Many online banks are offering nice interest rates on their savings accounts and I was wondering ...

[G+_Rud Dog]

Many online banks are offering nice interest rates on their savings accounts and I was wondering if anyone knows where the historical rates can be found for online banks?

This could tell if some banks are using this as a tactic for short term boosts in signups for the online banking saving accounts.

[G+_Jason Marsh]

I don't know if bankrate.com lists the bank(s) you want to look into, but it's a start, at least. I'm not sure if there are any truly online-only banks; the majority are probably single-branch banks which have heavy online marketing. Either way, the best rates I see are still less than the inflation rate, so not really doing anything to improve anyone's financial status.

 

You don't have to be a big baller or play fast and loose to invest and watch your wealth grow. We keep very little in cash accounts (less than $40K) to cover unplanned expenses, with any excess going to investments. No individual stocks for us. Our portfolio earns 6 to 8% annually, no thanks whatsoever to any bank's interest payments.

 

I swear I've had this conversation here in the KH community before... If you must stash money in a cash account, don't even tease yourself about interest rates, as there are NONE that beat inflation, so your money is losing value the whole time you let a bank hold it. Join a local credit union for local banking and your "oh shoot" account, and put your excess into mutual funds or ETFs.

 

Oh, and GO AGGRESSIVE with your investments, because you're likely to live longer than you think you will.

[G+_Akira Yamanita]

While I haven't tracked the rates, I have comparison shopped and done periodic reviews and found that while introductory rates might be used to draw you in, the normal rates are based on market rates. Rates also tend to be relatively positioned so if bank A has a higher interest rate than bank B, that usually stays the same whether the rates go up or down.

 

I agree that investments are a better idea, particularly if the money is for long term saving.

[G+_Jason Brown]

Under the mattress was good enough for my grandfather.

[G+_Rud Dog]

Thank you all. Just wondering if you place your money in a money market or self driving account. Leading to the questions; do you manage it? It would be interesting to hear how well the money performs over time.

Could it be that simple?

 

 

[G+_John Sullivan]

Rud Dog It is both that simple, and complex. If you were standing here, I could tell you everything you need to know about the stock/bond market in 15 mins., but that would not include all the specialty stuff.

What investment "vehicle" is right for you depends on how much you want to invest, how long before you will need to spend that money, and how much risk you are willing to take (as in, what if you invested to day and next week your money was worth half of that?)

As to your question of historical rates, what does it matter? All that matters is what the bank (or other) will give you in return for your investment today. To look back 20 years and see that you could have earned 10% does not help you choose who to invest with today.

If you have, say, $2500 to invest today, and won't need the money for at least 5 years, open a Vanguard account and invest 60% of your money in a S&P500 Index Fund, and 40% in a Total Bond Market Index Fund.

If you have $10,000 or more to invest, let me know.

[G+_Rud Dog]

John Sullivan You hit on something I have always wondered. I have heard of the S&P500 and reviewed its performance. It appears to do rather well but can you simply pull up a investment site and invest across the entire S&P500? Thank you for sharing your investment knowledge.

[G+_Jason Marsh]

The S&P 500 is a market index, not an investment vehicle, but there are funds that attempt to track with it. All the major investment firms/financial services corporations have Index Funds targeting the various market indices.

[G+_John Sullivan]

Rud Dog Going along with what Jason Marsh said, the answer to your question is yes. For instance, you could open an account with Vanguard and invest in their Vanguard 500 Index Fund and it will pretty much match the performance of the S&P 500 Index.

personal.vanguard.com - Vanguard - Vanguard 500 Index Fund Admiral Shares

[G+_Rud Dog]

John Sullivan It appears that fund is at its historical high. As I sit here thinking as many probably are is this the pivotal sell HIGH buy low moment? No one has that answer and it is understood but it certainly generates moments of uncertainty.

a teachable example will start tracking this one and see how it does. Thank you for the info.

[G+_John Sullivan]

Rud Dog You could, but it would be a waste of your time.

