Personal Finance bloggers love to write about about high-interest savings accounts. As of today, interest rates range from 5.31% to 4.50% on these accounts. It seems that many prefer the 4.50% of ING because their service is considered great. They also give you $25 to start an account. These accounts are great because they often FDIC-insured and guaranteed to make the interest they say they will. They are also great because they preserve the wealth you have. This is important if you may need that money in the short term.
What’s not so great about these accounts? Due to inflation, the real rate of return on these accounts is around 1.6% to 2.2%. If we refer back to the chart we used on Monday, we find that the time for money to double is going to be around 35-40 years.
I may be Lazy, but I’m relatively patient. As patient as I am, I’m not that patient. It is for this reason, that I try keep money in investments that earn a better real rate of return.