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You will NEVER get wealthy with a savings account
Let me explain
(thread)
Let me explain
(thread)
Before I get into the analysis
I want to say this... savings accounts are GREAT for emergency funds
I, myself, hold my emergency fund in a savings account
However
You will NOT be able to become wealthy with just a savings account, you must invest
I want to say this... savings accounts are GREAT for emergency funds
I, myself, hold my emergency fund in a savings account
However
You will NOT be able to become wealthy with just a savings account, you must invest
As of 2020, the average interest rate of a savings account is 0.05% 
“BuT wHaT AbOuT HiGh InTeReSt SaViNgS AcCoUnTs?”
Personally, I bank with Ally, and my current “high interest” savings account rate is 0.80%
So let’s run an analysis on both
“BuT wHaT AbOuT HiGh InTeReSt SaViNgS AcCoUnTs?”
Personally, I bank with Ally, and my current “high interest” savings account rate is 0.80%
So let’s run an analysis on both
Let’s assume the following people already have a fully funded emergency fund!
“invests” her money into a 0.05% savings account
“invests” his money into a 0.80% savings account
decides to invest his money into the stock market (8% average return)
“invests” her money into a 0.05% savings account “invests” his money into a 0.80% savings account decides to invest his money into the stock market (8% average return)
All 3 of our people set aside
$400/month into their accounts for retirement
They are all 25 years old
They all plan to retire at 55 and live off their investments (hopefully
)
Let’s do it
$400/month into their accounts for retirement
They are all 25 years old
They all plan to retire at 55 and live off their investments (hopefully
)Let’s do it
After 5 years
They each have contributed $24,000
account will be $24,029
account will be $24,478
account will be $29,390
Not much of a difference here... YET
Let’s look after 15 years
They each have contributed $24,000
account will be $24,029 account will be $24,478 account will be $29,390 Not much of a difference here... YET
Let’s look after 15 years
After 15 years
They each have contributed $72,000
account will be $72,269
account will be $76,471
account will be $138,415
Notice how is starting to pull away from the pack
Let’s look after 30 years
They each have contributed $72,000
account will be $72,269 account will be $76,471 account will be $138,415Notice how
is starting to pull away from the packLet’s look after 30 years
After 30 years, planned retirement age for all 3 of them
They each have contributed $144,400
account will be $145,082
account will be $162,688
account will be $596,143
What does this teach us?
They each have contributed $144,400
account will be $145,082 account will be $162,688 account will be $596,143What does this teach us?
Savings accounts are GREAT to hold your emergency funds
BUT
They are not a great way to build wealth
Even those “high interest” savings accounts aren’t going to build you wealth either
And, you’ll lose to inflation too
BUT
They are not a great way to build wealth
Even those “high interest” savings accounts aren’t going to build you wealth either
And, you’ll lose to inflation too
What’s the best way to build wealth?
INVESTING
Your money will be in a place it’s working FOR YOU
Not against you (or even losing you money to inflation
)
INVESTING
Your money will be in a place it’s working FOR YOU
Not against you (or even losing you money to inflation
)
I hope this thread helps explain the importance of investing
Rather than a savings account to build wealth
If you found value in this thread, feel free to share it
I appreciate you reading this far and I plan to continue to provide VALUE on your feed
@DecadeInvestor
Rather than a savings account to build wealth
If you found value in this thread, feel free to share it
I appreciate you reading this far and I plan to continue to provide VALUE on your feed
@DecadeInvestor
