Is the Savings Account Dead?
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- Опубліковано 3 жов 2024
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Once upon a time, savings accounts were a decent investment option, but today they rarely keep up with inflation... what happened?
sources:
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Two Cents is hosted by Philip Olson, CFP® and Julia Lorenz-Olson, AFC®
Directors: Katie Graham & Andrew Matthews
Written by: Philip Olson, CFP® and Julia Lorenz-Olson, AFC®
Executive Producer: Amanda Fox
Produced by: Katie Graham
Edited & Animated by: Sara Roma
Images by: Shutterstock
Music by: APM
I hardly call it a savings account anymore. More like a transfer station between my checking account and my investments.
Love that comment 👍
Yep
... but your investment account probably has a money market account, so why bother with a savings account if the money market account gives you higher yield?
Lol I thought I only did that :D
I get better return on gold coins.
People out here worried about earning 2% on their savings but paying 19% on their credit card debt 🙄
Hahaha yeah
No one with a savings account would leave unpaid credit card debt
@@pepebeezon772 Do you watch dave ramsey at all?
@@pepebeezon772 Some people just aren't very good with their money dear. Yes it make sense to pay off all credit cards as fast as possible, but some people just don't. Part of why I like PBS making this youtube channel, so people can learn.
Put a shirt on
Corrections on this video:
1) At 2:21 we said "Federal Reserve Banking", while the practice is actually called "Fractional Reserve Banking"
2) At 5:28 the on-screen text says that BNDX had a 4-5% Int/year. That should actually 4-5% Total Return/yr. Meaning the dividends + growth totaled 4-5%, not just the interest alone.
Thanks as always for your eagle-eyes -- you all help make the show better!
Also, the required reserve is zero percent of the deposit as of march 2020.
Source: www.federalreserve.gov/monetarypolicy/reservereq.htm
I had to rewind it just to make sure I heard it right. It’s understandable though and glad you caught it.
I almost flew out of my seat when I heard federal reserve banking. Love the content tho.
Wouldn't a telliporter cost more then a car but then the cost of today's model cars would have trickle down a lot after new technology and advancement in economy
Inflation happens when democrats Wing higher taxes on producers higher wages only those already at top can afford to pay. Record job loss and worthless paper printing
These two are like what I needed my parents to be when asking for financial advice.
Protip: Ask your grandparents for that kind of advice, tipically they have twice the experience with money
@@brandonouellette1536 But, as they said, their situation is way different from ours, so their advice probably won't be applicable here, unless of course, one of them is a financial advisor
Exactly why im currently in the process of making an "adult guidebook" for my oldest niece (she's turning 18). Someone needs to go through this stuff with her.
Though, I will say that I feel like my mom's done her best with what she knew.
@@brandonouellette1536 Investing in Bitcoin trading is the best investment that's more profitable🤑🤑
Bitcoin trading right now will be at every wise individuals list🤑🤑 in 2years you I'I be ecstatic with the decision you made today.
I do remember my parents telling me when I first turned 18 (many many many moons ago), to make sure to set up my Savings Account. My how times have changed...
I remember when I was eight my parents set up a savings account for me with gift money from my grandma. I never saw that money again.
And they're losers for offering that advice. Savers are losers.
My mom set my brother and I up with savings accounts when we were little. Now of course with all the bills I have, I can’t keep as much in there as I’d like (still better than some people though).
You still should though.
Great place for an emergency fund.
Some emergencies needs cash and most investments have fees and/or a week to convert to cash. If you get cash from a credit card, they usually starts charging interest on the same day instead of after your due date.
Just make sure that you've read the terms and agreements cause that could bite you in the ass with fees.
@@rustym.shackelford5546 that's not what I mean. I'm in my 30s and I have never got that money back. Savings accounts are great. I just opened a new one because it's easier to spend the money is it's in my checking account. I'm hoping to have some long term money
As a Gen Zer, I’m scared of my financial future. Everything seems to be made worse for us, the 80s and the 90s seems like the best time to have been alive to get rich
Same thoughts, man. I worry about the future of work now that we’re late teens and we’ll be looking for jobs soon. I also worry about stable employment (the ones that our parents had) since most of the jobs right now are gig work and thus doesn’t have guaranteed benefits like healthcare and retirement.
I’m optimistic though as it looks like our generation is considered to be pragmatic and financially educated.
Don't be worried. When everyone is going to be in the same boat as a country there will be changes. That's how social security was born.
I'm a millennial and stack up tools, skills and "money" not currency.
That's understandable to feel that way TG. But every generation has their unique financial challenges. I hope your takeaway from this episode and our channel is that it's still just as possible to thrive, grow your wealth, and do it in a sustainable way. But we just need to change our tactics to do so -- our parents' strategies don't work anymore.
Buy Bitcoin
The real value of a savings account is for your emergency fund. Interest doesn't matter. More importantly, all your bank accounts should be "no maintenance fee".
Should be. But never will. Bank of America got taken to court because of the BILLIONS they made off of fees
@@chaoswraith Usually they give you clear rules to avoid fees, and I know how to not have any myself.
AMEN!!!
This
Umm, what's a maintenance fee? (Sarcasm)
I avoid any bank that has fees to just hold MY money.
I would love an episode on how young people can start out, and how much they should put into investing, saving, saving for retirement, etc.: I’m 19 and I’m excited to dip a toe, and I know the sooner the better, but I don’t know where to start!
