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ACM Journal - Investment Management
14 Jan

Flourish Cash Management – Q4 2018 Newsletter

Interestingly, cash was the best performing asset class in 2018, earning 1.8%. That’s a pretty meager return, but it was better than losing money in stocks or breaking even in bonds.

Don’t be fooled by that return; cash is not a good long-term investment. Even with the honor of being 2018’s brightest star, cash returns are not keeping up with inflation, which means you lose purchasing power every year.

That said, there are good reasons to hold cash. Liquidity for near-term purchases, an emergency fund, or simply having the security of knowing you always have plenty of money on hand are all valid reasons to hold cash.

With interest rates low, the returns on cash have hovered around zero for many years. This has been a frustrating environment for savers. But there is a new offering that our clients can take part in that addresses that situation.

“Flourish” is a cash-management offering that currently pays 2.3% on cash balances. It also offers FDIC protection on up to $1.5 million for individuals or $6 million for couples. It is fully liquid, so you may access your cash anytime. It pays the same rate, or better, than many CDs, but you don’t have the lock-up that CDs incur.

This is not an Armbruster Capital offering, rather it is for cash balances not held in our accounts. If you have significant cash in bank accounts, you could link them to Flourish and electronically move money back and forth any time. Armbruster Capital does not charge a fee for this, as we are not managing these assets. Flourish does charge a fee, but the net return to investors is 2.3%. This rate will rise and fall with the Fed Funds rate, but it is not a promotional rate that will diminish after six months. Rather, given the recent direction of the Fed, it is likely to rise in the future.

There is no minimum to invest in Flourish and there is no minimum holding period, but it is best used for somewhat larger balances that will be held for a while.

Cash invested in Flourish will be swept into bank accounts at partner banks that are all large, national institutions.

If you have an interest in Flourish, let us know and we can send you an e-mail invitation to participate.

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