Yahoo and a bunch of other places can show you how any fund has trended since it was first offered. You can track the S&P 500 back to the 1950's (or earlier) if you want to, but the only thing you'll learn is that it has steadily gone up. Yes, it has had up and down moments, some drastic, but the overall trend has been up.

Either invest your money, or don't. It is a bit down from its record high, so this would be a good time to jump in. That does not mean that the money you invest today won't be worth less tomorrow, but historically it will increase over time. Sitting on the sidelines watching it will never tell you when is a good time to jump in. You just do it, then forget about it and don't look at it for a year.

[G+_Akira Yamanita]

Rud Dog Repeated analysis shows that trying to time the market means losing out on unexpected opportunities and just normal dividend income. That's enough to wipe out short term gains and makes consistent contributions over time the winning strategy. Actively managed funds consistently lose to index funds and what's worse, they have much higher fees. Even if they do better short term, the fees wipe out the extra gains.

 

Look into Wealthfront, Betterment, Vanguard, and Schwab. The first two are robotrading services. They use low cost funds for balanced portfolios and if you're already maxing out your IRA and 401K match, they have tax saving strategies as well. Vanguard and Schwab are where most of those low cost funds come from. You can invest in them directly as well. They have their own robotrading services for a fee or you could just buy the funds yourself.

[G+_Jason Marsh]

We've been using lifecycle funds for a decade or more now, and they're doing well. Don't require anything out of me, and they automagically get less aggressive as they near their time horizon. Currently I'm buying funds with a horizon in 2040. Any earlier than 20 or so years from "right meow" and you won't see much gain. Let it ride longer with a more distant horizon, and you stand to gain more. We're retired now, but still topping up our Roth IRAs and stashing the rest in a few tech- and international-sector lifecycle funds. When we get to our sixties (15+ yrs from now) we'll be retiring hard.

[G+_Rud Dog]

Akira Yamanita Test case investment are currently in Wealthfront, Betterment, and Schwab. Have not looked into Vanguard but will. The idea is to run for a year against high interest savings account and see if it does better than the others. Conducting results for investing.

[G+_Rud Dog]

Jason Marsh Not sure what "life cycle funds" are. "Funds" to me are grouped together diverse companies to lessen the impact of some having a down turn while those having upturn minimize or offset losses. The returns on these type funds on paper look very impressive with brick and mortar having accounts of .0X% while online banks have as high as 2 %. Some funds show interest across time as high as 8%. But now the thought is are we conservative and watch every penny or risk orientated.

[G+_John Sullivan]

Rud Dog Life cycle funds change their mix of stocks (more risky) and bonds (less risky) over time automatically. The idea is that an investor would probably want to take less risk as they grow closer to retirement, and would adjust their portfolio mix to be more bond-heavy as retirement nears. Life cycle funds do this for you.

[G+_Rud Dog]

John Sullivan My ignorance is showing, have never heard of a Life Cycle Fund , thank you.

[G+_Jason Marsh]

Rud Dog They're also called Target-Date Funds. There are many to choose from. I tend to look at the last five and ten year performance, as that (to me) is a good indicator of the sustained growth of the sector(s) the fund is tied to, as well as the effectiveness of the fund managers. Some will outperform others within their sector, some will underperform.

 

I'd caution you not to jump right into the first thing you think will make for good earnings, but also don't hold off for the "perfect" investment. There is something that meets your goals and risk profile.

 

My bank has advisors to review my goals and give advice at no charge, while some banks and most investment firms require a fee for such services or bury it in transaction fees. If your bank or CU doesn't have an office that does this for free, then talk to a trusted friend who has experience investing.

 

I have a brother who is in the industry, but he's got his own goals and he's a "company man" so I just take general advice form him. Not that he wouldn't love to have my account; I just don't mix business with pleasure or relations.

 

I'll do a fair bit of research every few years and find a new fund, either for new investments or to roll over old investments. It's not too much for me to do every few years. I'm no expert, and I probably am losing a little compared to those who put hours and hours a week into it, but I'm not worried.

[G+_Rud Dog]

Jason Marsh Will have to look into these funds. Have to park funds soon and need to come up to speed. Thank you.