7 ms·

Given my savings account pays 0.01%, and a 30 day CD from my bank pays .75%, and the average dividend yield of the S&P 500 ETFs (like blackrock's IVV) net-of-fe

Given my savings account pays 0.01%, and a 30 day CD from my bank pays .75%, and the average dividend yield of the S&P 500 ETFs (like blackrock's IVV) net-of-fees is 2%, is it all surprising that nobody uses Savings Accounts anymore? Seems like rational behavior to me.

sethammons 10y ago
In the article: > ...asked 7,000 people around the country how much money they had set aside in savings accounts for the future... I think that would include CDs and other savings vehicles. It is unclear if that counts retirement accounts.
- arbuge 10y ago
  Nevertheless it seems like a flaw in the study if it's not counting other liquid sources of cash, such as checking accounts, brokerage accounts, cash itself, etc.
dawnerd 10y ago
That reminds me, I need to move my cash out of savings. I'm insane for keeping that much in there without earning anything meaningful.
intopieces 10y ago
This response comes up every single time this statistic gets posted. I assure you that your condition is not typical for the 69% mentioned in the statistic quoted. "The Fed asked respondents how they would pay for a $400 emergency. The answer: 47 percent of respondents said that either they would cover the expense by borrowing or selling something, or they would not be able to come up with the $400 at all. Four hundred dollars! Who knew?" http://www.theatlantic.com/magazine/archive/2016/05/my-secret-shame/476415/ http://www.theatlantic.com/magazine/archive/2016/05/my-secre... 1 in 3 Americans has $0 saved for Retirement, and 56% have less than $10,000 http://time.com/money/4258451/retirement-savings-survey/ http://time.com/money/4258451/retirement-savings-survey/
- ghshephard 10y ago
  Fair enough - but, given the fascination a lot of people have with owning their home (which I do not), you would also have to include any positive equity (which can be leveraged in a number of ways) in their property in this scenario. I guess the question I would have is "What is the 10th/25th/Median percentile of net-liquidity" and "What is the expected downstream third-party income from Social Security/Pensions/etc..." expected. That paints a fuller picture of people's financial stability, and also identifies how important Social Security is to their wellbeing.
  - jwatte 10y ago
    Home owners are not in the bottom half.
- madengr 10y ago
  Thanks for that retirement savings link; been looking for that data. Yeah, forget the saving account. Retirement is going to be the real issue. Lot of people going to be eating dog food in the future. Pensions for anyone under 45 are pretty much non existent, with a few exceptions. Even if they are, the companies tend to screw with them. Our company just froze the salary for pension calculations (not that I have one), so somebody could work another 20 years and retire at a percentage of today's pay. At least I get a crappy annuity and 401k matching. New hires now get neither.
  - jwatte 10y ago
    You get at least something from social security, which every worker pays to sustain, and society then promises to keep going. (Worker/retiree ratio changes are going to be a problem.) Thus, retirement savings is not the top problem. However, the truth is that a majority of Americans worry about how to pay food and rent every month. This is not because they are all irresponsible human beings, but because American society makes it really freaking terrible to be in the bottom half. Retirement is out of reach; saving for an emergency has to fight with rent has to fight with prescription medications has to fight with clothes for your kids.
  - 10y ago
throwaway287391 10y ago
Ally pays 1% interest for their free online savings accounts. I wouldn't be surprised if other online banks are offering even more; haven't checked in a while. (Oddly, looking at Ally's CD offerings, some of the shorter-term ones are <1%...wonder what value those could possibly offer vs. their savings account.) Somewhat tangentially, it always surprises me that people continue to use checking/savings accounts from banks like Chase, Wells Fargo, Bank of America, etc. when they pay terrible interest rates, don't reimburse ATM fees, and sometimes actually charge you for debit cards and/or paper checks. If it's the thought of not having access to real brick & mortar banks that scares you, Schwab is a great option (though they pay much less interest than the top online ones).
- kibibyte 10y ago
  As far as I know, the only bank to offer a higher interest rate (for the entire balance--as opposed to the first X amount) is GS Bank at 1.05%. But I haven't seen anything higher.
  - lsiebert 10y ago
    Synchrony does the same.
  - sakopov 10y ago
    Barclays is at 1% or 1.05% as well I believe.
- ghshephard 10y ago
  I can answer that for myself - no way in hell would I trust any substantial amount of money to https://en.wikipedia.org/wiki/Ally_Bank https://en.wikipedia.org/wiki/Ally_Bank. I'm somewhat more comfortable with trusting this entity - https://en.wikipedia.org/wiki/Wells_Fargo https://en.wikipedia.org/wiki/Wells_Fargo If you have your paycheck auto-depositied, you can avoid most/all of the fees.
  - throwaway287391 10y ago
    Er, could you explain why? The Wikipedia articles you link to seem to very much make the case in the opposite direction... There doesn't seem to be anything damning in the Ally entry. Especially compared with the Wells Fargo entry, which includes a detailed 14 point list of "Controversies" (including the recent scandal and CEO resignation which should be fresh on everyone's minds).
freyr 10y ago
What bank gives you a 30 day CD at 0.75%? My bank (Bank of America) gives 0.03%.
- grogers 10y ago
  Seems fishy to me as well. Best I could find with a few minutes of googling was a 0.22% 30 day CD, but with a minimum of $95,000 [1]. Others I could find with low deposit limits are in the 0.10% area. Most banks don't even offer 30 day CDs it looks like. 1. https://www.usaa.com/inet/pages/bank_cd_rates https://www.usaa.com/inet/pages/bank_cd_rates
- ghshephard 10y ago
  Just double checked, and OCBC (Singapore) is currently offering 1% for 12 month deposit, no 30 day preferable rates.

