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You still have your money at a bank? Are you sure? I thought Interest rates are up!?!?


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Here’s a short story…

I was talking with a venture capitalist who is creating a new fund for computer software companies (think AI as well).

She explained how she has been receiving funds from investors who want to participate in her fund. But she’s not ready to invest quite yet. She still needs to perform due diligence for her target companies.

“So, where are you holding the funds until you deploy it?” I asked (yup, I’m always working!)

Here’s where it gets interesting…

“Well, we’ve had to break the money into different banks because of the recent bank failures. We feel comfortable with our bankers and the stability of their banks, but…you can’t be too sure.”


Now for the mic drop.

“I thought interest rates were higher?”

Here is where I step in to talk cash management… We at Alpha Pointe Capital might consider this a problem with most institutions that end up with piles of cash.

Going back to my VC friend and her problem of what to do if you’re holding cash.

The important basics regarding cash… it needs to be protected and it needs to be liquid. There are some securities we can name that fit this description. But the securities that fit this description are limited, especially when seeking the preservation of your cash.

But we must go back to one of her original, major concerns, bank failures.

Simply put, most of Silicon Valley, NYC, Austin, and the other VC hotbeds had a major cash problem when banks started to fail in the spring of ’23. Some VC firms realized they did not have immediate access to their cash. There was confusion about where to move the money as there were multiple bank failures.

Possible answer? Diversify.

We preach about how you need to diversify your portfolios, the same should apply to your institution’s portfolio. Even your cash portfolio.

There are a couple of things to consider with Cash Management services.

You see, it’s not super complicated but US T-bills and Federally Insured certificates of deposits do have unique qualities. These qualities include maturity dates, fixed/variable rates, credit risks, and price fluctuation to name a few.

Going back to our VC friend and her issue of spreading out her money amongst different banks. Your bank deposits and CDs are only insured up to $250k per depositor, per bank. So, if you are seeking FDIC insurance for your CDs with $5m or $10m to deploy, you’ll need to find several banks. Or create different ownership categories which may not make money movement easy.

Good news… many brokerages have access to hundreds of banks CD offerings (hint… Alpha Pointe Capital has access to 😉

What complicates Cash Management services is your CDs are only insured up to $250k per depositor, per bank. So, if you are seeking FDIC insurance for your CDs with $5m or $10m to deploy, you’ll need to find several banks. Or create different ownership categories which may not make money movement easy.

But our VC friend pointed out another problem. Interest rates.

Now is the perfect environment to shop rates. With interests skyrocketing over the past several months we are now seeing T-Bill rates appear attractive. And some banks are even raising their CD rates to compete with T-Bills, so it’s worth shopping around.

Having access to CDs from issuers across the country, sprinkle in some T-Bills and you’ve got a good start.

However, you still may want to engage an advisor. A financial advisor can help put a portfolio together to help optimize your liquidity, safety, and optimize yields.

How about that? Hopefully, you‘re still awake and now a bit more knowledgeable about your cash options!


James S. Gibbons CPFA
Alpha Pointe Capital-Founder/Wealth Manager

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