As you get older it is a pretty good assumption that you want to keep your money as far away from risk as possible. While you are bringing in income it is hard to keep moving money that you don’t need to spend, in and out of safe investments. When the time comes that you need cash, you want it to be as liquid and as easy to access as possible. One of the safest investments out there is a savings account. But it is also one of the lowest returns that you can earn on your money as well. What many people don’t know, is that there are online banks available that offer savings accounts that offer interest up to 10x higher than what traditional banks offer.
Online banks offer the same products and services that traditional banks offer, minus one thing. They do not have brick and mortar buildings all over the country for you to visit. Because of this they save a lot of money in overhead by eliminating staffing and the upkeep of buildings. So they pass these savings on to you in the form of interest and lower or no account maintenance fees. There are even online banks that are offering cash bonuses just for opening an account.
Technology is advancing everyday and by taking advantage of it, your life will become much easier. You can open an online savings account from your home computer. Then you can link your online account to your current checking account (at your traditional bank) and transfer money back and forth for free. Online banks have 24/7 online and phone support so if you have any questions they are there to answer them. If you need to deposit a check, you can do so with your smartphone and get the same results as you would at the teller or ATM. If you already take advantage of all of these things with your traditional bank then you probably do not drive down to your traditional bank anyway. And online banks have a network of ATMs all over the country and some even refund your ATM fees if one of their own ATMs is not available.
The heading is correct. You can utilize an online savings account (or any savings account, you will just earn the most interest with an online savings account) to earn less and make more. You can do this by utilizing your direct deposit paycheck that you receive from you employer or wherever you get your income from. On your direct deposit form you can designate where you want the money from your paycheck to go. You can apply this to multiple accounts and then designate how much you want to go to each account. Now, you just need to determine how much less money you can live off of each week. Then have that amount sent to your online savings account each paycheck. The key is to set up your direct deposit this way and forget about it. Then try to never remove money from your savings account unless you need it. Let’s say that you can live on $100 less per week (that’s one less dinner dining out for a family of 4). If you can make it 1 year without needed to withdraw any money from your savings account you will have $5,200 saved up plus the interest that you earned along with any signup bonus that you received. Not bad for tricking yourself that you were earning $100 less a week.
As you get older you don’t want to put your money in volatile investments that will have large swings up and down. Yes, with more risky investments you have the potential to earn more, but if you mistime the market than you could be looking at a lot less money. $100 a week (or whatever you can afford) is not going to drastically change your main investment strategy. Knowing that your money is in good place, safe from losses, will allow you to sleep better because you have a good pile of cash ready to go whenever you need it. If you want to invest the money but are not sure where the market will go, you can wait for the right buying opportunity and then you will have a good base to invest to hopefully give you the growth that you want.
Check out some of these great online savings account options and start allowing your money to grow risk free.