It is with great pleasure that we announce Tim Kriegel as the newest member of our Linder Financial Services team!  Tim has recently received his Registered Investment Advisor certification and will be soon getting to know you and our business. 

Some of you may know Tim.  He has been a long time LFS client and a former neighbor of Bernie and Toby in Hendersonville.  He recently retired from his position at Selee Corporation where he held a number of executive financial positions, including Chief Financial Officer.  He holds a B.S. in Business Administration from Clarion State University and is a Certified Public Accountant.  He currently resides in Hendersonville. 

We are so excited that Tim has agreed to join us.  He will have two immediate priorities as he comes aboard: 

• Tim will provide additional LFS financial advisory capacity in western NC and cement our long term commitment to that area which we all love so much.  We will now be able to take on new clients in western NC and provide additional operational support to those of you that reside there now.  But no worries, Bernie still thinks he’s in charge and is available for coffee and advice as always.  You will continue to interact with him, and with us from Atlanta, just as you do now.  But feel free to refer your friends and neighbors to us now – we can now absolutely support them and we are always truly grateful for your kind words to your friends and family.

• The new SECURE Act (see Bernie’s Blog) has reinforced the importance of smart generational wealth transfer so Tim will be leading our efforts to develop the “what” and “how “ to do this very important work with and for you.  This work is not just paperwork, although there is always plenty of that.  We are looking forward to building robust plans to get to know your heirs and build their trust in us, while we give you one less thing to worry about! 

We are looking forward to introducing you to Tim over the next several months.  Those of you in western NC will get to meet him in person sooner, but expect that all of you will hear from him over time.  Please join us in welcoming Tim to Linder Financial Services. 

Tim’s contact info:

Phone: 828-606-9078

Email: Tim.Kriegel@linderfinancial.com

Bernie, Marci, and Lori

This blog will focus on the major 2020 changes to distributions from retirement accounts.  The last blog entry focused on the 2020 changes to contributions to retirement accounts so feel free to look back to refresh your memory. 

You may have heard of the new SECURE Act which was signed into law on December 20, 2019.  We know you will feel more secure to know that “SECURE” is an acronym for “Setting Every Community Up for Retirement Enhancement Act”.   The government has been busy with other priorities since December 20, so many of your usual information sources, including us, have not been fully updated yet.  In truth, the government officials have not all yet agreed on some of the technicalities so just call us with questions and we will work through the implications individually with you as needed. 

Required Minimum Distributions (RMDs)

• Participants will now be able to delay taking RMDs from their traditional IRAs until they reach age 72 (up from age 70 ½).  This change only applies to those who turn 70 ½ in 2020 or later.  If this applies to you, we have talked with you about it.  If you are already taking RMDs, you must continue even if you are not yet 72.  This is a good thing for most of us! 

Inherited Retirement Accounts

• Beneficiary IRAs (non-spousal) must now be completely  distributed within 10 years (instead of over the lifetime of the beneficiary).  The rules for distribution to a spouse have not changed – the distributions are treated as if the IRA belonged to the spouse all along.  Note that this means that all the income taxes must now be paid within 10 years.  This is a massive, and largely unfavorable, change for most of us. 

• Roth (non-spousal) Beneficiary IRAs must now also be distributed within 10 years, but there is of course no income tax due. 

• This change might make a Roth IRA conversion more attractive as an estate planning strategy.  We will discuss with you if applicable. 

Adoption/Birth Expenses

• Penalty-free withdrawals from traditional retirement plans are now allowed for birth or adoption expenses, up to certain limits.  Taxes must be paid on the withdrawals. 

Happy New Year everyone!  This blog will focus on 2020 changes in funding to retirement accounts and the next one will cover the 2020 changes to distributions from retirement accounts.  Spoiler alert:  the distribution changes are potentially complicated and we will plan to cover those with you individually as well. 

401K/403B/TSP et al:

• Contribution limit increased to $19,500 (up $500)

• Catch-up contribution limit (for those 50+) increased to $6,500 for a total of $26,000 (up from $25,000)

Roth/Traditional IRA:

• Contribution limit is $6,000 (no change from 2019)

• Catch-up contribution limit (for those 50+) is $1,000 for a total of $7,000 (no change from 2019)

• Income limit eligibility for Roth contribution:

  • Phase-out begins for individuals begins at $124,000 and stops at $139,000 (up $2,000 from 2019)

  • Phase-out begins for couples begins at $196,000 and stops at $206,000 (up $3,000 from 2019)

SEP IRA:

• Contribution limit is 25% of gross salary or $57,000, whichever is less (up $1,000 from 2019)

Let us know if you need help adjusting your contributions or if you have questions about your eligibility. 

