π΄ββ οΈπ How to protect your savings during high inflation
Hey Pirate π΄ββ οΈ
π€ I was thinking about sharing some information with you all, and I thought Iβd give personal finance a shot. Specifically, Iβd like to talk about wealth-building. π°
π¦ Have you ever wondered how banks make their money? Essentially, they collect funds from people like us and lend them out to others, such as businesses and governments. To encourage us to entrust our money to them, they promise to take good care of it while also paying us back in the form of interest. πͺ
π‘Unfortunately, as youβre likely aware, the interest rates offered by most major banks arenβt very enticing. The national average savings account interest rate is currently under 0.4% APY, which means youβll receive less than $4 per year for every $1,000 you deposit. Meanwhile, the current Federal Reserve interest rate is 5%. π¨
𧲠While banks arenβt required to align their interest rates with the Fedβs rate, they often do so to help stabilize the economy. A good example of this is the recent rise in mortgage rates. During the pandemic, when the Federal Reserve kept interest rates low, you could get a home mortgage at around 3%. Now, the average cost to borrow money to buy a home is nearly 7%. πΏ
π‘ At this point, you might be wondering why your interest rate has remained so low (around 0.4%) while banks are charging their customers much more to borrow (+7%). This is where the business side of things comes in. Banks typically make money by charging borrowers more in interest than they pay out to depositors. The larger the difference between these rates, the greater the bankβs profit. ποΈ While the Fedβs sharp increase in interest rates provides a good excuse for banks to raise borrowing costs, they donβt necessarily have to follow suit when it comes to paying you back for depositing. And with average inflation at 5% in 2023, youβre effectively losing a significant amount of money by entrusting your cash to most major banks. πΈ
π The good news is that not all financial institutions take advantage of depositors and offer significantly higher savings interest rates. With a bit of research, you can find several that offer high-yield savings accounts at above 4% APY, which is ten times the national average. π€© One such institution is my affiliate partner, Webull π, which is currently running a special promotion offering 5.8% APY for the first month instead of the usual 4.1% APY. This means you can earn $410 per year simply by depositing and leaving $10,000 in the account. Additionally, anyone who opens a new Webull account can receive up to 12 fractional shares for free, each valued between $3 and $3,000. π΅
βοΈ Rest assured that Webull is SIPC insured, meaning the government protects your cash up to $250,000 even if the brokerage fails. While the recent collapse of Silicon Valley Bank may be concerning, your principal is safe as long as it doesnβt exceed $250k. π Depositing money with Webull can not only be a good financial education for yourself but also a step towards learning how to invest and grow your wealth. If youβre interested in learning about stock market investment, I recommend watching my video on Stock Market for Beginners. I share a clever approach to invest in stocks without losses in the long run. πββοΈ
Thatβs it for today. Donβt lose to inflation. Stay safe. Be smart.
Iβll see you all next week. Arrgh!
PK π
P.S.
π As an affiliate, I may earn from qualifying purchases. Using these links is the best way to support me at no cost to you! π
* Please note that this isn't professional investment advice.
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