Posted by If you have money sitting on the sidelines waiting for the stock market to improve, it pays to find the best low risk place to put your money. Even though bank deposits are starting to pay a bit more interest these days, they are always slow to increase rates. In one of my accounts, any money that isn’t invested goes into one of several banks automatically. I noticed that I was receiving more interest and thought that was great. But when I looked at the interest rates the banks were paying, it was still only 1.5%. So, I decided to check my brokerage account and found that any uninvested cash there was being put into a treasury fund which was now paying 2.5%.
Since the accounts are at the same investment firm, I was able to move money into the higher yielding cash account instantly. An extra one percent with no risk of losing money is worth doing. The money can easily be moved back into the original account if needed. The treasury fund will adjust quicker to interest rate changes. The change only amounts to an extra $200 per year. But it could be more if rates continue to increase. My retirement account was already using a money market fund to store uninvested cash. The plan at this stage is to generate as much interest from savings as possible without risking additional losses as we wait for market conditions to improve.
There are a few stocks and ETFs that I would buy, if they dropped below a certain level. Some of them are STLD, ROKU, and QCLN. I thought about buying SQQQ, to short the NASDAQ 100. I should have done that at the beginning of 2022. The only sectors that I would consider investing in right now are energy, semiconductors, and medical devices. I would avoid social media, retail, transportation, and real estate. Although all sectors have been hit hard, I think that US semiconductor companies will be the first to make a recovery in 2023. The semiconductor cycle has been trending down for some time. One of the signals for improvement will be an increase in new automobile sales. Cars are like rolling computers these days and they can’t be built without semiconductors. I’m sure it won’t be long before Apple or Microsoft introduces an electric vehicle.