sethammons 10y ago

In the article: > ...asked 7,000 people around the country how much money they had set aside in savings accounts for the future... I think that would include CDs and other savings vehicles. It is unclear if that counts retirement accounts.

arbuge 10y ago
Nevertheless it seems like a flaw in the study if it's not counting other liquid sources of cash, such as checking accounts, brokerage accounts, cash itself, etc.

dawnerd 10y ago

That reminds me, I need to move my cash out of savings. I'm insane for keeping that much in there without earning anything meaningful.

intopieces 10y ago

This response comes up every single time this statistic gets posted. I assure you that your condition is not typical for the 69% mentioned in the statistic quoted. "The Fed asked respondents how they would pay for a $400 emergency. The answer: 47 percent of respondents said that either they would cover the expense by borrowing or selling something, or they would not be able to come up with the $400 at all. Four hundred dollars! Who knew?" http://www.theatlantic.com/magazine/archive/2016/05/my-secret-shame/476415/ http://www.theatlantic.com/magazine/archive/2016/05/my-secre... 1 in 3 Americans has $0 saved for Retirement, and 56% have less than $10,000 http://time.com/money/4258451/retirement-savings-survey/ http://time.com/money/4258451/retirement-savings-survey/

ghshephard 10y ago
Fair enough - but, given the fascination a lot of people have with owning their home (which I do not), you would also have to include any positive equity (which can be leveraged in a number of ways) in their property in this scenario. I guess the question I would have is "What is the 10th/25th/Median percentile of net-liquidity" and "What is the expected downstream third-party income from Social Security/Pensions/etc..." expected. That paints a fuller picture of people's financial stability, and also identifies how important Social Security is to their wellbeing.
- jwatte 10y ago
  Home owners are not in the bottom half.
madengr 10y ago
Thanks for that retirement savings link; been looking for that data. Yeah, forget the saving account. Retirement is going to be the real issue. Lot of people going to be eating dog food in the future. Pensions for anyone under 45 are pretty much non existent, with a few exceptions. Even if they are, the companies tend to screw with them. Our company just froze the salary for pension calculations (not that I have one), so somebody could work another 20 years and retire at a percentage of today's pay. At least I get a crappy annuity and 401k matching. New hires now get neither.
- jwatte 10y ago
  You get at least something from social security, which every worker pays to sustain, and society then promises to keep going. (Worker/retiree ratio changes are going to be a problem.) Thus, retirement savings is not the top problem. However, the truth is that a majority of Americans worry about how to pay food and rent every month. This is not because they are all irresponsible human beings, but because American society makes it really freaking terrible to be in the bottom half. Retirement is out of reach; saving for an emergency has to fight with rent has to fight with prescription medications has to fight with clothes for your kids.
- 10y ago

throwaway287391 10y ago

Ally pays 1% interest for their free online savings accounts. I wouldn't be surprised if other online banks are offering even more; haven't checked in a while. (Oddly, looking at Ally's CD offerings, some of the shorter-term ones are <1%...wonder what value those could possibly offer vs. their savings account.) Somewhat tangentially, it always surprises me that people continue to use checking/savings accounts from banks like Chase, Wells Fargo, Bank of America, etc. when they pay terrible interest rates, don't reimburse ATM fees, and sometimes actually charge you for debit cards and/or paper checks. If it's the thought of not having access to real brick & mortar banks that scares you, Schwab is a great option (though they pay much less interest than the top online ones).

kibibyte 10y ago
As far as I know, the only bank to offer a higher interest rate (for the entire balance--as opposed to the first X amount) is GS Bank at 1.05%. But I haven't seen anything higher.
- lsiebert 10y ago
  Synchrony does the same.
- sakopov 10y ago
  Barclays is at 1% or 1.05% as well I believe.
ghshephard 10y ago
I can answer that for myself - no way in hell would I trust any substantial amount of money to https://en.wikipedia.org/wiki/Ally_Bank https://en.wikipedia.org/wiki/Ally_Bank. I'm somewhat more comfortable with trusting this entity - https://en.wikipedia.org/wiki/Wells_Fargo https://en.wikipedia.org/wiki/Wells_Fargo If you have your paycheck auto-depositied, you can avoid most/all of the fees.
- throwaway287391 10y ago
  Er, could you explain why? The Wikipedia articles you link to seem to very much make the case in the opposite direction... There doesn't seem to be anything damning in the Ally entry. Especially compared with the Wells Fargo entry, which includes a detailed 14 point list of "Controversies" (including the recent scandal and CEO resignation which should be fresh on everyone's minds).

freyr 10y ago

What bank gives you a 30 day CD at 0.75%? My bank (Bank of America) gives 0.03%.

grogers 10y ago
Seems fishy to me as well. Best I could find with a few minutes of googling was a 0.22% 30 day CD, but with a minimum of $95,000 [1]. Others I could find with low deposit limits are in the 0.10% area. Most banks don't even offer 30 day CDs it looks like. 1. https://www.usaa.com/inet/pages/bank_cd_rates https://www.usaa.com/inet/pages/bank_cd_rates
ghshephard 10y ago
Just double checked, and OCBC (Singapore) is currently offering 1% for 12 month deposit, no 30 day preferable rates.