Savings accounts aren’t what they used to be. Back in the day, you could earn significant interest each year by depositing money in your savings account and leaving it there as it grew. Before the 2007-2008 economic crash, many people felt that contributing to their savings account was a viable way to save up for retirement.
Right now, however, interest rates are incredibly low, and they have been for almost ten years. Though the Federal Reserve is likely set to increase rates later this week, you’ll likely see a negligible increase in your savings account and the interest you accrue. This means that putting money in savings is no longer a viable option for retirement.
What can you do? Why, invest in the stock market, of course! By buying stocks or exchange traded funds, your money can make money faster than savings accounts ever could. While you’ll have to assume a teensy amount of risk, investing in safe, low-cost stocks that pay dividends could amass growth at rates faster than any savings, money market, or CD account at your bank.
To get an idea of how your money will grow in the stock market versus your bank, the folks at Money Talks News created this in-depth video to explain how this system actually works. Once you learn the difference between your bank and your broker, you’ll never want to put another penny in your savings again.
Stocks aren’t guaranteed to go up or pay interest, so you must always do your research before you invest. Once you put money into low-cost funds or other low-risk investments, you’ll hopefully see your savings grow faster than before. After that, who knows? It might even be time to leave your pesky bank!