On a monthly basis, my car insurance bill increased by 12%, my Internet 25% and my rent 10%. My college friend had the same experience. My coworker told me his house insurance premium grew by a whopping 70%. Another friend did not even want to talk about his own expense hike because he was too fed up. Inflation is coming for us all. It is obvious that we need to make our money work harder if we want to maintain purchasing power. These are the three things I leverage:

High-yield savings account

I put a significant portion of my assets into a Milli savings account. The APY is 5.5% and there is no minimum or fee. I probably can have a slightly higher interest rate if I lock in my money in a Certificate of Deposit account (CD), but I prefer liquidity in short notice to a few additional basis points in yield. Treasury Bills also offer a competitive rate and uniquely a break on federal tax income. However, It’s cumbersome to buy from Treasury Direct and I also don’t want my money locked up.

The unusually high interest rates from savings accounts will stay for a while as I believe that the Feds won’t lower interest rates any time soon. What’s the point of depriving yourself of liquidity now? A few months from now, if I think that rates will drop soon, I may leverage a CD to enjoy a guaranteed higher rate. But not now.

At 5.5% APY, if you put enough money in, earned interests can help cover increased expenses and even some groceries.

HSA Investment

If you are a white-collar worker, it’s likely that you have an HSA account through your employment. In addition to a normal account, HSA providers often offer an investment vehicle through which you can buy mutual funds. These mutual funds are benchmarked against indexes such as S&P500. Instead of just parking money in an HSA, if you don’t have any short-term medical bills to pay, you can put some in an HSA investment account and earn some returns. So far in 2024, my account has outperformed the S&P500; which is a nice surprise.

Beware that mutual funds performance can also swing in the other direction.

Stocks

Stocks can produce incredible returns, but they can also inflict significant losses. I am no expert in this, so I will just talk about index funds.

For the last 30 years, the S&P500 annual return averaged 10.04% and 7.32% after being adjusted for inflation. Even Warren Buffett recommended index funds as a investing option to casual investors. The trick here is to consistenly buy and be patient. There will surely be bumps on the road, but historical data shows that if you hold onto index fund stocks long enough, you’ll be rewarded with a great return. In the short term, ETFs usually have dividends which may not be a lot, but always welcome.

For index funds, I have $VOO, $IVV and $SPLG. They are low-cost index funds that charge 0.02-0.03% in fees and they average 11.92-11.99% in annual returns in the last 10 years.