If you have money in the bank, expect it to earn you interest every year. This is a very important concept that most people don't fully think about. For example, instead of keeping your money in a regular account, you will earn a higher interest rate if you keep the money in a savings account. This is something that some people may not know, especially if they are the younger generation and are not fully aware of how bank deposits work. But even if you know something about saving in the bank, you may have to do more to find the best way to make more money with it.
For example, there are many banks that have poor interest rates on savings accounts. Most commercial banks offer interest rates below ten percent per year. This means you need to save a lot of money to generate significant income. Another more pressing question about keeping money in such an account is how low interest rates affect the value of your money.
While it's hard to watch out for, money doesn't retain its value over time. For example, you will find that what a dollar could buy five decades ago was far more than what it can buy today. The rate at which money depreciates in value is usually referred to as inflation. This concept basically means that if you own a dollar today and hold it without earning interest, it will lose some of its value in ten years. To reduce or even counter the effects of inflation, most people prefer to save their money in a way that they care about.
The disadvantage of a regular savings account is that the interest rate on a savings account is often well below the inflation rate. This means that the loss in value for your money accumulated during your banking business is only slightly compensated. If you want to avoid this, you can try putting your money in a high-yield savings account instead of a regular account. They often have much higher interest rates on savings accounts and can even get an offer of 10 percent interest.
The ten percent interest rate is ridiculous when compared to other forms of savings such as hedge funds, which can sometimes earn two to three times that amount. The best thing about high yield savings accounts is that they are very secure. The interest rate is guaranteed so you will never lose your money. If you want to ensure that your lifetime savings are intact and that you earn reasonable interest, it is much smarter to invest in such a savings account than to expose yourself to the risk of other types of mutual funds.
