Best Savings Rates Will Move Higher in 2013

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Savings Rates

Current savings rates will be moving higher towards the end of 2013. There is no where to go but up right? The highest savings rates are well below 1.00%. Well we though that last year but savings rates have since made new all time lows. National savings rates are like 0.10% right now, even if you had a trillion of dollars you still won’t earn that much interest even when you factor in compound interest.

Compound interest makes the annual percentage yield higher than the rate on savings rates and other deposit products.

Back in the 1980’s and 1990’s retirees are accustomed to having higher interest income on their certificates of deposits and savings accounts. Especially back in the 1980’s when CD rates and savings account rates were in the double digits. Even in the 1990’s you could still get the best savings rates at 7 percent or higher.

Therefore you need to combine savings with investing; the younger you are the more risk you can take. If there is a stock market correction you can ride out any corrections over time.

If you’re older and closer to retirement you should have a lower percentage of your investments in stock funds. Besides stocks there are bond and deposit accounts which both pay very little these days but at least your principal is 100% safe as long as you keep the deposit amount with interest under $250,000.

Younger people trade stock or invest in stock in both a regular cash account. Their retirement account doing so before a certain age will require you to pay taxes. You also pay 10% penalty if you take money out before a certain age.

What will decide your choices is your tolerance risk, age you want to retire, your current savings, savings rates and how much you’re saving each month. How much income you need when you retire is probably more than you will earn even if you are investing in stocks.

You should diversify your holdings and don’t have more than 10% in one stock and the key to success in investing is to diversify. Stay current with your investment portfolio and you pay taxes when you withdrawal the money. A young person who has 40 or so years until retirement can invest the majority of their investments in higher risk assets but still have a portion in savings accounts.

The higher return investments like in stock funds for individual stocks 5 year Treasury yields are under .25 percent and 1 year bank CD rates are around the same level on average. Savings rates are also around the same rate these days.

The investment term is shorter than a 10 year bond Treasuries and certificates of deposit because savings accounts don’t pay much right now but you’re principal will be safe and there are many investment philosophies and recommendations that say you should use deposit accounts in your investment portfolio.

When you’re about to retire you should have all your money in safe investments, shop for the highest savings rates on the Internet. You can find both bond rates online at the Treasury and savings rates right here at savingsrates.biz.

The most important thing you can do when setting up your investment portfolio is to make sure you select the right investments. Investments that fit your needs and comfort because when you invest in your retirement account the profits are tax free.

Retirement plans featuring automatic enrollment are a good way to save your money for retirement. These plans have much higher participation rates than those in which enrollment is discretionary. Remember to get the best savings rates online.

Savings Rates Today are Low but Compound Interest Will Help You Retire

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Savings rates today are every low these days, in fact even the best savings rates are pathetic. Interest rates in general have been low since the “Great Recession”, the slow recovery and the unwinding of the credit bubble. I don’t expect to see savings account rates or CD rates to move higher until 2014.

To give you an example of the best savings rates or money market rates right now you’ll be hard pressed to any bank offering a savings rate of more than 1.25%. The current national average savings rate reported by the FDIC is only 0.13%.

How is one supposed to save for retirement with such low interest rates. Well if you’re just starting out working and saving you have a couple of advantages over people older than you. The advantages are time and compound interest.

We all know what the first, time, is but you also have to start saving now because before you know it time slips away. The second advantage is compound interest which is interest earning interest. Compound interest is a powerful force which will allow you to reach your retirement goals.

You need to plan ahead for the next 40 or 50 years of your life. Starting now with a sound obtainable financial plan a lifetime will get you where you want to be. But you need to plan out the next 40 or 50 years and figure out how to have the retirement you want. If you start saving and investing wisely now for the future you come out a winner. You must stay on top of your investments to make this work.

We actually will have to work more than our parents did since they enjoyed above average stock market returns. The also enjoyed interest rates on deposit accounts as high as 13%. Saving more now to enjoy the type of retirement your parents or grandparents had is the key. Savings interest rates, money market rates and CD rates won’t always be so low like they are now so if you start saving and build a large savings over time when 5% to 10% interest rates come back you’ll be able to earn more and stay ahead of inflation.

Even if you have a nice nest egg right now you still won’t get much higher savings interest rates or CD rates. Right now jumbo savings account rates are about where regular savings interest rates. The FDIC’s national jumbo savings rate is 0.14%, only 0.01% higher than regular money market rates.

The first steps when starting a savings plan is to open a savings account. You also need to figure out how much debt you have, savings you have and what your net worth is. Don’t be alarmed if you’re young and have credit card debt you probably have a negative net worth.

All experts agree, the most important step for a successful financial future is for young people to start saving money now. All your dreams are obtainable if you just start with a savings plan. Doing a combination of savings and investing along with paying off high interest credit card debt is the key.

Start that savings account now and pay yourself first every month. Open an account with the best savings account rate you can get which will probably be just north of 1 percent. The best place to find the best rates is to search and compare savings rates on the Internet.

After you open that account and put a little bit of your paycheck into it each month sit down and look at all of your expenses. Once you have a list of expenses sort the list in two columns, needs and wants. Items you need to live and items you can do with out. You will be surprised how much fat you can cut and still have a good quality of life. Also reward yourself when you have done well.

Let me go back to compound interest for a second, if you get a savings rate that is 1.00% higher on a $100,000 that means another $1,000 in interest income. Take this extra $100,000 and factor in compound interest over 40 years and you’ll have a lot more money.

You can be an excellent manager of your money by following the basic savings strategies in the post but the most important step is to start saving now. You also need to constantly stay on top of your savings investments.