Why keep savings in banks?
The question is raised by the 2005 Form 1099-INT I got from my credit union today.
A big $39.43 interest during 2005 for my savings account, average daily balance about $7100, and APR 0.55%.
At least banks NEVER charge negative interest rates, at least with large balances, but clearly there's little incentive "investment-wise" to keep any balance in a savings account.
I might as well keep it under my mattress, at least as far as benefit is concerned. At least then I have guaranteed access, while there's a minute chance that a fast economic depression could cause a run on the banks, and a federal government FDIC "promising" protection, but in reality, how fast will they print new money? Is a $40 "reward" worth my risk?
It is largely just a question of curiosity for me, only triggered by the ridiculously small interest rate. Perhaps I should MAX my Roth IRA contributions after all, assuming I really can take the principle out tax-free under an emergency. At least that has an interest rate that MIGHT barely beat inflation!
Still, I can ask other questions, like whether there's value in "keeping money OUT of the economy". What if MANY people hid their savings under their mattress?
I don't know and don't have time to imagine the answer. Obviously economists will say it's BAD for everyone. Certainly if I'm going to STASH cash, best to pick GOLD as a better hidden investment than paper. Gold might yet plummet in value (certainly from current highs), but overall it has some guarantees of value, while U.S. currency in the end is not much better than strong paper, which might someday yet be used in fireplaces when the government collapses and hyperinflation remaps its value into worthlessness.
Of course my savings in my credit union allows George down the street to finance his new car, and such, and we all like that sort of community spirit, right?
The whole thing for me of course, the reason I don't invest it, is because I like the security of having it available whenever I like. So given my "freedom" it makes sense that savings account interests will NOT be often even competitive with inflation. They are just convenient places that I probably can't get robbed from, and probably are safe.
I MOST like the thought of withdrawing my savings as a sort of act of "civil disobedience", since I disapprove of the excesses of our economy, I might withdraw my participation.
In reality beyond my savings security, I drop all my extra cash into my mortgage, and perhaps there's some hope of maintaining value there, certainly I'm saving in interest there, and someday will have ACTUAL savings to "invest" or "disobediently divest", while for now it's just virtual savings against my mortgage debt.
Okay silly thoughts all around. I at least believe in the "get out of debt" ideal for security, even on a relatively safe mortgage on an insured home. Someday I'll have some harder questions if I'm out of debt and still find "excess income" beyond my expenses.
Someday...
A big $39.43 interest during 2005 for my savings account, average daily balance about $7100, and APR 0.55%.
At least banks NEVER charge negative interest rates, at least with large balances, but clearly there's little incentive "investment-wise" to keep any balance in a savings account.
I might as well keep it under my mattress, at least as far as benefit is concerned. At least then I have guaranteed access, while there's a minute chance that a fast economic depression could cause a run on the banks, and a federal government FDIC "promising" protection, but in reality, how fast will they print new money? Is a $40 "reward" worth my risk?
It is largely just a question of curiosity for me, only triggered by the ridiculously small interest rate. Perhaps I should MAX my Roth IRA contributions after all, assuming I really can take the principle out tax-free under an emergency. At least that has an interest rate that MIGHT barely beat inflation!
Still, I can ask other questions, like whether there's value in "keeping money OUT of the economy". What if MANY people hid their savings under their mattress?
I don't know and don't have time to imagine the answer. Obviously economists will say it's BAD for everyone. Certainly if I'm going to STASH cash, best to pick GOLD as a better hidden investment than paper. Gold might yet plummet in value (certainly from current highs), but overall it has some guarantees of value, while U.S. currency in the end is not much better than strong paper, which might someday yet be used in fireplaces when the government collapses and hyperinflation remaps its value into worthlessness.
Of course my savings in my credit union allows George down the street to finance his new car, and such, and we all like that sort of community spirit, right?
The whole thing for me of course, the reason I don't invest it, is because I like the security of having it available whenever I like. So given my "freedom" it makes sense that savings account interests will NOT be often even competitive with inflation. They are just convenient places that I probably can't get robbed from, and probably are safe.
I MOST like the thought of withdrawing my savings as a sort of act of "civil disobedience", since I disapprove of the excesses of our economy, I might withdraw my participation.
In reality beyond my savings security, I drop all my extra cash into my mortgage, and perhaps there's some hope of maintaining value there, certainly I'm saving in interest there, and someday will have ACTUAL savings to "invest" or "disobediently divest", while for now it's just virtual savings against my mortgage debt.
Okay silly thoughts all around. I at least believe in the "get out of debt" ideal for security, even on a relatively safe mortgage on an insured home. Someday I'll have some harder questions if I'm out of debt and still find "excess income" beyond my expenses.
Someday...
posted by Ares Olympus at 10:31 PM
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