Which Save Account Is Best?
Summary
- Save offers market-linked savings accounts.
- They are principal protected and tax-efficient.
- Which one is best?
Save — Banking with market returns
I put my cash in Save for its federally insured, tax efficient high yield. But which of their market-linked products is best? Here are the six current offerings:
Global Diversified Markets — Conservative
This is essentially a bond fund comprised of securities such as TLT, IEF, and TIP.
Save Moderate Portfolio Strategy
This is very similar to the previous one with slightly tweaked volatility parameters.
Save Global Multi-Strategy Portfolio
This one trades around sector-based ETFs suchg as XLE, XLF, etc.
Save Growth Portfolio
This trades around debt, equities, and commodities.
Save ESG Portfolio Strategy
This offering lacks long-term back-testing as their components are too new for them to offer data.
S&P 500 Risk-Controlled Portfolio
Unlike the other portfolios, this one has been live since May 13, 2009. This isn’t hypothetical; it is live performance:
Similarities
Each of these six offer federally insured principal protection up to $500k for a joint account and $250k for an individual account. So there is a 0% chance of a less than 0% return. Each is tax efficient, with gains taxed as long-term capital gains instead of income. Each have variable yields which average 2–3x alternatives. Each has a wild sign up bonus where you get to keep the return on an additional $5k of assets after a year.
Differences
So what differentiates them? Mostly: volatility. And with downside protection, the more vol the better. If they offered a fund that invests in lottery tickets, I’d put $500k in it. If they offered a fund that invests in roulette, I’d put another $500k in it. As long as my principal is insured, I want the most potential upside. Downside is someone else’s (the taxpayers’) problem. So I put 100% of it in the S&P (SPY) offering because I don’t want “conservative” or even “moderate” results dulled by cash or bond equivalents. I want unconservative, immoderate results. I want to drink a fifth of Jack Daniels, rip the steering wheel off of the shaft, and hit the gas. If it works, I keep the upside. If it fails, I pass off the loss.
Conclusion
I am usually downside focused when it comes to sizing risks. However, if downsides are offloaded, that changes everything. In such rare cases, it is logical to maximize implied volatility.
TL; DR
Everyone should put at least $1k in Save to get their sign up bonus; some may want to do more. For me, their SPY equivalent is the best choice.
