A savings account is often one of the first “selfish” decisions you make, yet it can be one of the best. Savings accounts offer two major benefits: they provide the security of storing the funds that pay interest and give you access when needed. You can create a rainy day fund and even save for retirement without relying on other income sources or shoe-stringing it. Mark Hauser, a managing partner at Hauser Private Equity, discusses the benefits of a savings account.
Savings accounts are a longtime investment.
For more than a century, the U.S. has relied on savings accounts to provide liquidity, cushion against market volatility, and even support much of its economic growth. While some investors have complained about the declining interest rates in recent years, it is important to understand that they represent a major shift in how Americans save money.
Banks used to offer higher interest rates – as much as 14 percent! For many people, it was enough to justify opening a savings account for the long term. Mark Hauser further explains how savings accounts have remained a part of the investment portfolio for many Americans.
The account is an effortless investment to open.
Most institutions will let you open your account online or with a scan of your driver’s license. There are usually no fees associated with getting started with a savings account. Mark Hauser gives us a couple of advantages:
- Instant Branch-based Funds Access
With many of the largest brokerage firms, you can access your securities through a branch-based account that allows you to invest in different investments and still receive the services you would get if you were investing at a large firm.
- Maximum Asset Protection and Accidental Expenses
Although it’s always a good idea to have an emergency fund, it is especially important with a savings account. Imagine losing your money because of something as simple as accidentally spilling coffee on it or losing the keys to your house.
- Optimal Direct Deposit Destination
If you have a salary or other regular payments to deposit, a savings account is a good way to make that happen. You can arrange a direct deposit arrangement with your company payroll department or automated payments from other accounts into your savings account. For example, if you have an insurance bill that comes out automatically on the first of each month, set up an automatic transfer from your primary checking account to your savings account each month and never miss another payment.