Hello, it’s Bradley, Marci’s eldest, here with another of my obituary blog posts. You may have missed it in the news, (there were a few other pressing headlines in December) but on December 8th, 2019, former Chairman of the Federal Reserve, Paul Volcker, passed away at the age of 92. I thought that given the recent focus on the Federal Reserve and interest rates, it may be worth writing a few words about him.

Paul Volcker was born in 1927 in NJ, and so grew up during the Great Depression and World War II. In his senior thesis at Princeton, Paul criticized the failure of the Federal Reserve to restrain inflation following WWII (something that clearly influenced his later thinking). After several years working for the Federal Reserve Bank of New York and Chase Bank as an economist, he joined the Nixon administration as Under-Secretary for monetary affairs and was later appointed as president of the Federal Reserve Bank of NY, and finally to the Federal Reserve Chairmanship by President Carter in 1979.

When Paul Volcker took over the Federal Reserve, the United States was facing persistently high inflation, the increase in prices (or decrease in the value of the dollar) over time. These inflation levels were due in part to higher prices of oil due to the Arab oil embargo and Iranian Revolution.

High levels of inflation can be extremely detrimental to the economy, as they discourage saving (since the value of saved dollars decreases over time). In economics, inflation can be seen as too much money chasing too few goods, resulting in higher prices.

The usual antidote to inflation is a decreased money supply.  And contracting the money supply is exactly what Volcker’s Fed did. Volcker increased the Federal Funds rate (the rate that banks lend money to each other; it is generally the lowest interest rate in the economy) to 20%! By comparison, the “tightening” of interest rates in today’s Fed reached only 2.5%. These high interest rates decreased the ability of individuals and corporations to borrow money, resulting in a decrease in the money supply and corresponding decline in inflation. This strategy also contributed to a recession (and unemployment rates of 10%), but by 1983 inflation had fallen to the Fed’s target of 3%.

Following Volcker’s term as Fed Chair, inflation has never risen to the same heights as in the 1970’s. This is due (in part) to the fact that Volcker’s Fed had convinced markets that if inflation were to rise again, the Federal Reserve would raise interest rates to squash it, and as in so many things in finance, expectations became reality. This collapse of inflation led to the incredible rates of economic growth in the 90’s, and later in the 2010’s. Later in his life, Volcker became an outspoken critic of banking consolidation, including support for the “Volcker Rule” requiring the separation of commercial banks from proprietary trading (a subject beyond the scope of this already too long blog post). We will all remember Paul Volcker as the inflation warrior he was.

As many of you have noted, it is likely that Schwab will be acquiring TD Ameritrade, which is the current custodian for our client accounts.  If the deal goes through, the effective date will likely be sometime in the second half of 2020.

The obvious question is what this means for all of us.  And the obvious answer is that we do not know yet.  Our objective will be to make this potential transition as seamless as possible for all of you!  And of course, we would love to get more responsive, more error-free service from Schwab.  We will see about that part.

The good news is that we, and many of you, have been through this before.  The bad news is that we, and many of you, have been through this before.  

Feel free to call with questions or whining about this news.  We are doing same. 

Lori

We know a lot of you have high yield saving accounts and/or money markets at Synchrony. 

Synchrony had a very bad day on Monday and accidentally sent emails to many customers regarding trial deposit into their Synchrony accounts or Amazon Creditbuilder accounts.  This was absolutely an error and Synchrony has assured me that all accounts are safe. 

Here is what the emails looked like and Synchrony’s response, when I finally got through.  I have since received another email on another topic.  All the phone lines and website are out of service right now due to very high volume – which isn’t helping. 

As usual when there is a problem of any type, I recommend that you change your Synchrony password once you can get back into your account.

Back, by popular demand, is our December 2018 post on Roth IRA’s as holiday gifts for children or grandchildren.  Still a great idea!!! 

Many of you are familiar with Roth IRA’s, but for those of you that are not, here is a brief overview:    

Roth IRA’s were created by the Taxpayer Relief Act of 1997 to help Americans save for retirement.  These IRA’s have become enormously popular in the last 20 years but there are some important considerations:

• The dollar contribution limits are the same for Roth IRA’s and traditional IRA’s. Eligibility for a Roth IRA requires “earned income,” subject to an income cap which is not present for traditional IRA’s.

