Don’t Take It to the Bank
One of my greatest frustrations is people who think it’s a good idea to put their hard-earned money into their bank’s savings account. In fact, it’s barely better than stuffing your savings under a mattress.
I’ve heard all the arguments about how safe your money is in a bank with the Federal Deposit Insurance Corporation. The FDIC protects depositors’ principal balance and accrued interest in the event of a bank failure.
What many people don’t know is their money is protected in a brokerage firm by the Securities Investor Protection Corporation (SIPC). It was created in 1970 to protect investors should their brokerage firm become insolvent..
So, if “safety” is negated as an issue, what other reason is there to keep your money in a savings account?
It can’t be the amount of interest banks provide, because those interest rates are anemic. Banks act as though they’re doing us a favor by providing savings accounts. What they’re actually doing is loaning your money to other people and charging them hefty interest rates.
We put our money in savings accounts because we’ve always been told to “take it to the bank.” It’s a habit. People feel good about putting their money away for a rainy day, but it’s clearly not the best way to invest your hard-earned dollars.
Don’t think I’m completely “anti-bank.” I still put a small amount of cash in the bank (about 6 months to one year of expenses) should an emergency occur. If I have an imminent need for cash, my bank savings is in a money market that allows me to write checks from the account.
Click the “schedule a consultation” button beneath this blog to arrange a meeting where we can discuss the best ways for you to save and invest your money.
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