@@Jonniemcl You're sweet for giving such a thorough response! What you're saying makes a lot of sense, I'll get saving :D
Well, I think they've got videos covering just about all of that, just not in one video
Buy some Bitcoin and Ethereum
read Dave Ramsey to get started then watch Graham Stephen videos on index funds
@Daniel Long Yeah using crypto is like putting up a modern day stocks and bonds go crypto if you have the extra money but a better investment will always be property. My parents asked me about crypto and i told them not to because of the highly unlikely chance of investment returns with crypto.
Yeah... I've never expected to earn a return on a savings account. It's just a place to stash some liquid funds for emergencies.
envelope of cash babeh!
Me neither, would just be nice if at least kept up with inflation. Instead inflation just quietly erodes it away!
@@granitemoss1451 doesn't sound like a savings account at that point
@@granitemoss1451 I typically use mine up before it gets that bad. It's for emergencies, or bills that I struggle to budget for. Like car registration, new tires every few years, oil changes at irregular intervals, vet bills, Amazon prime, that random hair color appointment I just have to have all the sudden, etc. It never sits there long enough to lose value.
So true, we never know when we will need some cash immediately.
" if I ever won $1,000,000, i'd put it in a savings account and live off the interest" anyone else know someone who used to say this?😂
Or CD's back when CD's used to pay 4-5%
@@grante8 lol yep. There is no incentive to save. It's as if they want everyone to just spend. Considering 2/3s of GDP is consumer spending. This is not a savers environment.
@Two Cents ok
well, I still get 7% anually on CD's in my country. I guess it's a cycle and it depends on the economy and the stock market here is shit
Stocks for 20 years, and retire in your 40s. Chase the career you want and have that safety net to retire early fulfilling your goals.
When a single overdraft fee can wipe out like 5 years worth of savings account interest, yeah I'd say you're better off just leaving all of it in a single account.
Yeeep. I recently changed my bank, and in the process of transferring money out I somehow acquired something like $20 in fees and that basically negated all of the "savings" I EVER earned in that account.
They can remove the OD fees if you ask them.
Just go to your teller and tell her. (Pun intended) at Chase they told me its up to 3 times (a year) they can remove them due to me maintaining a positive balance.
But I also now purposely spend under budget and keep a savings account to accumulate a little money to offset any surprises that may happen (maintenance, repairs and whatnot)
Im currently in a paydown debts phase, so investing isn't really on my table right now. But I have 2 savings.
1 for off the front end of my paycheck which is used for short term goals
And the other is rounded off every night, so my checking ends in whole dollars.
Once my savings reachs my mini goal, every extra dollar goes towards paying down debts more aggressively.
A savings account is intended for safe-keeping of money, not an investment vehicle. Instead of placing money in your safebox, put it in a savings account to protect it from fire,flood,theft etc. That is actually the only use of a Savings account.
Safe-keeping indeed but there's rules: You can't touch your money for t amount of time i amount of interest and you also therefore watch it burn trough inflation. Since it's not worth it you can just put it in a normal account where it'll still be kept safe same as savings and it'll be accessible just like a checking account. Because you can reason that accessing your savings freely is more important then winning a few dollars worth of interest.
My parents bought their first house in their early 20s, their college degrees cost way less than mine, and they had CDs and high yield savings accounts. Then they ask me why I'm nearly 30, not married, no kids, still living in an apartment, and don't have much for savings besides a month's pay budgeted towards emergencies. The only thing I have going for me is a college degree that I'll be paying off for the next 18 years and a career that barely covers my monthly living expenses and student loan debt payments. I'm pretty risk-averse because someone told me "education is the safest investment you can make" which turned out to be awful advice. How do I tell them the American dream is dead?
My mother is dumbfounded by the idea that I don't want children, granted I don't like children that much to begin with but MOSTLY because I will never bring a child into this life if I can barely even afford my own life...
@@x0scimy0x that's basically how I feel as well!
I've become very militant with my savings, even reduced my food shop from £600 to £320 last month.
Saving becomes addictive, especially when you're able to clear those long-standing debts one after another with accrued funds. Despite low interest rates, the mindset and discipline gained are the true gifts.
just put it into the SNP500 or another index fund...
@@jamescryptoguru6468 scam.
@@senseiadam-brawlstars9465 currently reimbursing debts x
You're right, it becomes very addictive. Interest on debt is a vicious cycle but interest and dividends on equity is the opposite - it feels great
@@juliantheapostate8295 that's my long term aim 😎
I remember graduating University and jumping into the work force for the first time. I opened up a new savings account and stashed money away for about 3 months, then actually took the time to read the "fine print" under my savings account details, and I was floored. As soon as I realized "High-Interest" meant 0.5% to the bank, I pulled my money out, and bought shares of the same bank and guess what...5% annual dividends every year since, plus capital appreciation on my investment. Same bank, but by taking matters into my own hands and educating myself, I've made way more money than they would have ever given me.
Times have changed 100%, and unfortunately these are things schools don't teach us, but considering the wealth of FREE information available online, taking the time to learn about what you can do now to financially empower yourself will absolutely change your life in time.
