The Power of a High Yield Savings Account!
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- čas přidán 12. 07. 2023
- The Power of a High Yield Savings Account!
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Just to clarify, a high yield saving account is not a place to build wealth. It is just a place to park emergency cash and try to minimize the effects of inflation on it. Your balance will grow in amount, but not significantly in value relative to inflation.
Still better than nothing in the long run it pays off
@@trynakillsu1 It should absolutely be used for emergency savings and any money you need to keep very liquid. But my comment was just to clarify that it shouldn’t be viewed as a wealth building tool.
@@PumpkinEater33 what do you recommend putting my money into after saving 3-6 months of emergency ?
@@trynakillsu1 sorry if I made you confused. I would recommend you put it into a high yield saving or money market. I was just saying that with 4-5% APY, don’t expect to “build wealth” with that. It’s just a good place to put the emergency fund.
@@trynakillsu1 Roth IRA invested in a whole market index fund.
You do pay taxes on the interest gained. It isn't a huge deal obviously for free money but just so everyone knows
I don't believe that's right, if I remember what my tax guy said, interest from a bank account are "unqualified dividends" and you wouldn't be taxed on it. Unlike qualified dividends from stocks.
@@redhawks0526 It's definitely taxed. They send you a 1099 at the end of the year. This is straight from the IRS:
Savings account interest is taxed at the same rate as your earned income. The interest you earn on regular savings, high-yield savings, money market accounts or certificates of deposit is reported to the IRS on Form 1099-INT
@@redhawks0526 you need a new “tax guy”
@@redhawks0526 as everybody below says it is taxable. as an aside a qualified dividiend means it is subject to the dividend tax rates which are 0, 15 and 20%. unqualified dividends means they are subject to marginal tax rates.
Everything is taxed so that foes without saying
My Chase savings account only gave .001% a month. Literally $0.20 a month. My Capital One high yield gives 4.3%. BIG difference in the first month alone.
when was this? for your chasing account
@@masongarcia8141 CITBank is higher still.
I doubt there's many people with 30k saved that don't know how interest works
You'd be surprised. I grew up relatively poor. No one taught me anything about financial literacy because none of them knew anything. I grow up, do pretty well for myself and end up with $100,000 in savings. A REGULAR NO INTEREST SAVINGS ACCOUNT. Didn't learn about high yield accounts until a few years ago. I cringe at all the interest I lost over those past years.
It's amazing how few people know about this. My aunt was saving for my cousin (for 17 years) in a regular account, we don't have the heart to tell her.
I have 35k in my checking account. My bank offers high yield interest rates are 0.15%. I'm not sure what bank this guy is talking about with 4.75% interest.
@@bowlinbob6 There are quite a few banks with high yield savings accounts. I use Capital One and get 4.3% but there are other banks that offer higher. I just use CP because I already had an account with them. I think BMO is offering 4.8% right now. Definitely look into it, you're missing out on a couple thousand dollars in interest a year.
@bowlinbob6 thats a standard checking savings, when you are talking high yield they are called CD'and you can't withdraw money till the end of like a 5 year contract.
I just learned what this was last month, I did my research and immediately opened an account, now I just got done talking to my brother about getting one and he’s looking into doing it too
Where? I have not heard of this lol..
@@brianowens889 I googled it right after watching this short to see what it was about and then I looked to see if my bank offered one and they do that’s
Opening my high yield was the best thing I ever did.
That’s the best thing you’ve ever done😂
@@tripleseven8328*_Hope she doesn’t have kids._*
buy Tbills urself instead, that is what the bank is doing and they are collecting the difference, and tbills are trax free
You guys are awesome. I finally moved my money after listening to guys for over a year.
I kept my next egg sitting in a normal bank account for years. Meanwhile i was using my high yield checking account ti pay all my bills. Idk why i never realized that i was being stupid. Immediately moved my money to high yield and earn 5%
These guys are talking about how to get better interest on a 30k savings when I am like "damn I wish I just had 30k to save"
It’s easy to get 30k
@@johngibs5356huhhhhh? In what world is it "easy" to save what most people bring home in a year. 50% of Americans don't have 1k in savings, it might be easy for your upper class ass, but not for the majority.
