6. Traditional Savings Accounts at Major Banks
Savings accounts are secure, FDIC-insured investments that don’t fluctuate in value and provide investors with regular interest payments. They can be found in nearly any bank in the country, from long-standing, traditional banks to upstart online banks. So how can they be considered toxic?
Why Traditional Savings Accounts Are Toxic
Obviously, savings accounts are not “toxic” in the sense that they will lose all your money. However, “toxic” can be a very relative term. For starters, many of the most well-known banks in the world pay just a token interest rate. Chase and Wells Fargo are a couple of examples, with both paying investors a minuscule 0.01% on their basic savings plans. Even the national average savings rate is only 0.09%. When you factor in inflation and taxes, your savings account money isn’t doing anything for you but sitting there. Keeping your money in this kind of savings account won’t ever generate the kinds of returns you should be shooting for in a long-term investment account or even what you could get with a high-interest savings account.
