Five Ways Your Savings Account Is More Than Just a Savings Place

by Mrs Money

Given all of the advantages that come with a savings account, the name ‘savings’ account can be misleading for those deciding whether to use one. Understanding some of the benefits to opening one can ensure that you get the most out of the money you put in the bank. Here are five ways to get more out of using a savings account today:

Compound Interest

It may seem that the interest earned on savings is insignificant; however, the returns grow over time. The totals can add up very quickly and turn into what is called compound interest. Essentially, this can be understood as interest earned on the interest you have already earned. For example, if you earn 5% interest on 100 dollars for a year, the 105 dollars you then have earns 5.25$ over the next year. This continues to grow exponentially, turning the five dollars into almost 1,000 dollars over the course of 40 years.

The 72 Rule


An easy way to see the power of saving is to understand the so called “rule of 72”. The formula allows you to calculate how long it will take a given amount of money to double when held in an interest bearing savings account. Just divide 72 by a given interest rate. For example, at the average savings rate of 5%, divide 72 by 5. This tells you that it will take 14 years to double your money at five percent interest.

Big Returns


14 years may seem like too long of a time for most people, however, the rule does not account for those that continue to add more funds. By growing the total of your account each year, you will see the rate of growth increase greatly. For example, if you take our original amount of 100 dollars at 5% interest once more, and add 50 dollars each year for 40 years, you will reach over 9,000 dollars and earn over 500 dollars in interest a year.

Saving Instead of Spending


Having a savings account should not be limited to a storage place for your cash. Rather, it should help facilitate a budget plan. For example, rather than purchasing a new product with loan money or credit, save the money in an account until you can buy the product directly. This habit can help save big money, especially if you do not mind waiting to buy it at a future date.

Choosing the Right Account


Take advantage of all the benefits of saving by choosing a savings account that best fits you. Many are not aware that accounts differ in terms of fees, withdraw or deposit policies and transfer costs. If you tend to make frequent withdrawals, it is important to know that some banks charge fees for excessive transactions and ATM usage. Be sure to speak with the account provider about maintenance fees or other charges that will hurt your balance. Calculate the annual percentage yield for each account you check. When you find the right one you will be one step closer to financial security.

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Five Underlooked Investments for Retirees

by Kaylie Phelps

When it comes to investing strategy, your age should be counted as one of the most important factors in forming the way you approach building a portfolio. While younger investors still have a salary that allows them to recover from more risky ventures in the stock market, older individuals or the recently retired need to tailor their allocation of stocks in a diversified way.

Ideally, this would look like a combination of companies that have above market average dividend return. But not everyone is savvy enough with todays markets to hit this golden combination on their own. That is why we have compiled a guide of these five under-looked strategies and assets that best suit the retired investor.

Consider Moderate Changes –

If you already have a portfolio before retiring, it is not always necessary to make big changes to the stock listing that you are currently in. For those first years of a hopefully long retirement, it is wise to make small adjustments, amounting to perhaps a 5-10 percent change in holdings. For example, if you plan to withdraw a moderate amount of your savings each year, say 3-5%, then adjusting for inflation you should be able to maintain your balance with a standard low risk portfolio. This should keep your initial years as stress free and gilded as possible. Consider the major and most important costs first such as dental senior insurance and then subsequently more luxurious ones.

Credit Investments –

Corporate bonds are one of the best-kept secrets in the retirement investment world. Most retired investors only consider stocks and equities. These credit investment products, when purchased through an intermediary such as an investment bank or hedge fund, offer the passive investor a relatively lower risk option to the more volatile equities markets. Some of these bonds can return as much as 12% a quarter, making the investor who helps fund these firms a handsome profit even after the rather expensive service fees.

Diversified Wealth Managers –

Rather than stressing while you should be enjoying your retired life, consider hiring a team of professionals to allocate your funds for you. There are many wealth managers today that specialize in low-risk sustainable investments designed to accomplish retirement plans. When speaking with wealth managers, ask for a reasonable blend of stocks and bonds that match your unique tolerance for risk and life plan.

Diversify Broadly –

Diversifying means more than just investing in both Stocks and Bonds and many companies and industries. Your diversification should consider factors such as quality grade of the investment, age of industry in which you invest, low risk and high risk. This strategy will cover your bases in the case of a financial crisis because these downturns rarely affect the young and old companies in the same way.

Index Funds –

U.S stocks and bond market index funds are the easiest way to achieve the type of diversification that allows retirees to thrive in all types of market climates. You will tap into a part of most of the companies that are traded publicly with ease. Many long time retired investors have nearly double and tripled their nest egg via this conservative method.

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