@@johngibs5356Easy to save 30k? You must live in a cardboard box. The median American salary is $57k, how will someone save 30k in a reasonable time frame making $57k?
@dengar96 even middle class people can do so; I did it on less than $25 per hour by today’s value. People should downsize, not be picky about where they live even if it means another state, get a second job, get out of debt and quit buying things they don’t need. Another $30k saved in 18 months or less. I save $10k per year from one job (with little to no overtime) and $16k per year from another job all while cash flowing school
@@nicholasselke5214 I make good money but I don’t spend any.. I still live with my parents (24) I do pay bills.. but everything else is savings.. saved more than 30k in a year.. I work extra hours… if u do it early you’ll be well off in future
Just opened mine today . Getting 5.1 %
“Average savings account earning 0.36% interest”
Me: *Laughs in 5.25%*
where?
What state?
@@danielcastro24884discover online high yield savings is around 4.30% now, with their CD's at 5% for 12 months
Put us on
My high yield is 7.85%
I just barely have 30k in my saving so definitely trying to get a higher yield.
Use Sofi lol
@@andrewclark145it’s better HYS than sofi
Just Google high yeild banks. Capital one, Ally, Sofi they’re all goof
Is it really worth it tho? Like I’ve had my savings in my bank for my whole life..can anything happen to your money being in these accounts?
@@drapermike If it is FDIC (which SoFI is, look it up) insured then it is safe.
Unless the government collapses and WW3 commences your money is safe.
Just changed from 0.01% BOA to 5.26%
why didn’t you name your 5.26% bank company
I closed this before the video even ended to open one of these 😂 thanks, guys!
Same.
Exactly!
I just have a line of credit instead of an emergency fund- I don't have any dependents do emergencies usually aren't that big or emergent. If something happens I use the loc and either pay it back from my paycheques or liquidate some investments
absolutely terrible idea.
I recommend a money market account. These high yield savings accounts have terms and conditions that are subject to change whenever the bank feels like it.
I mean they're free to open and maintain, so there's really no risk. If SoFi decides to change their terms tomorrow and bone me, I'll move my money to a new account and stop banking with them.
I have a Tbill 13 week ladder I keep my emergency fund in. Still paying over 5% and state tax free.
Too complicated. I’ve looked into it but… secondary markets aren’t as fluid as you’d wish, so if you need money in an emergency it could cost you.
@@amyx231Ladder in the t bills. You can survive a week without the funds. Bridge the emergency with a credit card and then pay off.
Any other basic finance shortcomings you need help with?
@@amyx231 T-Bills are 100% liquid. They can be sold at any time with no penalty.
A tbill might not be liquid enough for your emergency fund
@@talialalalala Ladder into T bills. Funds will be available every single week.
I'm saving to buy a house and the interest rate on my HYSA is the reason I owed taxes this year, a good problem to have of course!
Is that in a money market account savings account in a bank? Which they say isn't protected the same way?
He ain’t lying!
I have a sizable nest egg in a HYSA and consider the interest on that my part time job 😂
Im doing things my way by spreading my 10k across different HYS
Why? Too much effort for little to no result. Few hundred bucks over the course of a year
@@dayton191 it gets bigger every year...it don't stay the same like simple interest...they gotta give more at the end of every year... 10k x 0.04x04 5 times you will see in 5 years you will have over 100k in your savings and all you had to do was sit back and chill
@@dayton191doesn't really take much effort
Just curious: where did you find the high yield interest savings in 2020? Not a single brick and mortar I came across did more than .25%.
Several virtual banks. And there’s a credit union in Portland offering 5.25%.
@@Boogie2000 I was referring to 2020. I know today, 4 years later, they’re offering higher rates.
The only problem is at best the interest compensates for inflation. Spending your interest is tantamoubt to using capital
Could also just put the $30k emergency fund on red at roulette table. Much higher yield, potentially.😅 Double your money in a blink. Dave Ramsey would say you're not factoring in risk.
I don’t get what your point is with this comment, hysa’s have no risk.