• Contributions are made with after-tax dollars, unlike those in traditional IRA’s or most company sponsored retirement plans

• Because the contributions are made with after-tax dollars, the contributions can be withdrawn at any time, without tax or penalty. This might be important for young investors like your children or grandchildren who might need the money they invested before retirement

• Unlike traditional retirement plans, the earnings can also be withdrawn tax-free, subject to owner age and account duration rules, and there is no requirement for distributions to begin at 70 ½ years of age

As I said above, there is a requirement for the Roth IRA account holder to have “earned income” in order to be able to contribute BUT the actual contribution can be funded by anyone (YOU in this case) as long as the dollar amount of the contribution does not exceed the owner’s earned income or annual maximum allowed.

Head spinning?  How about an example?  You have a 19 year old grandson who worked over the summer as a lifeguard at a community pool.  He earned $2000 and will receive a W-2 from the city.  I am guessing he probably can’t invest this $2000 in a Roth IRA because he is saving every penny for college, BUT you can fund it for him.  You have until April 2020 to make this 2019 Roth contribution.  We will help you understand eligibility requirements and then help you actually pull this off.

Want to read more about Roth IRA’s?  See attached link. https://www.investopedia.com/terms/r/rothira.asp

As part of our normal security training and review, we tested ourselves on our ability to spot phishing emails.  We will give you an option below to check your own capability too!  (The test is hard.  I have had phishing training at least three times and I still didn’t pass the first time) 

So just what is phishing? 

Phishing is the fraudulent practice of trying to obtain financial or other confidential information via the Internet by sending users a fake email which looks like it has been sent by a legitimate organization but which contains a link to a fake website which looks like the real one.  The confidential information entered by the user on the fake website is then used to steal money or confidential information.  Scammers phish because it’s easy to do, there are no geographic limitations and it works!  Phishing is also often done via a fake link sent by text message.

How do I know if an email is phishing? 

• There is a link inviting you to update or confirm information, usually urgently. Often the email will indicate that your account is “on hold”

• The greeting is generic

• There are typo’s or grammar mistakes

• The email looks legitimate and it’s from a company you do business with

• It offers some refund or prize you have not requested

What can I do to reduce the chances of being caught in a phishing net?

• Use security software on your computer and apply security patches when they are pushed to you

• Automatically update your phone with security upgrades

• Use multi-factor authentication where it is available

• Back up electronic data – to external drive

• Do not click on links in emails unless you are sure they are legitimate. Use other means to contact the company.

What should I do if I am caught in a phishing net?

• If you think you have revealed confidential info, contact IdentityTheft.gov

• Run a security scan on your computer and update your security software if needed

• Change relevant passwords using legitimate website, not email link

• Report the scam to the real website owner

• Help others avoid the scammers:

  • If you got a phishing email or text message, report it. The information you give can help fight the scammers.

    • Step 1. If you got a phishing email, forward it to the FTC at spam@uce.gov and to the Anti-Phishing Working Group at reportphishing@apwg.org. If you got a phishing text message, forward it to SPAM (7726).

    • Step 2. Report the phishing attack to the FTC at ftc.gov/complaint.

Learn more here:  https://www.consumer.ftc.gov/articles/how-recognize-and-avoid-phishing-scams

Take the test yourself:  https://www.phishingbox.com/phishing-test

Lori

Vanguard has recently provided a few interesting pieces which reinforce the importance of “staying the course” when the market is volatile.  This isn’t ancient history, unfortunately. 

As always, we are here to talk if/when you are nervous.

Compliments of Vanguard…..https://advisors.vanguard.com/iwe/pdf/FAMKTVOL.pdf

You may have seen the news that TD Ameritrade is eliminating base commissions for online exchange-listed stock, ETF (domestic and Canadian), and options trades, moving from $6.95 to $0.00.  This change goes into effect on October 3, 2019.  That’s when you should start to see lower commissions on qualifying trades in your accounts.  Note that mutual fund trades are not included in this change. 

Please see the company press release for additional details on this announcement:

The Best Just Got Better: TD Ameritrade Introduces $0 Commissions for Online Stock, ETF and Options Trades

https://amtd.com/news-and-stories/press-releases/press-release-details/2019/The-Best-Just-Got-Better-TD-Ameritrade-Introduces-0-Commissions-for-Online-Stock-ETF-and-Option-Trades/

A single word defines the stock market right now…and that same word defines the stock market all the time.

