For as long as I can remember, I have heard people talk about "putting money in savings".
I get it, it feels safe, and your bank goes out of its way to make you believe that the 1.20% they are giving you on their Super Savers Platinum Saving account is such a great deal....it's not. You're getting robbed.
Admittingly, I'm not great at math, but I do know that earning 1.20% a year on your savings means you will probably never retire.
I always want my money working as hard for me as it can, and it simply can't do that in a traditional savings account. Thus the reason mine only has $13.26. Which by the way is only in there because of a Keep the Change promotion my bank was running.
So, instead of savings, I keep my money in 3 places. My 401K, IRA, and Personal Investment account.
You owe it to yourself and your family to at least invest in a fund that tracks the market and earns you at least 9% a year.
Lets take a look at a quick example.
Person A starts with $10,000. Invests $10,000 a year for 20 years into a fund that tracks the stock market and earns 9%.
Person B starts with $10,000. Saves $15,000 a year for 20 years into their "Super Savers Platinum" Account and earns 1.20% Annually.
As you can see, despite Person B, contributing $100,000 more out of pocket over the 20 years, person A) will have over $260,000 more in this scenario.
I follow this page on YouTube, called Minority Mindset, and this guy does an excellent job at explaining financial matters.
The video is only 4 minutes and well worth the watch. I will pull some quotes from the video below and post below.
"Putting your money in a traditional savings account is a 100% guarantee route to being broke.
The price of things go up an average of 3% a year (inflation). That means if a pack of gum costs $1 on January 1st, by December 31st its going to cost $1.03
The average bank interest rate is 0.03%. That means if you deposit $1 on January 1st, at the end of the year that dollar is worth only $1.0003.
That means by the end of year you can’t afford that stick of gum.The sad reality is that every year your money sits in a savings account it loses over 2% of its value.
So if you had $1,000,000 sitting in the bank, (due to inflation) you just lost like $20-30,000 with the “safe” bank investment."