Funny considering dave ramsey is what led me here
High yield saving accounts are completely safe, especially because they are FDIC insured
My emergency fund and general savings are in two buckets of the same high yield acct. 30k and some change total and I net 110$ each month in returns. Def not a way to build wealth and you do have to pay some taxes on it BUT that interest goes toward my fun money and paid for my last (fairly large) tattoo
I learned that can go wrong. Some investments fail big. and will have you wishing it was in a savings account. It won't grow in your savings account...but it's all there.
A high yield saving account is not the same as an investment. Your balance doesn’t go up and down with the market. The rate of return can fluctuate with the market, but it is generally significantly higher than traditional savings accounts.
Great info as always. so i have 25,000 which is emergency fund and saving in a 4.35% saving account. what is your thoughts on open up 5.15 %Cd account and start putting money in there?
It’s great to diversify your savings/investments, but don’t take away from your emergency fund to put into a CD
Especially important since you will lose at least 20% of that interest in taxes.
Is it okay to keep maybe 5 grand in the traditional savings account so I have immediate access if needed??
You can have immediate access in hysa as well. I use sofi with 4.6% savings account. All you need is direct deposit or $5k min balance otherwise is like 2% or so
What the best high yield account? I understand MMF are not FDIC insured, so would rather not have my savings in my individual fidelity account. Marcus from Goldman has 4.15 but I think there are other higher options?
Betterment
Don't know about betterment might be a better option but I use sofi. 4.6% with direct deposit or $5k deposit in first month. Even 0.5% on checking account
Numbers where wrong but overall interest account is better than having your money sit in the bank
wealthfront is at 4.8
Where the heck can you get 4.75%?
Wondering the same!
CIT Bank with a 5k minimum deposit. But there are multiple other banks that offer at least 4.5%
I’m at 4.0% right now with ally
Fidelity has a bunch of money market accounts that get that. CD's (while not as liquid) can get that. I know the Marcus account is close to that
Discover is around 4.15% right now.
Once you open the account does the rate change or is it locked in?
It often increases
It is not fixed. It can fluctuate over time based on market conditions, or the health of the financial institution.
4.75% In Synchrony. What do you guys use/have?
I also have synchrony I have $50,000 in it
4.75% at LendingClub
Do you have to have a checking account to open one up with Synchrony and can you withdraw ?
What high yield savings accounts are recommended?
Sofi and ally are the top imo
We have had marcus and ally for years
CIT bank
Synchrony has a really good one.
Ive been satisfied with capital one's 360 high yield. I also like their creditwise service
is the interest applied at the end of the year? or monthly?
Compounded daily, applied monthly
American Express has 4.15 % and they're pretty stable
capital one has a 4.3%
5% @ Treasury direct on 4 week T-bills
Actually 5.4% and no state taxes 🤑🤑🤑
Ladder in the funds if the 4 week gap scares you.
SoFi and CapitalOne have 4%+ accounts in 2023
Ally is 4% even. Other banks have slightly higher rates, but with the other benefits involved I prefer ally.
CIT is 4.95%
@@jeremyduncan-martinez2684vanguard money market fund is currently 5.06%
Another thing to know about high-yield savings is you have to have direct deposit set up
Only sofi does that. Most hysa like amex, marcus, wealthfront, citi, etc dont require a direct deposit
Please tell me where I can find these high yield savings accounts with 4%+ interest
Just google high yield savings account. There are tons of them above 4 right now. Pretty much every one honestly
Discover is a great one. Im with them.
Capital One 360, 4.3% APY
@@liptongtr CITBank. They also have 6 month 5% CDs.
Lending club HYSA 4.75%
Mine is 4.07
Im sorry, but this is where im confused. If you have 30k to deposit, isnt there better options to place that money by then?
It's meant to be emergency money. There's definitely better places for a much greater return but you won't have immediate access to the funds
Except you pay taxes on that. If possible find an account that’s tax sheltered that gives you a better rate. Also make sure there’s no penalties for withdrawals since this is an emergency fund.
Now imagine if your job is very secure and you are healthy having it in a s&p or a combo of treasury bonds and s&p.
I just put my 401k into S&P500.