“The macro environment continues to be defined by uncertainty,” Goldman Sachs’ top stock market strategist David Kostin said in his latest note to clients (emphasis added).

And he’s right. In recent days, we’ve seen oil prices spike after a drone attack, funds rapidly rotate out of one sector and into another, the Fed cut rates, something called the repo market go haywire... yeah, that sure feels like “uncertainty.”

But isn’t it always the case that the markets are defined by uncertainty? After all, uncertainty characterizes the risk investors take when they go long stocks. It’s that uncertainty that commands a premium, which is why the rewards of investing in stocks tend to be higher than risk-free assets.

I’m reminded of a comment made three years ago by Bank of America Merrill Lynch economist Ethan Harris: “It’s always something.” Back then, Harris pointed to turmoil in Europe, the threat of Britain exiting from the euro area, and anti-trade rhetoric picking up in D.C. Not only is there always something to be worried about, but ironically the stuff that was making investors nervous back then are very similar to what’s making investors nervous today. Though the S&P 500 was trading at about 2,000 back then and it’s at about 3,000 today.

I think my favorite musing on the permanence of uncertainty came during the darkest days of the financial crisis. It was Warren Buffett for the New York Times op-ed section.

“Over the long term, the stock market news will be good,” Buffett said. “In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a flu epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497.”

Buffett’s reflection is worth remembering. Because not only is there the risk of bad things happening, but worse, bad things actually happen. And yet time and time again, the markets sort it all out.

By Sam Ro, Yahoo Finance managing editor.

This question is one of the most common ones we hear from both clients and prospective clients.  And as most of you know, the answer is “it depends.”

There was a recent article written by Craig L Israelsen and published by Financial Planning which attempts to apply data and science to this question and the answer – all of which we love.  If you love the data and science too, a link to the article is included.  For the rest of you, just read on….

As many of you know, the standard wisdom has said that, based on historical market returns, the average retiree can withdraw 4% per year from a retirement account and not risk running out of money in the account in the average 25 years of remaining life.   

The study described in this article took a much deeper dive:

• considered 34 25-year time periods between 1961 – 2018 with a starting portfolio value of $1MM

• used a standard portfolio mix of 40% large cap U.S. equities/20% small cap U.S. equities/30% bonds/10% cash

• assumed no required distributions (i.e. Roth IRA)

• looked at 15 different withdrawal rates from 1% to 15%, withdrawn at end of year

And the results:

• in no scenario studied, was the portfolio at 0$ (or less) at the end of 25 years, even with a 15% withdrawal rate. Obviously, that doesn’t mean it can’t happen – it just didn’t in the years studied.

• Not surprisingly, the sequence of “good” years vs “less good” years matters. Portfolios which have the good years at the beginning of the 25 years did markedly better than those which had the good years nearer to the end of the 25 years.

• At the standard 4% per year withdrawal rate, the average ending portfolio balance was just over $4 million with a range of $1.8 million to $9.4 million!

• The optimum annual withdrawal rate for the scenarios studied was 8%. At this withdrawal rate, the average ending portfolio value was a very healthy $1.5 million and the highest annual withdrawal.

This is a good read!  Our answer after reading…  “it depends”. 

Lori

https://www.financial-planning.com/news/the-ideal-annual-withdrawal-rate

As Marci and I celebrate birthdays (well really it’s just one birthday) this week, we thought we would share the following information to help you plan for your upcoming “milestone” birthdays, compliments of Brighthouse Financial and Investment News.

And no, this is not a milestone birthday for us but we can still help you with each of yours and we will remind you of your options as you approach these BD’s!  Remember that all of these milestones are subject to change.

Legislative milestones:

Age 50:                You may be able to increase your retirement plan contributions to IRA’s, 401K’s and 403B’s 

Age 59 ½:            You may be able to take distributions from your eligible plans without a penalty.  Depending on the type of account, you still have to pay taxes though. 

Age 60:                Widows and widowers may be able to collect Social Security benefits 

Age 62:                You are likely eligible for social security benefits

Age 65:                You may be eligible for Medicare health coverage 

Age 70 ½:            Depending on the type of retirement account you have, spend down is required (RMD’s) and taxes must be paid.

ALPHARETTA August 1, 2019 -- Linder Financial Services has been selected for the 2019 Best of Alpharetta Award in the Financial Advisor category by the Alpharetta Award Program.