Instead of leaving your money with a bank, you now own (parts of) the bank
Every day I learn something new, I think "They used to do what?" Millenial realizations that literally things my mother or grandparents grew up with have been replaced with hopes and risks. What a time to be alive. :(
My parents lived their whole lives without credit cards. They put all their money in a savings account. The only investments I think they had was retirement. They don't understand why I don't just put all my money in a traditional savings account. They freaked out when I got an online only high yield savings account and when I started investing in the stock market.
Get Woke Get angry!
Did your grandfathers grow up with the Vietnam war? Not too much fun.
@@DavidEVogel Actually he did. Passed in his early 60s from alcoholism while being in and out of mental facilities. He was also black so his issues in daily life during segregation were a constant source of frustration that he ranted about till death.
My grandmother opened a $1000 CD for me when I was 10, a year before my 18th birthday, when I would have control of it, it had $5000, and my mother cashed it out to pay for a lawn for her new house. She moved in a year later, the year I moved out. I will not rest till every boomer is in the gutter where they belong.
Before the pandemic high-yield savings accounts were about 1 to 2%. Now they've dropped off the map.
Went from about 3% to 0.5% on Ally
I live in India. And my bank gives 6% on savings account. 6% upto 136K USD.
@@m1k3y48 yep!
@@alexsharma1339 check tommorow
The federal reserve dropped interest rates and they will be low for the foreseeable future.
Back in the 90s everybody was like “if I hit the lottery I’m putting it all in the bank and living on the interest”
@Two Cents wow a little more convincing than usual spam account, good job
...and even in the 90s, the first five words in the quote showed its irrelevance...
Inflation
Boomer: Back in my day, you could buy a house on a single salary and put the rest into savings and you'd have enough for retirement. You kids just want something for nothin'!
back in boomers day our money was tied to a commodity that had been used for centuries and wasn't printed into oblivion.
@@immaculatesquid Too bad the boomers decided to turn our money into FIAT while also calling us stupid idiots who don't understand the true value of anything.
@@fav843 every generation has been more impulsive than the last. boomers just don't realize that it mostly started with them because everyone that could tell them that is dead
@@immaculatesquid That's actually a fairly deep realization, it's so true from everything I've read about the 30s 40s 50s and 60s.
@Ra Graham We're inheriting a fucked up world left behind by these boomers. Fuck 'em!
The best way to find that balance between saving and living is by investing. This way you get to have your saving intact and then live comfortably off the revenue coming in from your investments. Financial freedom is possible, you just need to know what to do and when to do it. I am a living testimony.
I totally agree with all that you have said, this is the reason I have so many investments, financial freedom is my number one go.
I have seen videos, read comments. I am still trying on my own to start investing and it has not been working out for me. What do I do? How do I begin again?
It is not smart to start an investment by yourself when you clearly know nothing about it. I say leave it to the professionals. I use the services of an excellent portfolio manager myself, I don't wanna take chances. I advise you do same.
Investing all by yourself with no prior experience can be detrimental, you can loose all your money. I will advice you get assistance from a good professional, that way you will not loose your money, plus you will learn more.
@Luciana Wilson I recommend Edmund John Brock , he has been my financial advisor since I started my retirement and I have other investments with him as well. he is licensed and have good strategies. Plus you can withdraw any time.
The other day a Wells Fargo rep tried convincing me of opening a savings account with their 0.01% yield and I just told him my Tmobile checking account pays me one hundred times what he would pay me. He persevered saying that the point of a savings account is to have money aside and not to accrue interest. I laughed real hard and he got quiet and he changed the conversation topic.
Wells Fargo is the worst. I remember getting so many overdraft fees from them as a teen that I had to shut down my account when it was in the black and switch.
💩 customer service crooks...
@@rachel_sj "Black and switch"? Is that what that practice was called? 🤔
@@megamanx466 “In the black” is a term used for when an account has a balance vs “In the red” which means you have a negative balance. I switched banks as soon as I had money to take out of my account.
@ZigZag I haven’t banked with Wells Fargo in 15 years. I ended up paying hundreds in overdraft fees. I now bank using a local credit union and I suggest everyone doing the same
if i got 8% on a savings account i wouldnt even invest in 401k or look for mutual funds
I know of a place that gives between 10-12%, I ain't sharing since it will ruin it if too many people jump on board.
@@haroondaman7162 ok love
In 1982, I got 9% on checking and 6% on savings. It's coming.
@@haroondaman7162 Only problem with that is that it's not government guaranteed, you just have the company's word that they're insured against bankruptcy. If that payout fails and they go bankrupt overnight with all your money things could get very nasty. Returns that high are always risky, even if you don't see it. I would say your investment is equally as risky as shares in stocks would be, if not more considering how young crypto platforms are.
If you’re still looking for a savings account like that consider using Voyager Digital. I’m saving for a house as we speak with the use of their USDC token offerings. They are currently paying 9% APR on their USDC holdings of a minimum of $100 dollars. It is crypto currency (USDC) but it’s what’s referred to as a “stable coin” meaning its designed to stay at $1 so you aren’t having to worry about the volatility of the crypto market.
It’s not a bad safety net for a publicly traded company.
If you’re gonna use it, you can gain an immediate 25% boost by putting the required minimum balance of $100 in by using the referral code 7485EC.
That’ll get you an extra $25 in bitcoin with which you can sell and buy usdc if you’re trying to play this as conservative as possible.