@@Redmow51 if you are smart with money and finances you should utilize your credit card first then you can pay it off at a more stable point in your life and in the economy that's if the market tanked your savings then you give it time to recover
im too poor for these assumptions
Where and what bank can you find a percentage that’s over 2%? Please someone post up some banks.
Capital One
Sofi 4.6% with direct deposit
why not put any savings into a money market fund in a place like Vanguard or Fidelity. i have always taken off my "pay yourself first" savings off my direct deposit and transferred it to my moneymarket fund. whatever the interest rates are they have always been much higher than any bank account. started this in 2000. current yield is 5.06%. need the money, transfer online back to your bank over 2 days. used to be you could write a check from it. i think my moneymarjet fund stopped this though.
Your emergency fund should be easily accessible stable cash.
@@TheJeanean it is stable. the risk is "breaking the buck" . in the past when it happened they got 97 cents on the dollar before they were made whole. 2 days is not soon enough to get it in the bank? leave a little in your checking and put the rest in a money market fund. for a lot of people including us we pay by credit card and then pay off monthly so the 2 day wait is not significant. some may still allow you to write checks from it.
@@frankthefkintank 31 basis points for me is significant if you are going to the trouble of opening a new account anyway. the difference may not be that big if the current account you have is already at 4.75%. it will always have a higher yield than a banks high yield savings account for the same interest rate environment. over years the difference adds up. heck even with my sweep brokerage account vs the cash reserves money market fund where the difference is .01% less in the sweep account i'll push funds off the sweep and into the cash reserves unless i have the sweep funds on standby pending an open order.
Is a high yield savings account the same thing as a CD? Could someone explain this to me haha
No, they are a little bit different. Normally with a CD. There is a fixed rate that you lock in at. And you have to wait until the CD reaches Maturity until you can cash out. A high yield Savings account can have a variable rate. But has more flexibility if you need to access your money. You can withdraw whenever.
Which bank ....?????
plenty of options. sofi and ally come to mind. just google best high yield savings accounts
Honestly I've always had capital one and theres is 4.3% interest
Places that offer that?
Google
Sofi 4.6% with direct deposit
I just switched to a better savings account with the same stupid bank today. Let's see how long the interest rate stays above 4.
Isn’t inflation going to eat away all the gains anyway?
@@frankthefkintank i agree but stocks arent the move imo is all im saying
Maybe for a brief time but in the long run, no
@nicholasselke5214 nah it would only get worse long term even best you make a couple percent after inflation
My Cred union offers a 4.85% return BUT in a special certificate of deposit. :(
If you dont have an emergency or can build a new emergency fund while that one is locked up, do it.
Just drop that emergency fund in a money market fund with vanguard, VMFXX. Currently at 5.06% 7 day SEC yield.
@@classics-wz1bzit’s not an emergency fund if you cannot get to it
i get 5.5%, it's great, but at the same time the reality is it doesn't even keep up with inflation... it just makes sure you don't fall too far behind... takes that bag of melting ice and puts it in the cooler...
i get 5 percent
The only real downside is that a savings account may limit your monthly transactions to like 5 a month or something. But you can still panic and pull it all out in a month if you want.
Regulation D was paused during covid and remains that way. Most banks don't enforce it these days. You can move money from checking to savings and vice versa as many times as you need
CD account and High Yield Savings Account
Except that a high yield savings account penalizes you to withdraw.. there goes your emergency lol
False- That’s a CD - high yield savings accounts do not have holding periods.
Anyone have SoFi? Reviews? I have Marcus but thinking of switching.
How do I get a high yield savings account? Are there requirements or fees associated?
Capital one has a pretty good one
praytell where is this HYSA for 4.75?
Sofi 4.6%
The bank is loaning it out 9x, dont get excited about interest.
Those accounts have limits way lower than 30k and typically have term limitations that limit access. Someone point me in the right direction if you know differently.
I have Robinhood. $5 a month to access their high yield brokerage account feature. I Can take the money out as i please- no penalties. Of course I gotta pay taxes though. I make a little under $2 a day.
Sofi 4.6% no fees or limitations
Im gonna leave 47k EMERGY fund on a high yield savings account!
That’s gonna be fun
Some HYSA can be accessed w a debit card
@@SaveEuropa1488 I’m doing capital one ,
Although is not the highest return I feel like it’s safe there
as much as i love this tips... with the way things are, ill never have 30k in one sitting. or an emergency fund.
