this is ever more important. Please contact us to see what cash management strategies might make the most sense for you.


The views expressed herein are those of the author and do not necessarily reflect the views of Steward Partners or its affiliates.  All opinions are subject to change without notice.  Neither the information provided nor any opinion expressed constitutes a solicitation for the purchase or sale of any security.  Past performance is no guarantee of future results.

This material does not provide individually tailored investment advice.  It has been prepared without regard to the individual financial circumstances and objectives of persons who receive it.  The strategies and/or investments discussed in this material may not be appropriate for all investors.  Steward Partners recommends that investors independently evaluate particular investments and strategies, and encourages investors to seek the advice of a Wealth Manager.  The appropriateness of a particular investment or strategy will depend on an investor’s individual circumstances and objectives.

CDs are insured by the FDIC, an independent agency of the U.S. Government, up to a maximum of $250,000 (including principal and accrued interest) for all deposits held in the same insurable capacity (e.g. individual account, joint account, IRA etc.) per CD depository. Investors are responsible for monitoring the total amount held with each CD depository. All deposits at a single depository held in the same insurable capacity will be aggregated for the purposes of the applicable FDIC insurance limit, including deposits (such as bank accounts) maintained directly with the depository and CDs of the depository.

For more information visit the FDIC website at

An investment in a money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.  Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the fund.

Mutual funds are sold by prospectus.  Investors should carefully consider the investment objectives and risks as well as charges and expenses of mutual funds including the underlying portfolios before investing.  To obtain a prospectus, contact your Wealth Manager.  The prospectus contains this and other information about the investment.  Read the prospectus carefully before investing.

Securities and investment advisory services offered through Steward Partners Investment Solutions, LLC, registered broker/dealer, member FINRA/SIPC, and SEC registered investment adviser.   Investment Advisory Services may also be offered through Steward Partners Investment Advisory, LLC, an SEC registered investment adviser.   Steward Partners Investment Solutions, LLC, Steward Partners Investment Advisory, LLC, and Steward Partners Global Advisory, LLC are affiliates and separately operated.  <Team Name>Seacoast Wealth Management is a team at Steward Partners.

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