Pausing at the start of the video to say: I love the fact that the
"certified, pre-owned teleporter" looks like a Stargate! :D
So futuristic.😂
@@jay-rathod-01
80s/90s are the retro future. To hell with smartphones and government tracking.
I only understood having a ''Savings'' at an early age but wasn't talk about the reality of inflation and having investments!!! Jeez I would of been in a totally different situation today!!
It took a few months, but I finally watched every episode in this series. That feeling I have of financial literacy is probably just the Dunning-Kruger effect, as I'm sure this is just a crash course, and there's a lot more to finance I'm unaware of.
Thanks, Two Cents.
thankfully, it’s easy enough to see whether or not you’ve learned enough- just look at your checking account
It was a depressing day when I realized that putting money in the bank was a net loss of buying power. Since then, then I've divided my money between a regular savings/checking account (for paying bills), a high-yield savings account and CDs (my emergency fund), and stocks (I'm not likely to be able to buy real estate in my area without market-level growth or getting married, and the latter is nowhere on the horizon).
Cryptocurrency is too volatile and arbitrary for my liking, and serves no practical purpose as far as I'm concerned.
So I want to do something similar but I am not sure the ratio. Now I now things differ from person to person. But what is the max you would keep in checking, max in high yield savings, and then at that point the rest to stocks?
@@hippybecca I'm not a financial advisor, so take this with a grain of salt. What I do, though (AFTER having my retirement savings deducted from my paycheck), is have my paycheck deposited into my regular savings/checking account; this is where I pay rent, credit card bills (always in full), etc. The idea is to be sure I can pay all my regular expenses and still have a buffer of $1,000 or so for unexpected expenses. Excesses are sent to my high-yield savings account, which should have about six months' expenses (this is money I don't plan to use but want available in a major bind, such as a job loss).
After that, you can start getting into the world of stocks, bonds, index funds, etc. depending on how much risk you are willing to take. Getting some practice through a virtual trading simulator (which my father had me do as a kid) can definitely be helpful here, though bear in mind that it can lure you into thinking you are more competent than you really are. Again, let me stress that you shouldn't try this until your other financial affairs are in order; if the economy crashes and your income suffers, you want to have a safety net you can fall back on.
The savings account percentages have been getting lower and lower as time goes on. I just think of them now as a checking account+. You can stash some money there so that people can't use it if they steal your debit card (which is attached to your checking account), but that's it. It's not actually for investing anymore, put your extra money somewhere else.
Thank you for making this, and for including a "what to do instead" section, it's super helpful.
Two Cents below comment is a FAKE account ... Be aware !!
Just remember: savers are losers.
Beware the teaser rate. Banks don't have to tell you that the rate will drop from a competitive rate to a non competitive rate (nearly zero) whenever they want. Have been burned by that one a couple of times.
If you want to actually grow your money invest in a mutual fund or etf. The stock market averages ~10% growth a year, you’ll be much better off putting the money there.
My how times have changed! I can remember going to the bank when I was about 6 or 7 to open a savings account. I was barely old enough to sign my name! . It was an important day in my life to teach me the value of savings and thrift. If every child started with s piggy bank and learned the value of thrift, the world would be a lot better place.
This was sooo insightful! I have thought for a while now that my savings account was a joke. Like “why do people keep saying I need one of these accounts? It’s a waste of time”. But this makes complete sense!
SAME!!
I keep a savings account strictly as a rainy day fund. I aim to keep 3 months worth of expenses in it, in case either of us loses our job. It's also there to cover big, sudden expenses, like major home repairs or medical expenses.
In 2018, I needed to dip into the fund to pay for a new HVAC system and a new roof.
Aren’t savings account in credit unions still with it? I, sure they give higher interest/dividends than commercial banks
You can tell me where to shove it but I just wanna throw in my two cents. If you can, try to bump that up to somewhere between 6-12 months of expenses, or 6 months of income. Say a massive recession came and nobody in your household could get a new job, 6 months gives you a lot more leeway in a job hunt than 3. Most financial advisors give 6 months as the magic number. A 3 month emergency fund is still really impressive and puts you ahead of 90% of normal families, but it's nice having as much safety as possible.
@@CyberCactus I appreciate the feedback. The 3 months in savings is strictly for having a sum in easily accessible, liquid assets. We also regularly put money into mutual funds so it can grow, rather than depreciate due to inflation. Not to mention the last resort safety net of 401k loans.
Even if markets take a significant hit, I'm confident that the growth we'll see over the long term will exceed the immediate losses if we need to divest to cover emergency expenses. Granted that's just a guess; I haven't actually done the math.
@@sonicpsycho13 Fair enough, it's good to know you've got other semi-liquid assets you can fall back on besides your emergency fund, that would help a lot if push came to shove. If you're able to pull out your money from the mutual funds and 401k whenever you do need it then you can definitely get away with a relatively small emergency fund, those investments would work as funds in their own right when in a pinch. Small rainy day funds usually scare me but you seem well organised, I don't think you'd have much trouble in a recession. :)
I miss those $30+ interest payments I used to get on my savings account. Ever since covid hit it's half that now.😢😢😢
That's still better than my $1.00 payment
I have 10k in one account. It got 4 cents lol
If you see a decent thought out opportunity, invest in it. Keep half a years savings and invest the surplus.
