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There is no point in savings accounts

GeTinThere007 152 20 December 2, 2015 at 09:39 AM
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When we get nothing near 1% return. We might as well store it under a mattress or take a chunk of it and bet on the Warriors to win their next game.
I'm looking into keeping a 6 month emergency fund in a traditional savings account and everything else goes to Vanguard low fee, risk appropriate index fund.
What say you slickdeals Finance gurus on this plan?

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#2
Quote from GeTinThere007 View Post :
When we get nothing near 1% return. We might as well store it under a mattress or take a chunk of it and bet on the Warriors to win their next game.
There's still value in keeping your money in a safe place. You aren't getting any return, but you also aren't losing much to inflation either. I do agree that there isn't much value compared to a checking account unless you don't really keep a budget and it's how you force yourself to save, as some people do.

Quote :
I'm looking into keeping a 6 month emergency fund in a traditional savings account and everything else goes to Vanguard low fee, risk appropriate index fund.
What say you slickdeals Finance gurus on this plan?
An excellent plan.
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#3
Quote from dukeblue219 View Post :
There's still value in keeping your money in a safe place. You aren't getting any return, but you also aren't losing much to inflation either. I do agree that there isn't much value compared to a checking account unless you don't really keep a budget and it's how you force yourself to save, as some people do.
Agreed - just wait until banks start charging you, not paying you, for your deposits. Already happening in Sweden (though they have not passed charge on to customers yet).

(don't think this will happen as Fed has yet another opportunity to finally move yield curve up on Dec 15/16 meetings)

Quote from dukeblue219 View Post :
An excellent plan.

At first, I thought you were approving his betting on the Warriors! laugh out loud
Though you'd get terrible odds on it anyway - they are such a juggernaut right now...
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#4
Quote from GeTinThere007 View Post :
I'm looking into keeping a 6 month emergency fund in a traditional savings account
So there is a point in a savings account?
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#5
Making 1% in an online savings account is better than losing money. Always have to laugh at those that think the market always goes up until there is a crash and they lose all the gains of the past X years and then have to wait a number of years to recover. An emergency fund is not Vegas money so why would you treat it as such by putting it in the stock market?
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#6
Quote from megakimcheelove View Post :
Agreed - just wait until banks start charging you, not paying you, for your deposits. Already happening in Sweden (though they have not passed charge on to customers yet).

(don't think this will happen as Fed has yet another opportunity to finally move yield curve up on Dec 15/16 meetings)
Wait.. What!? Confused Charging customers to deposit is absurd.
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#7
Quote from YanksIn2009 View Post :
Making 1% in an online savings account is better than losing money. Always have to laugh at those that think the market always goes up until there is a crash and they lose all the gains of the past X years and then have to wait a number of years to recover. An emergency fund is not Vegas money so why would you treat it as such by putting it in the stock market?
True, emergency fund is not Vegas money but online savings do not even get us 1%. .07% maybe. It's just a bit depressing to think that we can't make a greater return on our diligently saved money when the banks loan it out and make high percentage returns.
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#8
Quote from megakimcheelove View Post :
Agreed - just wait until banks start charging you, not paying you, for your deposits. Already happening in Sweden (though they have not passed charge on to customers yet).

(don't think this will happen as Fed has yet another opportunity to finally move yield curve up on Dec 15/16 meetings)




At first, I thought you were approving his betting on the Warriors! laugh out loud
Though you'd get terrible odds on it anyway - they are such a juggernaut right now...
Well if you had 10k in an online savings account and chose to be responsible and only put 2k on the Warriors tonight, you woud make more on that one very safe bet than saving account interest for the year. I guess that is my slightly reckless twisted point.
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#9
Quote from GeTinThere007 View Post :
True, emergency fund is not Vegas money but online savings do not even get us 1%. .07% maybe. It's just a bit depressing to think that we can't make a greater return on our diligently saved money when the banks loan it out and make high percentage returns.

You can get about 1% in a number of online savings accounts\money market accounts from places like Ally, Amex, Discover, etc. Open a checking account with them as well and transfer money between the accounts as needed.

As to what banks are offering, they do this because the Fed Reserve has rigged the game to both prop up their stock market buddies and to keep the interest payments on the 19 trillion dollar federal debt as low as possible. Like any thing else, any time the gov intervenes in the private economy, it makes a mess out of things.
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Last edited by YanksIn2009 December 2, 2015 at 02:48 PM
#10
Well, the 1% savings aren't worth it, but NetSpend (and other type accounts) have 5% interest.
They cap at $5000, so you'll need an account for each $5k that you want to deposit.
Working well for me Smilie
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#11
Which Vanguard index fund? Not stocks, unless you can afford to lose half of your emergency fund, as happened from 2007-2009 (1-day record for loss is probably 20%, October 1987). Short term bond index fund? Probably, but still not as safe as an FDIC insured bank account.
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#12
emmSmilie
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#13
Just get several of the 5% savings accounts
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#14
Quote from GeTinThere007 View Post :
I'm looking into keeping a 6 month emergency fund in a traditional savings account and everything else goes to Vanguard low fee, risk appropriate index fund.
What say you slickdeals Finance gurus on this plan?
Just curious, I'm a Vanguard user as well (just a beginner). Would be interested to hear which specific fund you're looking at? I was thinking about opening a low risk fund in addition to my normal brokerage IRA. Thanks!
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#15
I'm one of those who believe the bank isn't a safe place to keep our hard earned $$. With current zero percent on most savings account, I'm better off with my free C/A that I use to pull funds from to pay all my bills, mostly CC bills.

One of these days, I'll not be surprise if the negative interest rate happens here like it is in Sweden.
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