Don't Leave Your Money in a Savings Account Right Now

If you're an avid saver, like I am, you're probably fairly upset about the terribly low rate that your bank is offering on a savings account. Local banks are the worst, mine is offering.2%. Online banks are better, I'm currently getting 1.1% with ING direct. But that's still terrible and if you have any kind of balance you're not making much. I used to do calculations to figure out how much cash I would need in order to simply live on the interest each year. Assuming I needed $40,000 a year for expenses, I would need $1 million earning 4% in a savings account. A few years ago that interest rate was easy to get. Now it's almost impossible.

So what should we do? We have cash in savings but at 1.1% it barely makes enough to serve a purpose in savings. Consequently we are looking for other ways to make money with our money.

You can put it into the stock market, buy bonds (not much there either), buy CDs (barely any better interest) or buy real estate. In some cases you can lose money, but to make it you have to risk it. You can buy riskier bonds from companies who have riskier ratings, in those cases you can get 7% and more, but they could default and leave you with nothing. Scary.

Real estate is ok if you're buying in a solid area, or if you have the skills to flip the house. But be careful where you buy. Depressed neighborhoods are losing value not gaining. So you'd have to be willing to hang on for a long time.

Whatever you chose, do something other than straight savings if you can. Of course have some cash on hand for emergencies, but don't assume that 1.1% is all you can get. There are other options.

The author loves to research topics and share her findings with others. More topics include the Dyson Fan and dishwasher troubleshooting.