Jesus....you must have 500,000$ in that savings account...lol
@@SteveWKk shhhh🤫
Just an FYI to anyone who doesn't already know. Peer to peer lending isn't legal in all states/countries, so you may want to look into the laws for your location before trying to jump in. I was going to do it a few years ago and realized it's not legal in TX.
My parents opened a savings account for me when I was a kid. Now I'm an adult and I don't know why I still have that account. Even if I had half a million dollars in it, the interest would only be $250 a year.
Oof. That’s rough.
The ONLY reason I have my money in a bank is because i don't like having that amount lying around the house.
Yep, what if there's a home invasion or a fire out of nowhere? Bye bye savings...
@Luís Andrade it doesnt cover cash lol....just stuff and jewelry
Just tell your friends, it won't be there!😜
@@aaronxavieruzcategui2455 Yeah, after the big tsunami in Japan, billions in yen was lost because so many people kept so much cash in their houses. Fortunately Japanese people are apparently very honest and a whole bunch of safes were found and returned to the owners.
@Luís Andrade House or renters insurance doesn't cover cash
The real crime of having a low interest environment is that, the low interest loan is only typically available for those with assets only. Banks rarely loan out money without collaterals. Financial illiteracy has always made people 's wealth gap wider. But these days, the effect has become even more forceful. And people does not even realize their cash value is being wiped out every hour.
Got a letter from my bank saying I’d get 10p for every £1,000 in my saving account 😂
They could’ve saved the stamp and given you that money.
@@matthew8153 underrated comment
What do you intent to do with all that money?
Yeah it’s not even worth it anymore
That's how they screw retirees !
I appreciate that I feel patronized while watching this. I am oblivious to using the financial market for personal gain access; being spoken to like a child helps to clarify and make the ideas simpler.
Glad you brought up the interest difference. My parents were earning 13% interest on their savings but we're paying 17% on their mortgage. So many people forget that part
Yeah. Back when a 400-600k house today was under 150k for them.
Yes and mortgages were 7 years and not 30.
@@gilbertoflores7397 More like $180k for a $350k house
@@davidstring8301 it depends on where you live, but the price of houses is getting ridiculous again. Things were significantly cheaper back then, so the point is still valid.
@@dthatcher7 No, there's was not a 7 year mortgage. They could not afford a $180k house with 17% interest over just 7 years
"you can try to spend hours sleuthing out the best high yield savings account in every corner of the internet.." literally me all day yesterday 😣
Yeah till after a month or two they drop the interest rate and forces you to spend hours looking for another bank to save with.
@Luís Andrade yep Graham is the best.
Yotta Bank! Yada is what I put my annual expenses into so that they can sit there for the year so that I can pull them out when I need them.
@@UlexiteTVStoneLexite low interest rate though at 0.2%
@@Mike-mc3sh but the winnings bring it up much higher than that to almost 2%. Depending on how much you have in there you are guaranteed to win something each week just based on numbers alone. As long as you have a high enough number of tickets you have to earn something each week. At the end of the week you get the yada number and statistically you have to earn something. You only have 70 numbers so it you have more then 70 tickets and have at least one ticket for each other number you are guaranteed to make something. My February realized APY was 1.43% and March was 1.26%. that's a lot better than any other Banks. That .02% is just what you get on top of the winnings.
I only use my savings account as a way to “hide” money from myself. I work as a delivery driver and put 20% of my tips in the account. I’ve put about $2k in there in the last year towards getting a home
Lol I do the same. A way to divide the money up and that each account plays a specific role. Wish I had started doing that years ago though.
@@jamescryptoguru6468 what are you promoting here anyway? I’d be worried people....
@@brightlite942 that's a fake account that replied, not the actual two cents
@@serinadean9019 Damn, even PBS is being bombarded with scammers.
Well the government surely knows how much money you have
High Yield Savings accounts are over 5% at the moment. This video is outdated at the moment I suppose.
Obligatory "why wasn't this taught in my public school" comment.
Because public school wasn’t designed to teach you anything, it was designed to create jobs for lazy people who want summers off
@@yaboydarrell That and to keep nearly entire generations under their control
@@yaboydarrell I love how you classify all teachers with a single paintbrush. Should I assume that all people who perform the same job as you are equally as ignorant?
I'd like to add "buy on the dip."
@@yaboydarrell it's really bc gov runs pub schools and gov doesn't want you financially independent. A populace that knows how money/economics works would not continue to vote for our ballooning welfare state.
My 2% cash back credit card nets me more money than my "high yield" savings account
Do well to respond
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I wonder if these guys could do a video about housing... specifically, where home ownership is going. I'm in Canada and I think that the prices are crazier here than they are in the US, so maybe the answer would be different for me.
It seems like more and more houses are being snapped up by wealthy investors as a way of getting more return, but the problem is that young people and average families can no longer afford to buy a house because the hot market is driving up the prices.
It feels like the middle class is disappearing when viewed this way.
So true. I wish rich people would dump their cash in the stock market and leave housing prices alone.
This is due to low interest rate policy and Quantitative Easing. Federal governments around the globe are causing this
These two are so amusing, but also provide so much great information! I hope they keep this channel going. The videos are really engaging and well made also. Thanks!
My checking account earns more interest than my savings account, but it helps me separate out the money I'm "not allowed" to spend. I make bi monthly deposits into the savings account for this reason, it's in my budget. I, personally, need that separation, but I totally agree interest/dividend payments are a joke now.
