Do you know that the average America rates for deposits under $10,000 is only 0.26%? How on earth are you going to earn from compound interest if you do not invest your money in stocks or bonds? A combo of near zero interest rate of 0.26% and inflation of 3.5% (October 2011) will reduce the value of your money quickly, day by day.
Lovemoney.com has a few savings products, including “Instant access savings accounts”, “Cash ISAs”, and “Fixed rate savings accounts”.
So how do you choose a product which is suitable for you?
First, what is your minimum investment? Different savings or investments products requires different minimum investment, it can ranges from $1 to $1,000. Certain products that come with the higher interest may require higher minimum investment amount.
Second, how much money are you going to save? Bankers are like normal people, they try to minimize their risks. Although some investment products may offer higher interest rates, they will put a limit to the products to prevent offering you what they cannot deliver.
Third, what is your risk appetite? You can be conservative by putting your money in savings accounts, but never ever think that they do not come with risks. You must understand the mechanism of interests calculation, is it by year, month or daily. How are your deposits going to be invested? What is the credibility of your banker?
Americans only save an average of $392 per year. Are you one of those losers who only know how to spend (which does not generate any income) but not knowing how to save?