Why would you not have your emergency fund sitting in a high yield saving account? They are liquid and very safe. Also FDIC insured, so if the bank fails you are still covered up to FDIC limit, which is much more than 30k.
@PumpkinEater33 I think he’s suggesting he will never be able to save $30k period. I love looking at one’s budget and watching them get overly defensive when I tell them what can be cut out of it. The only things people actually need are food, utilities, a home, transportation and maybe a cell phone. Everything else can be dropped until one is fully financially stable, and that includes getting out of debt
How much money do you need to have in the account for it to really grow? I have a high yield 360 account and have over 5,000 and it's not really increasing😮 😮😮😮😮😮
The point of a high yield savings account is to keep up just above inflation and to have that cash quickly available in case of emergency. Your emergency fund should ideally be between three and six months of your minimum expenditures, but definitely no more than twelve months
You'll need 6 figures to really notice a change. If you have 6 months of expenses already I'd suggest investing in roth ira and individual brokerage accounts
Average savings account is 0.36%? BMO is sitting at a ballsy 0.01% for me. Lol thank God I have Ally at 4.35%
What’s the catch?
Most will either require a minimum balance or at least direct deposit for the higher 4%+ rates. There's lots of different hysa types though
Why is nobody telling people get paid that monthly on your money
How many people have 30k just sitting in a savings account that aren’t already wealthy ? We are acting like 30k savings can happen overnight and if you have a family and moderate income and trying to put money in a 401K it’s probably never happening .
Build your emergency fund before investing anything. And live on only absolute necessities until you are both out of debt and have a fully funded emergency fund. The cost of living isn’t really that bad in most places if you don’t have consumer debt
Yeah but after taxes and all the bs fees they're gonna charge you it probably works out to about a half percent difference with big penalties for actually withdrawing if you have to. An emergency fund should honestly be in a separate checking account, just my opinion. It's not an investment.
There is no penalty for withdrawing from a HYSA. There is one for withdrawing from a CD early. And most HYSA’s have no fees as long as you start with $5,000 and never let the balance drop below $2,500. The entire point is not as an investment, but to keep up a little bit above inflation so you’ll always have 3-6 months of expenses stashed away
I just need $30k…..oh
Try $3k. 😅 Im working on it.
Yes sounds great now tell all the millions of people which bank gives those accounts and then all can have it right ? 😊😂😂😂
30k emergency fund is insane. Invest that instead
I have 500k in a H.Y.S at 5$ its $2k a month
If I had that and a paid off house, I could live off the interest alone
Who has 30,000 just laying around? Not me
You need to change something
Takes time, not everyone ever has that much laying around, for me it took taking jobs I don’t enjoy, maybe I got life wrong, maybe it’s better to have less money and more sense of fulfillment, statistically I won’t live as long given the high stress environment I work in, money isn’t everything, but it is nice to have
@@Moneykingkevo you would only get $50 in a year - sorry bud
@@patriotsforegolf9859 I said after year 1....year 2 you get 500 sorry bud
@@Moneykingkevo Year 2 you'd only get about $51 or $52, not $500.
Someone explain the eyebrows
bruh i wish i just had 10k
Do you have a monthly budget?
Ok where do i get 30 grand
Get a second job and don’t spend any money on things that aren’t absolute necessities until you save $30k. Have a car payment? Student loan debt? Get them paid off with that extra money first
And with inflationary 6-7% you're now losing money.
1400 a month
😂😂 subtract 3.5 percent
The banks are giningi guaranteed 5-6 % interest. The stock market is not safe right now
What... you only have 30k emergency fund... 🤣 that is literally some people's yearly... who can just have that sitting around now a days? Seems you may not be talking to general public in this one.. 😢
Who cares, let it inspire you. If you have even three grand, well that is ten percent of 30k so just keep going!
You need to reevaluate your budget. That's a decent emergency fund, not many will brag about it. Broke people can be jaded about it.
You spend 60k per year on necessities? Maybe you should re-evaluate your budget, because that's insane.