Do you have a Vanguard account?
@@adrianelias2365 for 401k, yes
@@RachelSchell I meant a mutual fund.
@@adrianelias2365 no I don’t have a mutual fund. I don’t think I know what that is.
@@RachelSchell You can buy into mutual funds within your 401k, they are basically index funds/etfs etc
Personally speaking, the best savings account I've found offers 3% up to a max of 100k with relatively minimal stipulations. I also know of accounts of up to 6.16% with a cap of $1000. Of course, paying down higher interest debt would always be recommended first as a guaranteed savings before pursuing smaller yield investments. I disagree with 2Cents recommendation of peer-to-peer lending in this case. If you're going to add risk, in my opinion there are other assets you could invest in that would provide a similar yield to peer-to-peer lending with less risk of losing capital.
Key take aways from video:
- buy bond index funds
- Do not spend money on savings accounts if looking for +2 % APY
Don't forget about stock mutual funds too! Vanguard has plenty of mutual funds that average 8-16% rate of return each year. Yes, some years you'll lose money, but the principle of dollar cost averaging will help you over time as well as compounding interest
for most people, stocks aren't a great vehicle for conservative, low risk growth appropriate for savings. stocks are for long term investing
@@macgrosel8138 If you can wait for 3 years you will always be in profits as far as mutual finds are concerned.
Loved the certified preowned teleporter joke 😂
The traditional ten year strategy: 1) Put it in an index fund 2) No touchy
>throwing away your gameboy cartridges...
*checks pricecharting*
Uh, yeah... I think buying up old games is a better investment than a savings account. Lmao
I've been reading through "Economics in One Lesson" by Henry Hazlitt; there's a chapter discussing the different forms of holding onto money and spending it. Basically, he discussed keeping money in a savings account provides for the capital to be used to start up new business projects, etc. The updated version was released in the late 70s so it definitely was in line with the higher rates you guys showed for the mid 80s. Still, the current forms and the alternatives you guys bring up would provide for the capital boost that saving entails (and HH states that saving can just be thought of as direct and/or indirect investing).
Honestly the more I grow up, the more I realize the older generation has been giving us erroneous advice. It comes from a good place, but they fail to realize how much things have changed. Everything from "go to school, it's the most important thing you'll ever do!" to "put your money in a high return savings account".
I've come to learn school is actually a big waste of money and time unless you plan on specializing in some academic field. I went to school for 3 years and I can't even get an entry level interview for jobs that pay slightly above minimum wage. Meanwhile I learned the skill of painting and I'm making more than double what these jobs could offer me.
That's great man, keep at it and spread the knowledge to younger kids. The stigma and group think will subside if more and more people will tell it like it is.
Savings and high yield is a contradiction. High return is from risky investments, which is not the point of a savings account. Savings account is to keep your money away from your spending habits, as safe as possible, and avoid inflation. Not to multiply/grow your money like a business or investment.
04:35 - he definitely meant "the perfect place to 'stache funds."
I have closed my savings account. I use a Fidelity cash management and then I use a brokerage account (index funds)
i always thought it was called fractional reserve banking! happy to keep learning!
I was noticing this myself recently, it seems like finance is harder than it was yesteryear
*Buys GME
Why?
There's also still the rule(in the U.S.) that if you take more than 6 times in a month from your Savings account, you'll start getting a fee charged each time. 😅
bruh
I thought you were kidding. But it's not a joke. It's called an excessive withdrawal fee. Why have I never heard of this?!
@@kalo0806 Well I think it's sometimes listed in the paperwork a bank or credit union give you when you open an account, but how many people actually go and read all of that? It seems like an easy way for financial institutions to make some money on fees. 😅
@@megamanx466 They charge you for taking your own damn money out.
@@goldcherries Indeed. In regards to ATMs, I typically use either my own CU's ATM or buy something small, like a drink, from a place that gives cash back free-of-charge with that purchase. 😅
Have you ever done a video on credit unions vs. banks? We keep our emergency fund/general cash in a credit union checking account that makes much better interest than a regular bank ever would.
One big reason I keep most of mine in savings rather than checking is because I have a debit card attached to checking. If a scammer wipes out my account and I only have a little in there but most of it in the connected savings account, I kept them from stealing most of my money. I do automatic transfers by phone from savings to checking when needed. This protects most of my money.
Some banks here in India somehow still pay 7% interest on Savings account LoL.
The savings account is a joke. People are depressed, struggling, and there's no help in sight.
checking account is worse
@@timafiggy
the scumbags that charge you for not having enough money in your account.
@@timafiggy worse return, but you pretty much need a checking account since most savings have limits on the number of transactions you can make in a month.
You need two or three different bank accounts.You need Saving accounts for daily expenses and current account for long term investment.But if you have unit trust investment account and bank financing unit trust investment,you can make enough money 💰💵 from those three special accounts.
There are ways to get returns fellas. Here's what I do, and it took me a few years to get this but it's doable.
Open a savings account from an online bank like ally. They used to have 2.8% but have dropped to 1% or something abysmal but it's still higher then most (sad). Anyways save up to 3-6 months worth of salary that can act as a safety net if you get let go or if hard times come and put all that into the online account. That's just for emergencies though. Once you get that account going set up a Roth IRA account and max it out every year. Budget your life to be able to max this account because investing into s&p500 ETF funds are going to set you up to be a millionaire by the time you retire. I've only been doing this for 4 years and my average return is 20.1%.
