“My bank earns 0.5% interest”
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Most big banks are looking wildly around wondering why young people are moving to high-interest savings accounts. Perhaps it’s because Wells Fargo’s interest rate is around 0.5% and they try to nickel-and-dime us for every small service. Sometimes, when I’m negotiating out of bank fees, I’m tempted to use a line I have never had the courage to use yet: “Do you know who I am?” But then I realize I’m a 24-year-old Indian guy with an ectomorphic body structure, and the phrase becomes a little less powerful.
You can be earning about 10x that money with a high-interest savings account. For more details, here’s how I set up my financial accounts.
But there’s a little more.
Get the right habits. First, some people wonder why they should bother doing opening up another savings account when they only have a few hundred dollars. The difference in interest isn’t really that much. But being young is about getting the right habits so that when you do have a lot of money, you know what to do with it.
A savings account is not enough. Stop being lazy!! Second, and this is more important, I’ve noticed that a lot of you are really satisfied with yourselves for opening up an ING account (now called Capital One 360). Good! We all should–it’s a great step in the right direction. But there’s a weird sense of, “I did it, now I’m done!” Guys, opening up a savings account is one of the earliest steps to getting rich. It’s the equivalent of an infant crawling 14 steps. Now that you’ve got one of your financial accounts set up, it’s time to start thinking about growth through investing. Earning 5% in a savings account is not enough.
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