Announcement
High-Yield Cash Reserve: What you wish your savings account could be
Announcement
May 04, 2023
Intelligent Investing: Part 2
⚡ Update Oct 15, 2023: High-Yield Cash Reserve has temporarily reallocated its underlying assets to better manage risks associated with the ongoing US debt ceiling negotiations. As a result, the new yield to maturity rate is 4.6% APY 6. ⚡
Why put your cash in the bank when you can trust US Treasuries? Many people use a savings account to store their cash, earning next-to-nothing in interest. The ultra-wealthy often put their cash into US Treasuries instead. To make it easier for more people to access this “financial superpower,” we’re introducing Arta’s High-Yield Cash Reserve.
Key Takeaways
Earn 4.6% APY1 with Arta’s High-Yield Cash Reserve
High-Yield Cash Reserve is a great alternative to savings accounts, earning your spare cash one of the highest yields at low risk.
The returns on High-Yield Cash Reserve do not incur US State income tax, unlike interest earned from most savings accounts. This could get you a tax-equivalent return as high as 5.66%5.
US Treasuries are a “financial superpower” that the ultra-wealthy often use to protect their spare cash against rising inflation. Arta makes it easier for more people to start investing in US Treasury bills.
Low risk. Possibly the lowest. The underlying assets of this AMP are exchange-traded funds (ETFs) of treasury bonds and notes fully backed by the US Government. Plus, Securities Investor Protection Corporation (SIPC) protects the assets of this AMP up to $500,000.
Managed using AI, this AMP aims to optimize for the highest yield and vigilantly respond to changes in interest rates and other factors.
Get started with the High-Yield Cash Reserve by becoming an Arta member today at artafinance.com/join.
Earn 4.42% APY1 with a High-Yield Cash Reserve
Today’s volatile markets with rising interest rates and worrisome inflation have investors scrambling for safer investments that have reliable returns. When it comes to earning higher interest rates on savings or spare cash, most people are familiar with savings accounts, certificates of deposit, or money market accounts. But now, there is another option that can offer potentially higher yields at low risk. Arta has created AI-Managed Portfolio (AMPs) that optimize for high yields for a short-term investment on your savings.
This edition of Arta Insider takes a closer look at the High-Yield Cash Reserve, a direct alternative to savings accounts that can earn a return of 4.42% annually1.
Who is High-Yield Cash Reserve for?
The High-Yield Cash Reserve is for investors who want liquidity while still earning a high interest rate. High-Yield Cash Reserve is a great way to boost your short-term savings for an emergency fund or upcoming milestones like a vacation or home down payment.
What does the High-Yield Cash Reserve invest in?
The High-Yield Cash Reserve generates a high yield through investments that have one of the lowest risk profiles2: US Treasury securities. These include Treasury bills (T-bills), Treasury notes (T-notes), Treasury bonds (T-bonds), and Treasury Inflation-Protected Securities (TIPS).
5 reasons to use High-Yield Cash Reserve over a high-yield savings account
#1 A higher yield for your savings
As of November 2024, you can generate 4.42% APY1, which is higher than cash management accounts and considerably higher than traditional savings accounts3.
Your take-home income can be further boosted depending on your state tax residency (see reason #3 for more details).
Category | Example | Annual Percent Yield (APY) |
|---|---|---|
AI-Managed Portfolio | High-Yield Cash Reserve | 4.42%1 Tax-equivalent yield is potentially higher. |
Cash Management Account | Wealthfront’s Cash Management Account | 4.5%4 |
High-Yield Savings Account | Apple’s High-Yield Savings Account | 4.1%4 |
Traditional Savings Account | Bank of America’s Advantage Savings Account | 0.01%4 |
#2 Low risk. Possibly the lowest.
US Treasuries are commonly regarded as some of the safest investment options available2, as they are fully backed by the US government. The US government is widely considered by sophisticated investors as less likely to default compared to a bank.
Your assets in High-Yield Cash Reserve are protected by the Securities Investor Protection Corporation (SIPC) up to $500,000 in value, compared to the Federal Deposit Insurance Corporation (FDIC) insurance of up to $250,000 for cash in a savings account.
Your assets in High-Yield Cash Reserve are protected by the SIPC up to $500K in value, compared to FDIC insurance of up to $250K for cash in a savings account.
#3 No state or local income taxes
High-Yield Cash Reserve invests in US Treasury ETFs, and income from US Treasuries is not subject to US state and local income taxes, unlike interest earned from a savings account. Federal income taxes still apply. You’d need a savings account that gives you 6.63% to match what you’ll get after-tax from this AMP, depending on where you live and your income tax bracket5.
You’d need a savings account that gives you 5.9% to match what you’ll get after-tax from this AMP, depending on where you live and your income tax bracket.
#4 Your assets, held in your name
When you invest in the High-Yield Cash Reserve, you hold the ETFs in your name at Arta’s broker-dealer custodian bank BNY | Pershing, unlike a commingled money-market fund.
#5 No strings attached
Unlike some savings accounts, there are no sneaky requirements such as recurring deposits or compulsory investment periods, and your investment can usually be liquidated quickly in a few days.
Use artificial intelligence (AI) and machine learning (ML) to optimize yields
While you can buy US Treasuries directly from the U.S. Department of the Treasury or brokers like Fidelity, TD Ameritrade, and Schwab, with Arta’s AMPs you get a distinct advantage. Arta will use AI and ML to automatically reallocate and rebalance between different types of treasuries in response to changes in the interest rate or market fluctuations in US Treasury prices. This saves you from having to make adjustments yourself in search of the best yield. You also don’t need to hire the battalions of bankers and treasury experts normally used by the ultra-wealthy. AMPs are continuously monitored and regularly reviewed by our Investment Committee to ensure that they are performing as designed. Read more about how AMPs use AI.
Get started with High-Yield Cash Reserve
The High-Yield Cash Reserve is a valuable alternative to traditional and high-yield savings accounts with notable benefits. We’re thrilled to offer you this new way to invest and can’t wait to help you get started. Become an Arta member today at artafinance.com/join.
We believe the information presented to be accurate as of the date published and such information may not be updated in the future.
Footnotes
As of time of publication in November 4, 2024. The yield presented here is estimated based on the weighted average of the Yield to Maturity of the underlying assets. Yield to Maturity is a forward looking projection, and is subject to change based on market conditions such as interest rate changes. The realized yield may be higher or lower. The 30-day trailing Securities and Exchange Commission (SEC) yield for the AMP as of October 11, 2024 is 4.65%, estimated based on the weighted average of the most recent 30-day SEC yields for the underlying assets. Arta is waiving fees through 2023. Past performance doesn’t guarantee future results. All investments carry risk, including loss of principal.
↩Compared to most stocks, ETFs of stocks, and corporate bonds for example
↩National savings accounts average 0.39% APY (FDIC, April 18, 2023)
↩As of time of publication in October 11 2024.
↩High-Yield Cash Reserve invests in ETFs that hold US treasuries. Income from US Treasuries is exempt from State and Local taxes. Depending on your state and local tax situation, this AMP's tax-equivalent yield could be higher than the Yield To Maturity of 5.9%. For example, a California tax resident, filing jointly and in the highest tax bracket, would need a savings account that gives an equivalent yield as high as 5.9% to match what they’d get after-tax from the Harvest Treasuries AMP. This example is for illustrative purposes only, and is not tax advice. Seek the advice of a tax professional before making any investment.
↩As of October 11, 2024.
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