That's it. Open an online account to try and offset inflation, but still accessable if needed and the rest into a Roth IRA and into ETF funds.
These videos are always so informative! Thanks for the tips and advice on savings accounts.
Thanks for releasing this on my birthday. I have a high-yield acct earning 0.5 now. This vid answered some questions.
Big banks paying 0.01% and online banks paying 5.2%. Get your money into smart accounts that pay the best rate you can find.
The direct lending thing is a crazy suggestion to make. I think lending out your money to an individual is a far greater risk than even buying a single stock. Coca Cola is highly likely going to be around in a couple year, and remain a profitable company. An low volitivity ETF would be even more safe. It's possible for volatility to be at a loss right when you want the money back, but the chances of it going to 0% is not there. Also, you have the option of putting off that big purchase for a year while your investment recovers.
Definitely my favorite video from y’all thus far. My AllyBank savings account was once in the 2% interest rate realm, but is now a 0.50% interest rate due to you-know-what, and will probably stay that way (or drop) for a long time.
Thankfully I have investments elsewhere, and now I just use my savings accounts whenever I wanna get ready for my next PC upgrade, future trips, and of course, emergencies.
Thanks again for your 2 cents!
Funny you mention Ally in a negative light, because I just moved TO Ally. But thats because with Hometrust Bank (formerly Bank of America) my savings account was not 0.5%, but 0.05%! So even though I'm only getting 0.5% now, its still 10x more than what I was getting before...
@@x0scimy0x I still bank with Ally regardless of the interest rate decrease. They are still a solid bank overall. I still need a place to have funds set aside. You are right though;
their interest rate is still high in comparison to most major banks despite the drop from 2% to 0.50. We gotta do what we gotta do!
I think it’s 4% now, their money market account it 4.3%
@@stop08it Yup it’s definitely going up now to where I had it back when I created my account in 2013 :)
@@stop08it Yeah, this video is interesting to watch with the context of the last 2 years. High Yield Savings Accounts are over 4% right now and inflation seems to have finally cooled to around 3%, so we're back up to a positive real return.
I absolutely loved the way this video began.
Lendingclub is no longer an available for investors since January 2021.
The rules of the game changed. It's not harder to save/make money than it was back then. It's just different, and we have to adapt!
It is harder. Way harder. We are forced to take risks we didn't in the past. It was awesome to just invest in a fixed income fund with a set and forget mindset. Now we don't know if we will go up or down 20% overnight, it feels like gambling and it is painful to risk averse people.
@@TheSimArchitect That's true. It's not as "ABC = XYZ" as it used to be. But I feel like the returns are much better too. While these are just examples of extreme luck, people are becoming millionaires overnight by (recklessly) betting it all on a single crazy thing like Bitcoin or Gamestop, which would never have been possible back in the day.
Now I do NOT acknowledge either of those two instances as viable or consistent ways to build wealth. But you can't deny there's a lot more opportunities to bathe in Benjamins compared to before. For example, UA-cam allows people to effectively build their own personal brand and make money off of it! That would have been unheard of back in the day.
@@VarsVerum Before we could invest safely or even keep our money on a savings account earning something. Now people are borrowing money to gamble in the market. They lowered interest to force people to invest money into productive things or consume more, but we're gambling in the stock market instead. The problem is that if anything happens the stock market bubble will burst and we'll be left holding our bags. And so will retirement funds etc.
Easy access to information made too many people interested in passive income, but someone has to carry the weight and plant the crops, manufacture things, build roads and fix buildings. If everybody keeps saving a huge chunk of their income so they can invest the money and "live for free" the system doesn't work anymore. Anything good is good because there's a barrier to entry. Before, it was information and education, or enough funds and good credit. Now, if you can't own something that actually produces revenue, like real estate, you're dependant on the market. If something goes wrong you may suddenly lose half of your money, or more, even if you invest on an index fund, bonds, gold etc. What do most people dream of doing if they "ever win the lottery"? Quit their job! We don't want to be productive, working sucks, that's why we are paid for it, it's a compensation for selling our lives and feeling the pain.
Both warren buffet and Dave Ramsey say savings accounts are not investments. That’s what the stock market is for. Savings accounts are for the unexpected expense. The oh no moment.
Peer to peer lending seems extremely sus especially with all these "new companies" running the show.. they could abscond with your funds at any moment like a lot of the early crypto exchanges did.
It is incredibly risky. Lending Club shut down in December of 2020.
Your money is at risk. Only invest what you can afford to lose.
@@MOGGS1942 I don't invest in risky ventures. I typically only invest in OTM call options
@@passiveplunder Yeah, I always saw ads for lending club and anything that has a sales pitchy ad seems like a red flag to me. It just sounds too sketchy when you're lending to and borrowing from strangers.
@@goldcherries The sad part is the business model sounds great on the surface as you cut out the major banks and get to both loan money at lower rates and take home more than a savings account can give you in interest. Win/win. In practice however, it fell through for Lending Club because the loans were unsecured. There was nothing to recover in the event that people stopped paying. I had more than a few loans discharged because the lendee declared bankruptcy.
