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Apologies for no email last week. Work was busy and memorial day weekend arrived quick. To the new readers, welcome! Hopefully you find the email both helpful and enjoyable…if not then we still have memes.
Quote
“The beginner chases the right answers. The master chases the right questions.” - James Clear
Get Paid To Save
Saving is a great thing.
While you can’t do it wrong, thanks to high yield savings accounts, there is a “good” way to save and a “great” way.
Here is how to make sure you do the latter. 👇️
Normal Dollars
The journey of most dollar bills that end up in savings is pretty boring. They get deposited in a checking or savings account and often aren’t touched for years.
They lay around collecting dust, as their counterparts get to live the dream of being invested and growing into a larger fund.
“I wish I was a cool kid.” - Probably a dollar bill in your traditional savings account.
Here is just how boring it is.
According to Market Watch the national average savings account interest rate was 0.46% for May 2024 (average checking yield was only 0.08%).
Depending on how much you have saved, that 0.46% would earn you this each year:
$10,000 saved = $46
$50,000 saved = $230
$100,000 saved = $460
Let’s be honest. That’s pitiful, and borderline robbery by the banking system.
Here is why.
High Yield Savings Dollars
While they aren’t the coolest kids on the block like the invested ones, dollars that go into high yield savings still have it made. Why is that?
Because depending on the account they have the ability to guarantee a risk free return of over 4.5% right now.
Bad market news? Who cares. Economy scare? No worries. WWIII? Meh. Funds in a HYSA aren’t at risk of decreasing in value like their cousins invested in stocks, ETFs, bonds, etc.
So how are these accounts able to earn a yield 10x more than the lame dollars sitting in a normal savings account?
As you likely know interest rates are high at the moment. This means banks earn more interest on loaned money, and can therefore transfer more of it back to users of their platform. It sucks for some things (like getting a loan), but is an opportunity for cash sitting on the sidelines to earn a little for itself.
Here is what you would earn each year on cash sitting in a HYSA offering 4.5%.
$10,000 saved = $450
$50,000 saved = $2,250
$100,000 saved = $4,500
Yes. It’s literally free money, but here is a few things to know. 👇️