Investment Vehicles – What Is Yellow Money?

Investment Vehicles – What Is Yellow Money?

Investment Vehicles - What is yellow money?

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This week we’re talking about different investment vehicles. Part of that will be discussing the Colors of Money strategy what yellow money is.

My son Asa is really into playing Fortnite. You may have heard of this video game if you have any grandchildren who like to play. In this game, and like many other games, there are different worlds. This really got me thinking about how this is similar to our Colors of Money strategy. When we look at investing and retirement and we go through the Colors of Money, we are deciding where we want to “play” or in what “world” we want our money to be.

Often I will have someone ask me what the different investment choices are for them. 

The fact is, there are hundreds, if not thousands of different investment options.

To make it simple, we’re going to break it down into what we call the three colors of money or three worlds of investment choices. 

3 Investment Objectives – Growth, Liquidity, and Safety

Quote from Financial Advisor Platteville, WIFirst, there are really three things that we can be looking for when investing; liquidity, growth, and safety.

Whenever you think about investing, you have probably considered these three objectives. Maybe you’re looking for somewhere safe to store your money, while also having the access to it. Maybe looking for it to grow as much as possible for the future. Maybe you want less risk and stable growth so you can take an income from it…


We’re looking for one of those three things, and again, there’s no method of money management or investment that meets all three of these investment objectives perfectly.

Over the next three weeks, we’re going to talk about the different colors of money and how they work. Today we’re starting with yellow money.

Yellow money is what we like to call our cash money. It is money where the most important objective is liquidity.

That means that the money is there for us to take if we need it. This also means that we want the money to be stored safely.

Thus, yellow money is safe and it’s liquid. 

When allocating yellow money, it’s going to be money that you can’t lose because it isn’t being invested in the market.

So, it is safe and it is liquid. But what is it missing? The growth.

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Types of Yellow Money – Savings, CDs, MM**

Years ago people could put money into yellow money like a CD and live off of the interest. They were making great interest rates and they could just live off of that.

With today’s rates, you might be laughing because you know this is no longer true. The rates haven’t been great for quite a while and you can no longer survive on interest.

We are not getting much growth with yellow money. It’s there for liquidity. It’s there for safety or getting a little growth, but not a lot. 

Quote from financial advisor Monroe, WI

OK, it’s probably maybe enough to buy you dinner once in a while, but that’s about it. 

It’s definitely not enough to retire on, but on the flip side, for those younger or for your kids and grandkids, they’re not paying the high-interest rates you once did either. 

So we’re not making a lot with yellow money, but it’s there, it’s safe, it’s liquid. 


How Much Should I Have In the Bank? 

Now the question becomes, how much should we put there? 

Intuitively, we all know you can’t put everything in yellow because you’re not making any money over time. If you’re not making anything, then you’re not even keeping up with inflation, so we don’t want to put all of our nest egg or all of our retirement funds into yellow, because at that point you’re losing money safely. 

This is especially true if any of those accounts are taxable. 

However, we do need to put some money in yellow, and we need to make sure that we have enough.

This amount will be different for everyone, but a safe place to start would be setting aside a few months of living expenses.

This is especially true if someone is younger and working. Think about the recent pandemic. If you were out of a job for even a month it could devastate you.

So we need to have savings for a couple of months as well as enough for emergencies.

The car breaks, the furnace goes out, you know you know, your child has an accident or maybe you’re retired and you’d like to take a trip.

You need to have money in place, but as I mentioned, there’s really no set minimum or maximum because everyone is different.

As far as when you’re getting to retirement, you might ask how much you need in yellow money and again, you want to have some of that covered, but it also becomes a comfort level.

How much do you need there to really feel comfortable? 

I say as long as everything else is taken care of and your plan is in place, then you do whatever feels right.

So that sums up yellow money. It is safe, liquid, and there when we need it.

As I mentioned before, we will be talking about the different colors of money over the next three weeks. There is yellow money, red money, and green money.

As you follow our blog over the coming weeks you’ll find out what’s best for you.

It depends on your situation, where you’re at in life, and what your goals are, but as we go through the colors of money I want you to think about all of the different options.

How much would you put in each category? 

** Please check out our Lazy Money blog for a NEW Yellow money that is liquid, safe, and averages about 3-6% per year!!

Download select chapters from our book, including The Colors of Money to learn more about these different investment worlds and how advisors work in each.

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Michelle Bertram and Beverly Bertram are financial advisors living in Mineral Point WI and serving the surrounding communities. Michelle Bertram does financial planning for retirees along with business consulting. Beverly Bertram specializes in retirement planning and income planning for her clients. Michelle Bertram and Beverly Bertram are authors of the book, Creating You DREAM Retirement and creators of the DREAM Retirement Process. Serving Madison WI, Verona WI, Mount Horeb WI, Barneveld WI, Dodgeville WI, Dubuque IA, Platteville WI, Lancaster WI, Cuba City WI, Fennimore WI, Darlington WI, Monroe WI, Spring Green WI, Black Earth WI and beyond

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