I was wondering what every is getting in their savings accounts? I'm getting 4.4% which is great compared to what I used to have, but seeing as rates are going up all over, I am wondering if my bank has kept pace. Discuss.
Max out your 401 and start a roth IRA if you can. Try to put it all in those. Your work will match some of what you put in your 401 up to a certain %. For your roth, it is all about compounding interest. Look those up Jae. Nick and BSL should have some input.
4.4% is high that is near money market rates. I have seen some 5.5% offers through online banks like E-trade. CD rates are running in the low 5 to mid 5's. If you switch make sure they send you a toaster.
Honestly, I don't count a savings account for real "savings"...even though 4.4% is impressive. To me a savings account is used more as liquid funds and usable money than a true savings. Logan nailed it on the head with the 401k and IRA. That is where you will really accumulate wealth. If you are brave you can dabble in the market, but I have never been a fan of the risk. Money Markets are always good too...they usually have some pretty good returns. I personally don't even have a savings account and just use my checking, but will max out my 401k once it is available to me at work. Just my .02.
And another note, if you are going to go with market trading...stick with things like "spiders" which is an index that measure all 500 companies of the S&P 500...least risk and not that suseptible to market movement. Usually have nice steady gains. Since we are young, you can also try a nice growth fund. Of course with risk comes gains, so you have more potential for gains, but more exposure to risk. depends on what your goals are I guess. Either way...do SOMETHING...compound interest is key like Logan pointed out.
Damn, one more thing. Wanted to point out why 401ks are great. You can put a portion (50%) in a steady growth fund, and another portion (say 25%)in a riskier growth and then you limit your risk exposure, but have potential for some nice gains. Ok, I'm done.
Yeah, I obviously max out the Roth & contribute enough to get the most out of my employer. However I think just keeping a checking account is not very useful. Some checking accounts will give you interest but we're talking less than a percent. Personally, I use a credit card that gets rewards points for purchases and pay it off every month from my savings account. That way I am accumulating the most interest possible.
6 comments:
Max out your 401 and start a roth IRA if you can. Try to put it all in those. Your work will match some of what you put in your 401 up to a certain %. For your roth, it is all about compounding interest. Look those up Jae.
Nick and BSL should have some input.
4.4% is high that is near money market rates. I have seen some 5.5% offers through online banks like E-trade. CD rates are running in the low 5 to mid 5's. If you switch make sure they send you a toaster.
Honestly, I don't count a savings account for real "savings"...even though 4.4% is impressive. To me a savings account is used more as liquid funds and usable money than a true savings. Logan nailed it on the head with the 401k and IRA. That is where you will really accumulate wealth. If you are brave you can dabble in the market, but I have never been a fan of the risk. Money Markets are always good too...they usually have some pretty good returns.
I personally don't even have a savings account and just use my checking, but will max out my 401k once it is available to me at work. Just my .02.
And another note, if you are going to go with market trading...stick with things like "spiders" which is an index that measure all 500 companies of the S&P 500...least risk and not that suseptible to market movement. Usually have nice steady gains.
Since we are young, you can also try a nice growth fund. Of course with risk comes gains, so you have more potential for gains, but more exposure to risk. depends on what your goals are I guess. Either way...do SOMETHING...compound interest is key like Logan pointed out.
Damn, one more thing. Wanted to point out why 401ks are great. You can put a portion (50%) in a steady growth fund, and another portion (say 25%)in a riskier growth and then you limit your risk exposure, but have potential for some nice gains. Ok, I'm done.
Yeah, I obviously max out the Roth & contribute enough to get the most out of my employer. However I think just keeping a checking account is not very useful. Some checking accounts will give you interest but we're talking less than a percent. Personally, I use a credit card that gets rewards points for purchases and pay it off every month from my savings account. That way I am accumulating the most interest possible.
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