Each year, the Alpharetta Award Program identifies companies that we believe have achieved exceptional marketing success in their local community and business category. These are local companies that enhance the positive image of small business through service to their customers and our community. These exceptional companies help make the Alpharetta area a great place to live, work and play.

Various sources of information were gathered and analyzed to choose the winners in each category. The 2019 Alpharetta Award Program focuses on quality, not quantity. Winners are determined based on the information gathered both internally by the Alpharetta Award Program and data provided by third parties.

About Alpharetta Award Program

The Alpharetta Award Program is an annual awards program honoring the achievements and accomplishments of local businesses throughout the Alpharetta area. Recognition is given to those companies that have shown the ability to use their best practices and implemented programs to generate competitive advantages and long-term value.

The Alpharetta Award Program was established to recognize the best of local businesses in our community. Our organization works exclusively with local business owners, trade groups, professional associations and other business advertising and marketing groups. Our mission is to recognize the small business community's contributions to the U.S. economy.

SOURCE: Alpharetta Award Program

CONTACT:
Alpharetta Award Program
Email: PublicRelations@localrecognitions.org
URL: http://www.localrecognitions.org

Hello, it’s Bradley, Marci’s older son again (with a little light editing from my aunt and mom). All the differing definitions of “jobs in this country” among the Presidential candidates interest me, so I looked at the statistics, what they mean and why we care. 

At regular intervals, the US Department of Labor releases data about the nation’s labor market. This evidence is used along with other information to measure the strength of the economy. Below, I’ll define the terms that you’ll probably read in the newspaper and then I will do the hard part – try to explain why any of this actually matters to individual investors like us. 

Labor Force: The labor force is defined as all people working or looking for work. The Labor Force Participation Rate is then simply the percentage of people in the United States who are in the labor force (excludes children, retirees, and so-called “discouraged workers” who have given up looking for work). A high labor force participation rate is generally linked to a strong jobs environment, because discouraged workers will re-enter the labor force if they believe they will be able to get a job. Sometimes, if the labor force participation rate increases due to discouraged workers re-entering the labor force, the unemployment rate will increase a bit due to more people counted as unemployed until they actually find jobs.

Unemployment Rate: This is probably the most commonly quoted statistic by both media and politicians. The unemployment rate is the percentage of people in the labor force (defined above) who do not have a job. The reason why the unemployment rate is important is because when most people have jobs, they will buy things, and this requires the production of more things, which creates more jobs, and so on in a virtuous cycle. Economists often talk about something called the “Natural” rate of unemployment, also called “Full” employment, which is the rate at which essentially everyone who wants a job has one. Most economists believe that the natural rate of unemployment is around 4-5% (meaning that the current unemployment rate of 3.7% is full employment).

Non-farm Payrolls/New Jobs:  One of the most anticipated monthly reports is the new jobs report. Obviously, the more jobs created, the better. In a growing economy, jobs are created every month.  In order for the unemployment rate to decrease, the economy generally needs to create at least 150,000 jobs per month. It’s also worth noting that the initial estimates from the Bureau of Labor Statistics are often way off month to month and can change by hundreds of thousands of jobs in “revised” estimates.

New Jobless Claims: The Department of Labor releases weekly reports of how many new workers have filed for unemployment benefits in the past week (the rest of the reports are released monthly). This is a reasonably good leading indicator of the behavior of the labor market.

As you can see, there are always enough different (and conflicting) statistics for pundits (and politicians) to tell whatever story they want about the economy.   As investors, these statistics are important because they are among the major factors that the Federal Reserve takes into account when determining short-term interest rates.  These short-term interest rates obviously impact bond pricing, but they also have a very significant impact on the equity market due to the corporate cost of borrowing for business operations or expansion.

As we’ve seen over the last six months or so, the different and conflicting statistics, (along with Presidential tweets) are making the Fed Reserve job more challenging as well but that’s a Blog post for a different day.    

We want to share some good news from Vanguard for all of you who own Vanguard Index funds in your Ameritrade accounts.  

As of the end of July, Vanguard is eliminating the Investor share class of all index mutual funds. That is the share class that most of you own currently.  That share class will be replaced with the Admiral share class, Vanguard’s lowest expense share class available outside of employer-sponsored plans.  As an example, Vanguard Index 500 (their largest index fund) carries an expense ratio of .14% for the Investor share class and .04% for the Admiral share class.  Obviously, that’s not a huge dollar difference since Vanguard Index funds are already very inexpensive, but in percentage terms, it’s a huge discount!  

