Updated: Jul 23
Happy New Year!! Tell me, what will your financial picture look like this year? One thing for sure, having a stable financial house will stand the test of time. Let's chat!
My first banking memories were with my maternal grand-father. Every week or so, he would take us to the local bank. We would hand the person at the window a little booklet and he (my Gramp) would give them money. When we got the booklet back, the total was more than the previous time. While my young eight/nine-year old mind thought it was magic and I was rich, I was learning a valuable life lesson that I still carry with me til this day. Pay Yourself! The other lesson my Gramp taught me was, "when my money goes out, it needs to march back with friends". So while savings matters, return on investment matters just a much. Keep reading...
Most of the time when we think of savings, the first thing that comes to mind is a bank savings account. This is called a simple interest account. Nothing wrong with this, but the returns are hella low. I mean if you're going to park your money in the bank only for the bank to turn around and lend out to borrowers for high rates and collecting the ROI, why would you be ok with only earning $.02 - $.05 a month? That is not good math for me my friend!
So in the words of my great, Gramp! It's time to have your dollars march back with friends. There is no better time than now to evaluate your savings goals. Whether you have a savings plan and you're already on a steady streak or you new year goal is to start saving, the most important thing is to be consistent.
We recommend leveraging a savings tool that will compound your money. Typically, there are four types of compound interest savings accounts: 1) High Yield Savings; 2) Certificate of Deposit (CD); 3) Money Market and 4) IRA
Here's why that will make a difference. Opposed to earning a few cents on your bucks, you earn upwards of 2%. So for example, you take a $1000 of your bonus, pay raise, tax refund or the money you have in savings and deposit those funds in an high-interest earning account, if you did that for 20 years, your money will grow to over $1 million! No simple savings account is going to make your money grow this way.
So cheers! And happy savings all 2020! You can calculate the potential growth of your savings at investor.gov.