Why Saving Money is a BAD Idea

If you use a savings account, you really need to educate yourself and think twice.

Why Saving Money is a Bad Idea, you ask?

Now, I’m no financial advisor, especially not your financial advisor and this is not financial advice.

I personally use Ally Bank as my MAIN savings account, for various reasons which I’ll highlight on a later video.

I use Ally Bank to park my cash for upcoming transactions and also for budgeting. If you look here you can see some of the names or purposes I’ve designated to these accounts, and some even have sub-buckets.

But here’s the deal, In total I have a small fraction of my overall portfolio in Ally Bank, specifically $54,000. It’s actually closer to $70,000 but I had to borrow some money to buy some cheap stocks recently.

Regardless, I had inflows and outflows throughout the year so I probably had a little less than $54,000 in the account for most of the year.

But now as we reach the end of the year, I can see my accumulated interest of $240.

Seems like a ton of free money right? Absolutely!

240/54,000 gives us a yield of about 0.4% interest that we’ve earned.

Not bad, right $240 for doing absolutely nothing, talk about passive income!

But wait!

Inflation this year was upwards of over 6%!

That means every $1 is now worth about 94 cents!

To be precise, my $54,000 has lost 6% or $3,240 in value.

So actually, January 1st of this year, my purchasing power of $54,000 is now the equivalent of about $51,000.

I lost $3,000 in value by choosing to put money in a savings account.

But wait, there’s more! We’re just considering the cost of storing value in money or dollars.

What about the opportunity cost?

Even if you’re not a savvy investor, you can still invest in no-brainer stocks or ETFs such as those that mirror the S&P500 - for example the VTI or VTSAX or VOO.

THOSE funds are up 27% if not MORE.

What would my $54,000 be worth today had I invested? With 27% gains on $54,000, it would be worth a whopping $68,580. But now, it’s only worth $51,000. This presents a difference of over $17,000.

This is a classic example of life-changing money you miss out on because you choose to use a SAVINGS account.

You really have to read between the lines but also open up your eyes to see what’s going on. Money might be a store of value, but it does not store and maintain value - let that sink in.

#personalfinance #millionaire #money

Видео Why Saving Money is a BAD Idea канала Mr. Money Mindset