If you own a Vanguard Index fund at Ameritrade, some time the week of July 22, you will see a new mutual fund in your account.  Then the week of July 29th, your current index fund balance will be transferred to the new mutual fund.  This is a tax-free conversion and any Ameritrade commissions will be paid for by Vanguard.  

For those of you who have automatic purchases or redemptions of Vanguard Index funds, we will ensure that they are reset to the new funds and that your transactions continue with no interruption. 

Competition in the index fund market is very intense and expense ratios are dropping in response.  Some good news for us as investors!  

As always, if you have any questions, don’t hesitate to call or email us.

A client sent us this cartoon so we thought we would share with you. We LOVE investment advising humor so feel free to send us what you see too!

I well recognize that the title of this blog is a bit of an oxymoron (how do we limit something which is required???) but Investopedia recently published an article on this very topic.  Not necessarily new ideas here but an interesting different perspective on this question, which we all ask nearly every day. 

Four strategies are discussed by Investopedia if the money from the IRA is not needed for expenses right when the investor turns 70 ½:

• Delaying retirement

• Converting to a Roth IRA

• Managing the timing of the initial distribution

• Donating to a charity from your IRA

Delaying retirement past 70 ½ is a possible way to delay paying income taxes on your retirement account.  This rule, which only applies to a 401K at your current employer, allows you to delay taking your RMD and PAYING THE TAXES on it until you actually retire.  Note that this does not postpone required distributions from other retirement accounts; it only applies to a 401-K at your current employer. This is an interesting idea but I’m not really buying this one.  

Converting to a ROTH IRA is a great option since it eliminates taxable required distributions forever, not only for you, but also for your heirs.  The downside is that you have to pay tax on the conversion amount in the year of conversion.  That obviously can be very expensive in that year.  It is a possible option for investors who have the cash to pay the tax outside of the IRA and who do not need the required distributions for current expenses.  Think of a ROTH IRA conversion, not only as a strategy to reduce your current required minimum distributions, but also as an estate planning tool since you are leaving a tax free asset to your heirs.    I’m sure we all know one person this caveat applies to.  I suggest we all get to know more!

Managing the timing of the initial distribution is another way to postpone the initial distribution.   The first distribution is required by April 1 of the year following the year the retiree turns 70 ½.  After that, distributions are required to be taken annually by December 31.  This timing means that a retiree could have to take two distributions in the first year, which could push the retiree into a higher tax bracket.  In almost all cases, we recommend going ahead and taking the initial distribution in the year you turn 70 ½.    

We have talked in earlier blogs about donating to a charity from your IRA.  As a reminder, you can donate your RMD up to $100,000 to an IRS qualified charity and not pay taxes on that amount.  This option is only available in IRA’s, not 401K’s or other employer-sponsored retirement plans,  so if you want to do this when you are 70 ½, you will need to roll over your 401K – which we can help you with. 

As always, we can discuss any of these options in more detail with you!

 -Lori

There was a recent article in Money Magazine which claimed that 2/3 of Americans have dollars in savings accounts which pay less than 2% APY.  The article went on to say that 20% of the population earn less than 1% and 25% earn nothing at all on their savings accounts. 

While all of you proved your financial literacy a few blog posts ago, we know that you may have family members or friends who might benefit from a reminder about online high yield savings accounts.  These accounts are great for that very important cash reserve that we always talk about.  Account owners can get quick access to cash while generating some income.  Remember that savings accounts of any type are not LFS managed assets, but we are happy to help you (or the friend you are asking for) get an account opened. 

Online high yield savings accounts currently pay about 2.5% APY.  These online banks can pay higher interest because they have lower expenses.  Generally they have no branches or checking privileges and will often limit the number of transactions per month.  That means that account holders will need to electronically link their online savings account to their checking or credit union account.  Luckily this is easy to do. 

There are many online savings accounts available, as a quick online search will reveal.  They have slightly different features, so read the fine print.  We like Synchrony (link attached) because it is FDIC insured up to $250,000 with no monthly fees and no minimum balance.  Withdrawals can be made online 24/7, by phone or via ATM.   Synchrony High Yield Savings accounts are currently paying 2.3% APY. 

Lori

https://www.synchronybank.com/banking-resources/faq/?UISCode=0000000