I love the conversation! Of course I mostly get to be the one who reads it, but sometimes I ask you guys if it’s okay for me to print some of your answers. And usually you say, okay! (But it’s always okay if you don’t want me to! I won’t!)
The prevailing winds in this group (at least the ones who write back) blow towards liking banks that have doors you can knock on. Several people wrote to say that they use only people-staffed banks in order to keep those staffers in jobs! (Elon Musk, Peter Thiel and those other AI providers would scoff at that – ‘course they get to keep their jobs when Robots rule the earth.) I stand with the Keep-the-People-at-Work crowd, though I’m interested in what my brother who works at Microsoft thinks about that. I’m hoping he’ll read this and write back.
(Man! There’s something dead in my house today, this Halloween! I don’t think it’s a person though. DON’T BE LOOKING AT ME WITH THAT SMUG, DISGUSTED LOOK! All y’all New Englanders know this is the time of year animals come inside to hang out and die if it comes to that! All y’all got dead stuff in your house! You just don’t smell it yet!)
But I got this reply and I thought it was very interesting – and great! He asked me to use only his first name, though:
Here is my two cents about savings accounts (although I have a few more cents than that in my accounts).
First caution, I'm only 22, so I'm not that experienced in life. I just really enjoy reading and researching personal finance related things.
My first actual thought. Savings accounts aren't as great as they're cracked up to be. This kind of blew my world last week or the week before when I learned it: you're going to be losing money in a savings account pretty much no matter what. Why? Inflation! You can see here: https://www.thebalance.com/u-s-inflation-rate-history-by-year-and-forecast-3306093 that inflation for the past few years has been about 2% or over. You're going to be very hard pressed to find a bank with a savings rate that good. The savings rate is a matter of losing less money. Even though my online bank has a 1.9 % interest rate, I'm still losing money because the money is worth less, because of inflation.
So, what's my strategy? I have an emergency fund in a normal brick and mortar bank that barely earns any interest (and thus the value of it goes down about 2% per year because of inflation). But I have the emergency fund in there because I can access that money immediately, in case of a real emergency, like a car breakdown or needing to withdraw cash to eat at Elmer's (I've only been once, and I can't remember if it's cash-only. Regardless, I like to pay cash to local stores so they don't have credit card fees).
Online banks have great rates, but it can take a while to access the funds. When I transfer funds, it typically takes 4 business days for that to happen. If I had a real honest to goodness emergency, that would be 3.9999 business days too long! I would want my money immediately. With the brick and mortar bank, I can transfer the money from my savings account instantly. As far as I can tell, that's the major advantage of the brick and mortar bank
In addition to the emergency fund, I invest small amounts of money (hopefully more once I get a higher paying job). Investing is the only way that your money can really make money, but again, you can also lose money that way if we have another recession. I also have an online-only bank account through Synchrony Bank, with a 1.9% interest rate. This is where I put my actual savings. This is for things like potential graduate school (if I go crazy and decide to go to school again!) and Christmas presents for my family. I know because of the higher interest rate, the money will barely be losing any value.
Anyways, the moral of the story is that I see advantages in both. I don't put my eggs in one basket. But then again, I'm only 22.
Ladies and gentlemen – there it is, the answer and the Future! from a guy who is only 22. I’m curious now as to what he invests in. Eli! What do you invest in? Write back and tell us!
Aight! I’m getting ready to go over to Elmer’s to paint faces for Halloween! Come on in! If not for face-painting, then dinner and the bar (and candy out front!)