Overview of Where to Keep Your Cash for the Highest Return
Chris Hutchins breaks down the best places to park cash that you need to keep liquid—whether it’s for taxes, an emergency fund, a down payment, or money waiting to be invested. The core message: the “best” option depends less on headline APY and more on tax treatment, liquidity, account friction, and bonuses. After comparing banks, brokerages, treasury funds, cash management accounts, and promo offers, he argues that the optimal choice varies widely by tax bracket and cash balance—and that some overlooked bonus-heavy brokerage setups can outperform simple high-yield savings accounts by a meaningful amount.
Main Takeaways
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Don’t compare cash options by pre-tax APY alone.
After-tax return matters far more, especially if you live in a high-tax state like California. -
Liquidity comes first.
Cash should be accessible quickly when you need it, so long-term market investing is not a substitute. -
State tax exemptions can be a big deal.
Treasury interest, T-bills, and treasury ETFs can avoid state tax, which is especially valuable in high-tax states. -
Bonus offers can materially change the math.
Brokerage and bank bonuses can add 0.5%–1%+ in effective return, sometimes more if you stack offers or move large balances. -
Friction matters.
A theoretically better rate may be worse in practice if it requires too many steps to open, move, or manage.
Options Covered, From Worst to Best
Low-return traditional bank accounts
- Big-bank checking and savings accounts at places like Chase, Wells Fargo, and Bank of America usually earn near-zero rates.
- These are easy, but usually a poor place for meaningful idle cash.
High-yield savings accounts
- Competitive online banks and fintechs commonly pay around 3%–4.3%.
- These are often the simplest “good enough” solution for people who want easy access and don’t want to manage brokerage investments.
- Examples discussed included accounts from online banks and fintechs such as Wealthfront, Mercury, Marcus, Ally, and others.
Treasury-based brokerage options
- Treasury ETFs and money market funds like SGOV, VBIL, and VUSXX can be attractive, especially for:
- high earners,
- residents of high-tax states,
- people with larger balances.
- Their key advantage is state tax efficiency.
- Downside: more friction than a savings account, since you may need to sell and wait for settlement before moving cash.
Cash management accounts
- Fidelity, Vanguard, and Schwab-style cash management accounts can blur the line between bank and brokerage.
- Some default core positions are no longer as tax-efficient as they once were.
- Chris notes that some manual treasury fund choices may be better for taxes, but they add friction.
Synthetic cash / box spreads / specialized funds
- He briefly covers more complex strategies like box spreads and certain ETFs.
- These can offer tax or structural advantages, but he does not view them as compelling enough to justify the complexity for most people.
Tax Considerations
Ordinary income vs. capital gains
- Many savings and treasury-yielding products are taxed as ordinary income.
- Some structured products may receive more favorable tax treatment, but they are more complex.
State tax exemptions
- Treasury income can avoid state income tax.
- In California, that can be especially meaningful because the state rate is very high.
- The episode emphasizes that a seemingly small rate difference can become large after taxes.
Muni funds
- In some states, municipal bond funds can be attractive because they may avoid both federal and state taxes.
- These were mentioned as another “don’t ignore the tax treatment” category.
Bonus and Promo Strategies
Why bonuses matter
- A bank or brokerage bonus can often be worth more than a slightly higher APY.
- Examples:
- fixed cash bonuses,
- tiered brokerage bonuses,
- temporary promo rates,
- referral-only offers.
What to watch out for
- Many bonuses are short-lived or require maintaining funds for a set period.
- Some bonus values look huge on small balances but barely matter on larger ones.
- Sequencing bonuses across institutions can improve returns, but it adds operational overhead.
Notable current standout: Silo
- Chris highlights Silo Markets as the most compelling option in his current analysis.
- It sits on top of Interactive Brokers, so he feels comfortable with the custody structure.
- It offers:
- points on brokerage balances,
- reimbursement-style credits,
- a referral-based welcome offer,
- potentially the best overall return in his comparison for large balances.
- He says it is especially attractive if you already have the kind of credit cards whose fees can be reimbursed.
Other bonuses mentioned
- Wells Fargo Premier: a strong public bonus, especially for larger balances held over a shorter period.
- E*TRADE and others: tiered offers that can be decent, but less compelling than top options depending on balance and timeline.
Chris Hutchins’ Practical Recommendation
If you want simplicity
- Use a solid high-yield account or cash management account that is easy to operate from.
- He still likes Mercury Personal and Wealthfront Cash as practical, user-friendly setups.
If you’re in a high-tax state or higher bracket
- Lean toward treasury ETFs / treasury funds in a brokerage account.
- The state-tax savings can outweigh the hassle.
If you have a large balance and don’t mind optimization
- Look hard at brokerage bonuses and high-value promo offers.
- He считает Silo and Wells Fargo Premier among the most interesting current options.
If you value ease over maximum yield
- Don’t over-optimize.
- Chris repeatedly notes that avoiding friction may be worth more than squeezing out a few extra basis points.
Bottom Line
The best place to keep cash is not universal. Chris’s framework is:
- Prioritize safety and liquidity
- Compare after-tax returns, not just APY
- Factor in bonuses and promo offers
- Choose the least complicated option you’ll actually use
For most people, a high-yield savings account or a user-friendly cash management account is fine. For high earners, high-tax-state residents, or large balances, treasury-based brokerage options and bonus-heavy brokerage accounts can be significantly better.