My savings account offers 0.01% lol
same lol
Surprisingly In India, My Savings bank account pays me 6% and even all transaction charges are free!
@@Taurus388 So True, I know that. Thanks though :)
Mine 2.7% with transaction costs which nullifies it to negative.
Guys your explanation technique is quite impressive.Great job.
Thanks
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Two Cents below comment is a FAKE acount ... Be aware !!
I (26yo) just had a convo with my 56yo parent a couple months ago, and I said that it seems to me the 6-months-of-living expenses savings rule has to be adjusted and thought in terms of liquidity -- i.e., maybe I have 3 months' worth of living expenses immediately available in a saving's account, and the other 3 months' worth of living expenses I have in relatively easy to access forms of safer investments.
2:03 You just described Brazil nowadays! 🇧🇷 We just leave everything in Treasure Direct notes/bonds and earn way more than with stocks, with less risk
Beat the inflation by investing in a company that will make said teleporter!
yeeeeessss we have a winner! I am copying this idea
@@kialuvsyoo LOL
That company will surely die.. :D
My stocks are my savings account 🤗
Taxable accounts: i can take out the net income i put in (if it doesn't loose value).
That's part of the game 👍
Anyone noticed our boy Philip got some new ink? 7:23 niceeeeee.
@Two Cents stop selling your scams two cents doesn't sell anything there only here to help
This was actually one of the most useful videos I've watched. Thank you.
Two Cents below comment is a FAKE account ... Be aware !!
The bank ads were 10% interest on your savings!
A few months to a year later and beyond goes down to 0.01% interest...
wow! just learning the history of different savings accounts is so fascinating, and seeing where they will go next is going to be very interesting to watch.
Ugh. Sorry Ruby. There's a dang imposter here.
@@TwoCentsPBS amogus
I hide my savings under my mattress...my way of sticking it to "the Man"!
Don't be surprised when the man sticks it to you. Have you heard what the EU has been doing lately?
Sticking to "the man", while "the man" is continuously creating inflation, rendering your mattress less valuable each day...
What if you have a fire or you get robbed? At least put it in a safe and then hide it.
Very smart of you. So if there was an emergency let's say a fire, a flood, a tornado, an intruder, a robbery you'd lose you money entirely. Not to mention that inflation is gonna eat that money away. In the next 10 years you would've lost 20% of your money's face value. "the man" doesn't care about your money, they literally have trillions to work with. You're hindering yourself from seeking investments that would actually give you a return because of your fear and arrogance. So much so that bed bugs and ants are more of a threat to your financial state than inflation.
@@tasneemahmed5821 You sure put a lot of thought and effort into your reply...I'm impressed! I pray that you have a blessed and prosperous day. I'mma go upstairs and count my money.
I use saving accounts just for liquidity for my emergency fund. Anything above that goes into a high yield bond fund or stock.
How big is your emergency fund?
Yeah, a savings account is more like insurance against short term volatility these days. And the only reason I'd consider a CD as of 2021 is if I had the money set aside for a large expense (for instance, getting my windows replaced) and I wanted to park it somewhere with a slightly better return than my bank while I went through the whole pre-work process if I know it's going to take a few months between the start and when I need to pay.
Basically, if you want stability for a short term goal or liquidity, use a savings account and you can all but ignore the interest. Seriously. The low amounts any reasonable person should have in a liquid savings account indicate that you should look for the best services attached to that account since the difference in yield is literally pennies in most cases.
If you want growth, you invest. If you want stability, you save.
What the Hell is this?
can y'all do a video on how to set up a bond index fund? 😭
Can you do a video on retirement annuities? What they are and how they work
I've found I save much more than my other early 30-somethings. Not because I'm trying to flex on anybody, but because I'm genuinely frugal as a default state. Heck, the most money I spent goes to repairs and renovations to my condo because it A. looks better and hopefully B. improves the value.
I've always heard about old school mortgage rates, but it just seems crazy to me. It's like buying a house on a credit card! I damn well would've rented back then until I can afford to buy a house cash.
A few things I would add to this. One, if you do mutual funds remember their expenses and also how it will change your tax liability. Second, some of these mutual funds do TRS investments which greatly increases volatility. TRS was more popular about a decade ago, but still fairly common. I would also say that you could simply get a bond without using a mutual fund. Government bonds are considered very safe (for most countries), and you can even do corporate bonds. You can get a US treasury bond at most banks and this is considered the "risk free asset" that investment managers build their invest plans on if they use CAPM.
Dude got the cool haircut, stache and beautiful family (God bless!). Keep up the great informative videos. 🤙🏽
And a new tattoo.
Thanks for the quality content
Making money is easier through investment, don't save your money buy Bitcoin and invest💵💵
Cryptocurrency (bitcoin) is one of the best investment one can make and build wealth for their future
Trading crypto currency (bitcoin) is also a nice way to invest $ 1000 and change your life.
People will be kicking themselves in regrets in a few weeks if they miss this opportunity of buying and investing in Bitcoin (Cryptocurrency)
Well with the crypto currency market favorable as its investing now wouldn't be a bad choice.
Yes Investing in Bitcoin with the guidance of an expert is the best and more profitable
You two have grown so much. I remember when I saw your 50k subs and pointed out how underated you were. You deserve this and much more !
To stare the obvious, depending on your situation, the best solution may be to just pay down debt (especially credit card debt).