This Week In Your Wallet: Your Route To Financial Freedom
I hope you had a terrific weekend — full of sun, fun, good food, great friends and all the other things that go along with the Fourth. We were pulling this newsletter together in and around our celebrations, so it just made sense to kick off with a pitch for financial independence. I want it for you. You want it for your kids. With that in mind, please check out our story on how to “adult.” These may be the basics, but they’re the basics you need in order to build a financial life solid enough for all your other dreams to stand on.
Among the items on the list: Obtaining — and keeping — good credit is one way to guarantee less stress in the future. It’s the key to saving beaucoup bucks (and major headache) on a lot of important milestones — getting your first car, signing on your first apartment, buying a home, applying for a loan. It means upping your future freedom, so take care of it by paying bills on time, not using more than 30 percent (ideally 10 percent) of your available credit and checking your report regularly for errors and signs of identity theft. Another key tip not just for grads fresh off of campus? If auto-saving is your friend, compounding interest is your ride-or-die. It ensures the money you save every month for retirement grows exponentially over time. That means that every little bit really does count. It also means not leaving free money on the table by contributing the maximum possible to your employer’s retirement plan. (And kudos to our colleague Hayden Field for the great GIFs that accompany the story. This is one we think you’ll want to share.)
Where To Grow Your Cash
Speaking of saving, DepositAccounts.com has a list of places to safely grow your cash and weather potential financial “storms” this summer, including Brexit (Britain’s exit from the European Union), stock market ups and downs and the Federal Reserve’s interest rates decision. These are not places for stashing the funds from which you’re looking for growth, rather those that you’re looking to preserve while not putting yourself at the mercy of those anemic interest rates so many banks today provide.
The three places you can net a slightly better return while keeping your funds free from harm? Internet savings accounts, certain CDs and high-yield reward checking accounts. How much better can you do? Considerably. I told the site I had $35,000 to save (you can give it whatever number you wanted) and a three-year time horizon. The average savings account rate, 0.18%, would net me a 3-year return of $190. Nothing impressive about that.
But by simply moving the whole sum to an internet savings account — like the one at Incredible Bank (yes, that’s really its name) — where the return is 1.17%, I could quintuple the three-year return to $1,243. And wait, there’s more. If I’m willing to open more than one account, I could park $28,000 in a 36-month CD at Hanover Bank (earning 1.35%) and the other $7,000 in premium custodian savings (where the interest rate is 2.02%), and I could bump my total return to nearly $1,600. (Note: That savings account — like interest-bearing checking accounts we’ll talk about in a moment — has a maximum deposit, not a minimum. You can’t keep more than $10,000 there and earn that sizable interest rate). Finally, you could — if you’re willing to do more work — put $25,000 into rewards checking with Adirondack Bank and the other $10,000 into savings with Incredible Bank, boosting your return to $2,705. (Note: The deal with rewards checking is that there is usually a maximum deposit, and you have to make a direct deposit into the account every month as well as make a certain number — usually 10 — of debit card transactions.)
Two points I want to make about this: First, in just about every category that DepositAccounts.com laid out for me, credit unions had better returns than even the competitive Internet banks. It is definitely worth checking to see if you’re eligible for membership (often you will be). And second, a lot of people are leaving a lot of money on the table. If you’re looking for the equivalent of free cash, this is a good place to start.
How To Stop Robocalls… Or At Least Fight Back
We’ve all been there. You answer your phone without looking at the caller ID, or maybe you’re curious because of the number you don’t recognize. Who’s at the other end? A prerecorded voice telling you the “IRS” needs you to call back, that you’ve won a cruise, that you may be eligible for a sum of money. Robocalls are on the rise because advances in technology mean it’s easier for scammers to dial thousands of phone numbers, The Wall Street Journal reports.
So what can you do? Start by putting your number on the FTC’s National Do Not Call list if you haven’t already. It probably won’t deter scammers, but many legitimate companies adhere to it. Next, update your phone — new software like Apple’s upcoming iOS 10 in the fall will update call blocking options. Don’t pick up calls from numbers you don’t recognize — confirming you’re a real person might get you placed on more lists. And if you’re getting a bunch of robocalls, consider using an app like Hiya to do a reverse lookup of the number and report it in the app. Then, file an FTC complaint.
Have a great week,
Jean
