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

A Lost Decade
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.

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