Saving Money: Banks Can Cost You Value by Saving
Saving Money Isn't Bad, but Where You Put It Can Be.
Yes, you are right. Those aren’t real hundred dollar bills. The money you have in a standard savings account is quite real, though. Even though that person in the image may not actually be burning money, you are in-fact doing just that by leaving your money in a savings account that does not bring you any return (additional income for the money you gave the bank).
Banks are only required to maintain anywhere between 3%-10% of their money supply in their reserves. Banks typically invest $9 out of every $10 you deposit. Some people need evidence to believe what they read these days, so here is a link for that (I too support evidence) — https://www.federalreserve.gov/monetarypolicy/reservereq.htm).
What does that mean for you? It means banks are using your money to invest in businesses, governments and infrastructure while your money literally loses value. How does it lose value? Inflation (An economic term that means what you can buy with your dollar decreases every single year).
Now, that does not mean banks are bad. By them (banks) utilizing money that would typically be sitting there creating no value, their investments lead to loans for small business owners, corporations, municipalities, etc. Point is, they create value with a resource that would other-wise do nothing. With that being said, you can be a smart steward with your money and deposit your savings with banks that have higher interest rates (money given to you at a rate typically influenced by the Federal Reserve). To keep this short, I will not unravel the structures and processes of the Federal Reserve.
There are many online savings account, my favorite being Ally Bank, that distributes money monthly to its customers. Because they do not have branches all throughout the U.S., they are able to pay an annual yield to those that have money saved with them. They are FDIC Insured (Another fancy term for your money is safe, typically up to $250,000, in the event we had another Great Depression-type economic downturn) which means you can rest at night knowing your money is just as safe as it would be at your local bank.
There are many resources and banks that pay an interest rate anywhere between 1%-2.25% (rates may adjust monthly due to the economic environment). Big names like American Express, Goldman Sachs and other nationally recognizable brands are in this space as well. Ally Bank currently has an annual percentage yield of 2.25%. For every $10,000 you have saved, your account will increase around $225 every single year. I do not know about you, but I like putting my head down at night knowing my money is working for me.
Banks are only required to maintain anywhere between 3%-10% of their money supply in their reserves. Banks typically invest $9 out of every $10 you deposit. Some people need evidence to believe what they read these days, so here is a link for that (I too support evidence) — https://www.federalreserve.gov/monetarypolicy/reservereq.htm).
What does that mean for you? It means banks are using your money to invest in businesses, governments and infrastructure while your money literally loses value. How does it lose value? Inflation (An economic term that means what you can buy with your dollar decreases every single year).
Now, that does not mean banks are bad. By them (banks) utilizing money that would typically be sitting there creating no value, their investments lead to loans for small business owners, corporations, municipalities, etc. Point is, they create value with a resource that would other-wise do nothing. With that being said, you can be a smart steward with your money and deposit your savings with banks that have higher interest rates (money given to you at a rate typically influenced by the Federal Reserve). To keep this short, I will not unravel the structures and processes of the Federal Reserve.
There are many online savings account, my favorite being Ally Bank, that distributes money monthly to its customers. Because they do not have branches all throughout the U.S., they are able to pay an annual yield to those that have money saved with them. They are FDIC Insured (Another fancy term for your money is safe, typically up to $250,000, in the event we had another Great Depression-type economic downturn) which means you can rest at night knowing your money is just as safe as it would be at your local bank.
There are many resources and banks that pay an interest rate anywhere between 1%-2.25% (rates may adjust monthly due to the economic environment). Big names like American Express, Goldman Sachs and other nationally recognizable brands are in this space as well. Ally Bank currently has an annual percentage yield of 2.25%. For every $10,000 you have saved, your account will increase around $225 every single year. I do not know about you, but I like putting my head down at night knowing my money is working for me.
Who doesn’t like dogs? Its owner probably has money in an interest bearing savings account.
Do some research. Ask questions. Be an informed consumer and lender. Those that borrow money are the ones that pay interest, but those who are the lender are rewarded with a return. This is one safe way to become a lender in a world that is focused on consuming.
Do some research. Ask questions. Be an informed consumer and lender. Those that borrow money are the ones that pay interest, but those who are the lender are rewarded with a return. This is one safe way to become a lender in a world that is focused on consuming.
*This is not financial advice. For educational purposes only.