How To Boost Your Savings
When it comes to savings, the earlier you start compounding and reinvesting your money along with interest, the more you will end up with. For example, a newborn which is given $6500 in his 8% a year account will end up with a cool $1,000,000 when he hit 65. Such is the power of compound interest. If you have been procrastinating on savings and not well versed in investing, here's a technique that give you an incentive to save.
Perhaps you are procrastinating about saving money because you do not have any knowledge on money and do not know what are the best ways to invest. No matter how good an investment is, it's always crucial to research on it and plan your move. In fact, an 8% interest deal are scarce nowadays due to economy slowdown unless you are prepare to take bigger risk to score that kind of returns. For those of you who do not want to be bothered with complicated investment jargon and high risk, a high yield savings account can be a good option.
You already know what is a savings account. A high yield savings account is high yield because it is fully internet based, which mean you cannot find physical branches of the bank in real life. The only important thing you need to know about this kind of savings account is that they can give you up to 8 times the normal national average of interest rates returns. So if you are previously unmotivated by the tiny interest offered by conventional banks, this is your chance to grow your wealth fast, without having to take any financial risk such as in investments.
Online banks are able to give you this kind of interest because they are saving so much money from not having to use paper and ink, maintaining physical branches, hiring workers and so on. With their significantly lower overheads compared to brick and mortar banks, the interest that they offer you is a small fraction of how much they saved. Therefore, this will also mean that you will not be able to withdraw from its branches such as in a regular brick and mortar banks, besides not having a passbook nor an ATM card. The only proof of your possession of an account is a username and password that you can use to access your account and online statements.
Who needs statements anyway when one can have online statements? They're a waste of paper and a hassle to store and retrieve. Besides getting high interest rates for your money, your online statements will instantly reflect any transaction so you'll always get the latest updates. The lack of these documents will ensure that they will never get lost and you will not have to pay for those facilities. Since an online bank may or may not come with an ATM card, the primary way of withdrawing and depositing is through a bank transfer using your existing conventional bank account. So if an online bank is giving a much higher returns than your usual account, simply transfer your funds over to enjoy the better rates.
Registering for an online savings account such an ING Direct will only take minutes, and a customer can start to enjoy anywhere from 2.75% to 3.25% depending on your balance. After all, internet banks are all about speed and efficiency, as you'll soon discover. For those of you who have spare cash for long term, why not consider a time deposit with ING'S Certificate of Deposit (CD) and get up to 4.25% returns? For the same CD duration (60 months), a normal brick and mortar bank will only give you around half of that, sometimes less.
If you're are thrilled with the idea and want to get your own online high yield savings account, here's another incentive for you. ING Direct is so confident that you'll love their service, they're going to pay you $25 just to sign up for an account with them. They say good things are meant to be shared, and ING Direct is listening, which is why you'll get a $10 reward on top of the $25 you get as a new customer, when you refer another person who sign up with them. So stop procrastinating and start to do some serious savings with the many incentives that is featured in this article.
Originally posted 2008-11-01 04:44:41.
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