Cash or Stocks, Depending on the Season

The seasons are changing, and so are the markets.Some of you may be pleased to know that, after years of near-zero interest rates, you can finally get decent rates on your cash savings.I never notice the seasons changing. In my defense, Austin is not a place where the seasons change all that much.And with work, kids, and trying to carve out some time for myself every once in a while, my mind is always working on something and I don’t really notice the scenery around me.But during the long Thanksgiving weekend last month, I had a few days to really slow down. I read a book that wasn’t about finance or economics. I exchanged thoughts with my visiting father-in-law about Catherine the Great (a quirky, shared interest). And on a walk to the park with the girls, I looked up and realized that many trees in our neighborhood had changed colors.My sister in Illinois sent me pictures of her trees, as a point of comparison. Not a huge surprise that on Thanksgiving the trees up there looked different than the trees down here:In Austin, it can be hard to notice the seasons changing. It gets very cold for a few days, then the sun comes out and it warms up, then it rains and blows, then who knows. In northern Illinois, it’s usually pretty easy to tell when winter has arrived. It gets cold, and then it stays cold.It reminds me what it’s like for investors trying to figure out if and when the markets have taken a turn.Sometimes it’s easy to know when the markets have turned in a different direction, for better or for worse. Most of the time, it’s hard to know.This has been an interesting year for the markets. U.S. stocks have basically gone sideways. The housing market is slowing in much of the country. Yields on bonds have gone up by quite a bit. No one knows whether these changes signal the first signs of the next recession or just a pause before things start chugging up again.Investors have to deal with uncertainty all the time. Many investors are saving for a long-term goal like retirement, and last month I wrote an article about staying the course with long-term investments during a market correction. I still think that if you have a part of your portfolio that needs to grow over 10, 20 or 30+ years, it’s a good idea to stay in stocks for the long run.But this month, I have a tip for those of you whose goals are more short-term. Whether you’re saving up for an emergency fund, planning an upcoming home purchase, or making withdrawals in retirement, this is a great time to seek out better rates on cash savings.Short-term rates are finally getting interesting. For example, today TD Ameritrade (my custodian) has listed a 12-month FDIC insured CD at a 2.7% yield and a 24-month FDIC insured CD at a 3.05% yield. You can check your own bank or custodian to see if they are offering higher rates, too. Now’s a great time to do some comparison shopping.If there’s some portion of your portfolio that needs to hunker down and hibernate during these chilly, volatile months in the stock market, CDs might be a nice respite from the cold.