Treasure of the Day
Monday, June 17, 2019!
WHAT IS TODAY’S TREASURE? An article that discusses how to choose a high-yield savings account.
HOW’D YOU DISCOVER IT?
The usual – my personalized Google News feed.
WHAT DO YOU LIKE ABOUT IT?
1. I am personally supportive of a high-yield savings account. I made the switch about a year ago, and I have been very happy. The money I have in a savings account now in an online high-yield savings account grows at a much faster rate than my previous savings account at my credit union.
2. Good information. The author presents some good factors to keep in mind before you make the switch (if you decide to make the switch).
HOW MIGHT THIS BE USEFUL FOR ME?
If you have a savings account from a “brick and mortar” bank, chances are that your savings account interest rate is super low. If your intent is to keep some money in a savings account, consider the switch to a high-yield savings account provided by online banks (making sure, of course, that they’re FDIC-insured).
ANY FINAL COMMENTS?
As the article suggested, high-yield savings accounts tend to have more of a difference when dealing with higher balances. For me, the difference was huge (about 16 to 17 times the rate of my previous bank).Even though the difference is more pronounced with a higher balance, the thought of maximizing the interest you receive in a savings account makes sense if you don’t expect to touch the money much. On the flip side, there are at least a few reasons why a high-yield savings account wouldn’t really make sense. Those who want to invest toward their retirement and don’t have a short-term need to keep money in a savings account might want to weigh the pros and cons. There are those who would argue that the interest rate for a savings account is usually outpaced by inflation. After all, a dollar in 1970 isn’t worth the same as a dollar now (a dollar went much further in 1970). By this account, some would recommend investing that money instead. A common argument for this is that investing in something like an index fund would return an average of 7-9% over the long run. But, the most important thing is to assess your situation. A high-yield savings account might make sense. It might not. Consider how much money is in play, how much of it you might need in the near future, and weigh it against some other options you can take with the money.
“But, the most important thing is to assess your situation. A high-yield savings account might make sense. It might not.”