Farnoosh Tells Us How to Make the Most of Your Cash

Farnoosh Tells Us How to Make the Most of Your Cash


Hi there, it’s Farnoosh. And I know why you’re here. You want to make the most with your money! Parking your cash – where do I park it? Where do I get the best interest rate? What’s most important when I’m picking
a bank for my savings? That’s what today’s video is about – and
blog post. Thanks for joining me here. Alright, so, it’s an important question
– how to make the most of your cash. There are lots of choices out there for us
these days from credit unions to online banks, traditional
brick & mortar banks. There are even apps that will connect to our
banks accounts and move money from our bank accounts into
another savings account on the go, without really
any involvement from us and it’s actually getting us to save more. So, where do you start? It’s a little overwhelming. That’s the bad news. So here’s some help, okay. I’ve categorized this advice based on how
you plan to use this money. So, if you plan to use this savings for an
emergency, then most importantly you want to put your
money somewhere where, it’s safe and you have
access to it quickly. So, in every case you want to get an account
that has FDIC insurance, right? That has insurance backing it in the event
that the bank collapses, there’s a breach, up to $250 thousand dollars, FDIC insurance will protect your money. So, knowing that, you can begin your search and you might land on a bank account at an
online bank or a traditional bank that you can actually
walk into a physical location and here it just really
depends on your comfort level. Do you like having a virtual relationship
with the bank? Or do you like actually going in physically
and talking to someone and that might steer you in a different path. If you’re solely interested in yield savings
return, I mean, it’s like, okay – rock, hard place. These days, the best interest rates on savings
accounts are 1 percent maybe 1 percent and a quarter and that you’re most likely going to find
at an online bank. So if that’s really your goal is to get
the best return, then an online bank is really probably your
best bet. But there again, you’re going to lost the
opportunity to potentially interact with somebody in person. There may not be other types of financial
products offered via a virtual bank. They’re very simple, they don’t have a
lot of overhead, and that’s why they can give you the higher
APY. So it just really depends on what you’re
looking for. But most importantly you want a bank account
that can give you access readily to your cash and its money that will
be protected. Now, money that you’re saving up for a goal
down the road but in the short term – if you’re planning
to buy a home, mapping out your wedding, things like that. I think you may want to look at a certificate
of deposit, a CD. These savings vehicles usually come with fixed
terms: 6 months, 12 months, 2 years, 3 years. The bank expects you to keep the money in
that CD for that duration in exchange the bank gives
you a relatively higher rate of return and, that’s cool. But again, you gotta make sure you don’t
need this money for a while. And the term will inform you of when it’s
important to keep that money in the CD. Banks will incentivize you more for parking
your cash in that CD because then they’ll be able to use that
cash during that time frame to lend it out, earn more interest, you get
the picture. One tip for CDS, when you’re looking for
where to put your money is to shop around. Really important, says Greg McBridge of BankRate.com. He finds that through comparison shopping
you usually do end up getting a better idea of what’s out there and landing
on a CD that does offer the most attractive rate. Money market accounts – what are these? And should you put your money in them? A money market account should not be confused
with a money market fund. The money market fund is an investment vehicle, does not have FDIC insurance, it’s a little
riskier maybe a lot riskier. A money market account is like a savings account there is FDIC insurance. You can earn a slightly better rate of return,
interest rate, with a money market account than a traditional
savings account. And because the bank usually requires a minimum
deposit sometimes $1,000, sometimes more so if you do have a nice chunk of change that
you want to park and you don’t want to tap it tomorrow or
envision tapping it soon a money market account could be a good place
to park your cash. If you’ve got a lot of time between now
and tapping your savings say you don’t need this money for the next
5 years, 10 years, 20 years we’re not talking about saving anymore,
we’re really talking about investing. You know, shifting your mindset to this idea
of taking a little bit more risk with this money because
you have more time, is smart. And now you’ve entered the world of investing. And of course, that’s a whole other article
– where to invest your money. But, you know, Greg McBride, again of BankRate.com
really loves index funds So do I. We love them because of their broad coverage, but also the very, very, very low fees that
you’ll pay to invest in them. The Vanguard Total Stock Market Index Funds
is a pick of Greg’s and the expense ratio there is .16% which
is significantly lower than funds with similar holdings – not to
get too nerdy on you. But, that is where to park your cash in a
nutshell, but of course I’m sure you’ve got questions. So feel free to reach out to me, leave a comment
below you can always email me [email protected] Hope to see you here again next time! Soon!

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