Bank Savings Accounts
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Mattress manufacturers had to hate the day bank savings accounts were first formulated. But of course that would have been back when they were made from burlap and hay, or maybe just the innerspring hay model. But money has been hidden from thieves in a number of quite ingenious ways in recent times, but sadly perhaps more from spouses than thieves. A toilet paper roll, the clothes hamper, a fake plant, inside a picture frame, inside old sneakers under the inside sole and many other ingenious places are all used for clandestine deposits for money, but alas, they don't pay interest. Bank savings accounts are a necessity for most people who have at least a modicum of extra money they don't want to hide in an aquarium full of piranha.
Maybe the most important aspect of a nest egg account at a bank is safety. Despite the fact that one's money is in a toilet paper holder and safe from thieves' eyes, if the house burns down its gone forever. And for some people, the greater danger than the house burning down is the fire that extra money creates in one's pocket. Money just lying around can be a great temptation to burn. Putting it in bank savings accounts is the smartest way to avoid both the house and the pants from burning up one's stash. And if the money is placed in a financial institution it is protected by the Federal Deposit and Insurance Corporation or FDIC. Amounts up to one hundred thousand dollars are secure under this umbrella of protection.
Bank savings accounts, among other money making efforts that financial institutions employ, are a chief source of their lending supply of money. When people receive loans from their bank, in most cases they are receiving money taken from the nest egg account of other customers. Those customers are paid an interest rate that is competitive with other lending institutions in the area and then lends that same money out at a higher rate to make a profit. In most cases, the interest is compounded daily, and while not head spinning, putting money in a nest egg early in one's life and not touching it for decades is a real eye opening consideration. Consider the grandparents who gave each of their grandchildren a gift of five thousand dollars on the day of their birth in the form of a savings account making five percent compounded daily. They were not allowed to draw from the accounts until their 21st birthday when each of them would have over fourteen thousand dollars.
In typical fashion, as stock prices plummet, interest rates rise and conversely fall when stock values rise. Taking advantage of such swings in the market place by moving money in and out of bank savings accounts can be an excellent way of investing in a rather secure manner, particularly if the stocks are of lower speculative pedigree. But one must be careful to pick the right type of nest egg holding plan to take advantage of being able to quickly move money around. One would always want to choose a depositor of savings to be fully equipped with all the latest security devices, but Jesus said that something else about saving money was so much more important. "Lay not up for yourselves treasure upon earth where moth and rust doth corrupt and where thieves break through and steal but lay up for yourselves treasure in heaven, where neither moth nor rust doth corrupt and where thieves do not break through nor steal for where your treasure is, there will your heart be also." (Matthew 6: 19-21)
Choose wisely from the many options a person has among the several bank savings accounts available. The first are the run of the mill, nondescript accounts that offer a straightforward short term investment opportunity. The short term caveat might change if interest would climb above ten percent or more during high inflation times. The money market nest egg plan, paying higher rates than the run of the mill type, requires minimum deposits and only allows a certain number of withdrawals a month, oftentimes under the guise of checks written to cover expenses. Money in these types of bank plans is covered by the FDIC up to one hundred thousand dollars. Experts suggest that consumers with more money than that should begin a strategy of using more than one bank in order to have all insured. Then there is the Certificate of Deposit, or CD which are bank savings accounts that are firmly in the financial institutions possession for a certain length of time, usually six months to five years.
Finally there are hybrids of savings accounts that are called money market funds. These are purchased from mutual fund brokers are based on short term bonds, which pose a much degree of risk than long term bonds. These are based on US securities such as government investments, and commercial paper. They are not FDIC insured, but do offer higher rates of interest than bank savings accounts. The recent disclosure that Americans carry as much as two trillion dollars in personal debt has given rise to the government's "Feed the Pig" ad campaign espousing the need for hard core saving on the part of its citizens. Teaching children very early about the power of compound interest and the need to have a regular plan of saving money is crucial in turning this big debt ship around.
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