4 ms·

Inflation will erode the value of money just sitting in an account. Even if you lock it up and get better interest the results will get dwarfed by investing in

by lawn 2mo ago

Inflation will erode the value of money just sitting in an account. Even if you lock it up and get better interest the results will get dwarfed by investing in broad, passive, and low fee funds.

altmanaltman 2mo ago
yeah but the two are different things no? Like yes if you take more risk with even diversified, passive funds you will like get more volatility which could go either way. There is no way you can know it will drawf interest rates provided by the bank which are designed not to beat inflation but prevent your cash from getting eaten away by the inflation as opposed to sitting in your basement locker etc. Also the idea doesn't seem to be "hey kids beat the market and get the best returns" but to gradually show the value of accumulated savings? They can also contribute their own earnings to those savings and at that age it is better to keep it in bank and accumulate interest than invest even in diversified low risk funds if your objective is to get the best savings by the time you are an adult and then you can decide what you want to invest in.
karel-3d 2mo ago
yeah but you get essentially 0 risk (especially if the bank is insured) risk is proportional to gain
noduerme 2mo ago
Yeah, but that's really not the point of opening a bank account for a kid. The point is that saving should become a habit. Seeing a balance grow is satisfying. When you're 12 years old and mowing lawns it's better to put money in your bank account than stuff it under your mattress, or spend it on dumb shit you won't remember next year. Then you talk to your kids about CDs, mutual funds, high yield savings, growth stocks, dividends, inflation, retirement funds, real estate, loans, etc. The first thing is how to open a bank account and put money in it. You'd be amazed how many adults I've met who didn't learn that until their mid-20s.

by lawn 2mo ago

Inflation will erode the value of money just sitting in an account. Even if you lock it up and get better interest the results will get dwarfed by investing in broad, passive, and low fee funds.

altmanaltman 2mo ago

yeah but the two are different things no? Like yes if you take more risk with even diversified, passive funds you will like get more volatility which could go either way. There is no way you can know it will drawf interest rates provided by the bank which are designed not to beat inflation but prevent your cash from getting eaten away by the inflation as opposed to sitting in your basement locker etc. Also the idea doesn't seem to be "hey kids beat the market and get the best returns" but to gradually show the value of accumulated savings? They can also contribute their own earnings to those savings and at that age it is better to keep it in bank and accumulate interest than invest even in diversified low risk funds if your objective is to get the best savings by the time you are an adult and then you can decide what you want to invest in.

karel-3d 2mo ago

yeah but you get essentially 0 risk (especially if the bank is insured) risk is proportional to gain

noduerme 2mo ago

Yeah, but that's really not the point of opening a bank account for a kid. The point is that saving should become a habit. Seeing a balance grow is satisfying. When you're 12 years old and mowing lawns it's better to put money in your bank account than stuff it under your mattress, or spend it on dumb shit you won't remember next year. Then you talk to your kids about CDs, mutual funds, high yield savings, growth stocks, dividends, inflation, retirement funds, real estate, loans, etc. The first thing is how to open a bank account and put money in it. You'd be amazed how many adults I've met who didn't learn that until their mid-20s.