My Safe Place

Bill Parrott |

In the early 1960s, my grandparents bought a beach house in Laguna – a turquoise beacon perched high above Main Beach with never-ending views. It was a safe place for me, far from the world's troubles. After a hard day of boogie-boarding, body surfing, snorkeling, and Smashball, I would retreat to the balcony armed with a bag full of food from Taco Bell to watch another beautiful California sunset and ponder the day. All my fears and concerns would melt away as the sun set behind Catalina Island.

Investors need a safe place, too. I love equities, but they are volatile and unpredictable despite their long-term performance. A safe investment can protect against market crashes or uncertainty. What is a safe investment? Let's look at a few haven trades.

  • Savings Accounts. A savings account is efficient because it's typically paired with a checking account, and it's easy to transfer money between the two, but the interest rates are low. However, it's a tough account to beat if you must transfer money regularly between checking and savings.
  • Certificates of Deposit (CDS). CDs are popular because large money center banks like JP Morgan, Wells Fargo, and Citi primarily offer them to their customers. A CD is a logical investment if you have money in a bank savings account because the interest rates are higher.
  • US Treasuries. The US Treasury Bill, Note, or Bond is my safe investment recommendation. A Treasury offers attractive rates with tax benefits if you live in a state with state taxes like California or New York. Treasuries are more liquid than CDs, and it's possible to profit from them when interest rates fall.

If you need money in one year or less or are concerned about the stock market's volatility, park your money in a safe place like a savings account, CD, or US Treasury.

In times of crisis, different people react in different ways. Some might try to escape. Others might attempt to batten down the hatches and ride out the storm in a safe haven. ~ Cullen Bunn

January 11, 2024

Bill Parrott, CFP®, is the President and CEO of Parrott Wealth Management in Austin, Texas. Parrott Wealth Management is a fee-only, fiduciary, registered investment advisor firm. Our goal is to remove complexity, confusion, and worry from the investment and financial planning process so our clients can pursue a life of purpose. Our firm does not have an asset or fee minimum, and we work with anybody who needs financial help regardless of age, income, or asset level.