Low-Hanging Fruit

Six months ago we posted on how we've been mis-managing, or more accurately, not managing our cash savings accounts:

The extreme low-rate environment (less than 0.5%) during the past ten years, however, has caused us to be inattentive to brokers' machinations.

This inertia is common to many thousands of people: [bold added]

In a few minutes and with a few clicks of a mouse, you can crank up the yield on your cash by two percentage points, often adding hundreds—even thousands—of dollars to your investment income annually. The only hard part is overcoming your own inertia.

In September, with one mouse-click I transferred $140,000 to a money-market fund from the .2%-yielding cash account. It was a psychological boost seeing the monthly interest go from $23 to $233. (Though my jobs often require me to analyze much larger investments, these analyses are all ratiocination without intuitive understanding; I can feel the difference between $23 and $233.)

Several months later, I sold 10,000 shares with another mouse-click and returned $10,000 to the cash account. Easy-peasy.

So why didn't I manage money more actively sooner (by "active" I mean spend 1-2 minutes a month)? It turns out that I'm not alone.

In all likelihood, the only thing stopping you is you.

Inertia may be the most powerful force in financial physics. Once you have cash in a bank or a brokerage account, moving it will tend to feel harder—perhaps even “riskier”—than leaving it there. In what economists call “the flypaper effect,” money tends to stick wherever it lands...

One study of roughly 850,000 participants in a retirement plan found that 72% had never changed how much they invested in which fund...

If you are still earning only a fraction of a percentage point on your own cash, kick yourself into motion. You may never get an easier chance to raise your return at no extra risk.

When beginning an exercise program the hardest step is the first.