Cash is bad. Inflation ate 20% of it. Invest in physical things that cant get wiped out by a keyboard.
An average Crytpo Defi like AAVE will make 10% a year. Banks cant compete with cryptocurrency.
Savings accounts just became that rate. They were closer to .50-2.00 depending before the crazy rate increases.
108$ or 1400 in a year that’s really not much of a difference. Yea it’s way more then that 108$ but we as average joes we need more then 1400$ how do I make my money work for me??
Emergency fund is not intended to be a long term investment strategy. Invest into the S&P 500 consistently (preferably around 15% of your income) and live off less than you make
I have two HYSA’s, one being my emergency fund and the other being my car fund. Every time I buy a car, I go to the financing department to figure out how much the payment would be. Then I pay cash for the car and move that equivalent payment amount into the car fund every month, of which I use only for car related expenses like maintenance, repairs, registration, insurance and buying another car when I’m ready. The other is my emergency fund, which I put in an extra $5k each year. The rest of my investments are in treasury bonds and S&P 500 mutual funds
It also helps that I chose to live in one of the least expensive areas of the country and continued to look for places that were cheaper, all the while not having any consumer debt. And getting a second job even though I can pay the bills and max out my 401k contributions with one job; the second job is all extra
Mainly, people need to be willing to make sacrifices
That's just emergency fund. It's not intended to be a great return, just enough to keep with inflation really. Follow their financial order of operations 👍
Lame that in the US 4% and some change is considered "high yield".
Where is there something better?
@@supreme5580in countries with higher rates. I live in Chile......rates here for savings are between 9% and 11% annual.
@@jamesrenaud592having a high interest rate for savings means that loan interest rates are just as high, otherwise it wouldn't make sense for banks to lend out money, so you're telling me banks have personal loans and mortgages for probably 15-20% in Chile?
@@classics-wz1bz in Chile there is an accounting unit called 'UF' (Google it) to represent inflation (whatever that is, whether it's high or low). There's a spread so usually mortgages are like UF + 4% (for example) since they are long term. Short term personal loans yes are like 20%-25% right now. The monetary policy rate set by the Chilean Central Bank is currently 11.25%, it's been that high since October in order to kill inflation. It seems to be working so the market expects them to reverse course and start cutting soon. Right now is a sweet spot if you have any capital to spare, you can get a CD for like 10%, which is a positive real rate since inflation has now fallen below that.
@@jamesrenaud592 see my point above, there's a reason you have such a high savings rate, it's that those loan rates are insane.
Stop yelllinggggggg
You get taxed alot
You say that but don’t forget Uncle Sam wants his cut of that capital gain in which they took no part in or risk. What a joke, anyways I don’t think it’s worth it.
It's worth it for peace of mind is about it. Not really worth it financially
Bro my normal savings account is 3%, what sort of low ass account would only give 0.35%
Wells Fargo for one.
BofA
Stock market on average return is about 11.68% over the years… way better than saving.
Yeah but you don't want your emergency cash in the market
@@proarmy70 is right, it is "emergency" fund that you might need at a moments notice. Emergencies don't wait for us to come out of recession(or a simple downturn), making you possibly sell for huge losses. Having a relatively small amount of emergency fund for the purpose of immediate access is just playing it safe, giving a peace of mind for investing the rest. Even high yield savings will obviously lag behind compared to investing but for some people it can be life and death, especially if they are new to these.
However I do personally feel like 30k is too much for some considering most people suggest 3-6 months of "expenses".
Until you have an unplanned expense and then need to yank that money out, most likely when the stock market is down and then that "11% gain is more like a 25% loss withdrawal, all because you're too greedy to have a little money on the side
You don’t want to put emergency cash in the stock market! They always say put money you can lose an not worry about in the stock market!
And then there is me …..i just sell and buy stocks in account (only big one) and got 161%, 65% and 15.71% for my 3 different accounts….I don’t really keep anything in regular account, not even emergency fund. In case emergency arises, i have credit lines which i can use and liquidate my position when its right time to pay it off
You're taking on inherent risk though. What if the market crashes and you have an immediate emergency expense? You probably don't need to keep 30k in an emergency fund, but having some amount of cash immediately available is generally advised.