A Lost Decade: Depositors have missed out on meaningful revenue by not using Treasure!

A Lost Decade
Treasury
Pablo Mitchell
|
November 16, 2022

In a recent post we highlighted how large banks generate profits by paying depositors as little as possible while pushing lending rates higher. What is good for banks is not always best for clients. As we showed, the better solution for depositors is for them to deposit their cash with Treasure Financial. Over the past three months depositors could have earned an additional $33.6 billion on a deposit base of $7.6 trillion.* It is natural to wonder if that time period was a fluke. Perhaps banks performed better over a longer time frame? Let’s find out!

We’ll consider an allocation to three products the Treasure Financial Investments Team recommends to clients with $10 million in idle cash. See the breakdown in Table 1.

Table 1: Customized Treasure Reserve Allocation

We calculated the annual percentage yield (APY) for the above allocation over the last decade to answer the question: “How would this allocation compare to the APY you could have received from a bank over the same time period?”

In a word: favorably!

Let’s look at the data. Figure 1 shows the time series of APYs resulting from the Treasure Reserve allocation compared to bank deposit APYs.

Figure 1: Treasure Reserve vs The Banks**

As the chart shows, no matter the interest rate environment, Treasure’s APY is substantially better than leaving cash in a bank.

How do these APYs translate on average over the period from 2014 to 2022? Figure 2 shows Treasure’s APY of 1.17% compared to a bank deposit APY of 0.05%.

Figure 2: Superior Average APY for 8+ Years

Is Treasure’s 1.17% a meaningful APY? Consider that a typical startup raises around $10 million for a Series A. How would an account, seeded with that amount of cash in 2014, have evolved over time?

Same word: favorably!

Figure 3 shows the value of $10 million compounding at the APYs shown in Figure 1 for Treasure vs. banks.

Figure 3: Difference of Approximately $1.5 Million

This amounts to nothing less than a lost decade for depositors. What is a small business or early stage startup to do? How can they avoid another lost decade?

Here are a few simple steps:

  1. STOP gifting your money to large banks
  2. Open your Treasure Financial account today
  3. Let our highly skilled Investment Team*** build you a risk managed allocation delivering a meaningful APY

* Sources: Treasure Financial, US Federal Reserve Bank

**Assumes current rate for prior three months

***Dedicated team experienced building and managing billion dollar strategies with firms including: Iowa Public Employees’ Retirement System, Koch Asset Management, Nuveen, Thiel Macro, TIAA

Based on the average annual excess returns of hypothetical back-tested performance in the Treasure High Yield portfolio from 2013 to present and the current Federal Funds Rate. Results are shown net of fees. Hypothetical back-tested performance is not a guarantee of future performance and actual results will vary. Returns are subject to change daily. Source: Bloomberg.

More from the Blog

NewsTreasure Partners with Unit a Leader in Embedded Banking Services
Treasure Partners with Unit a Leader in Embedded Banking Services

Treasure is excited to share its partnership with Unit, a leading Fintech providing embedded banking services.

Read More
NewsTreasure Financial Announces Partnership with Sequence To Provide Embedded Investing For Personal Finance
Treasure Financial Announces Partnership with Sequence To Provide Embedded Investing For Personal Finance

Treasure Financial, a financial technology company specializing in embedded investing, is thrilled to announce its partnership with Sequence

Read More
MarketsThe Surge In Demand For Money Market Funds to Efficiently Store Cash
The Surge In Demand For Money Market Funds to Efficiently Store Cash

There are now more than $6 Trillions in assets allocated to money market funds! To put things in perspective this represents more than 35% of the total deposit sitting with banks.

Read More
Treasure Technologies Inc.
447 Sutter St
STE 405 PMB 25
San Francisco, CA 94108
Website is operated by Treasure Investment Management, LLC ("Treasure"), a wholly-owned subsidiary of Treasure Technologies, Inc., and an investment adviser registered with the U.S. Securities and Exchange Commission ("SEC"). Brokerage services are provided to clients of Treasure by Apex Clearing Corporation ("Apex"), an SEC-registered broker-dealer and member FINRA.

Investing involves risk, including loss of principal. The contents of this website are provided for information purposes only and do not constitute an offer to sell or a solicitation to buy securities. Past performance is no guarantee of future returns.