If your money is sitting in a regular savings account at a big bank right now, you're losing money every single day and you probably don't even realize it. Most traditional banks are paying you 0.01% interest on your savings. That means for every $10,000 you have, you make $1 per year. Meanwhile, inflation is running between 2 and 3% per year. So, your money is literally getting less valuable just sitting there. Now, the craziest part, you guys, is that this is a super easy fix. It takes about 5 minutes to set up and it's completely free. I'm talking about opening up a high-yield savings account. keep about 7 to 8% of my net worth in high-yield savings accounts and it pays me a couple thousand dollars a month in pure passive interest without me doing anything. So, in this video, I'm going to break down exactly why you need a high-yield savings account, how it works, how much money to keep in one, and I'll actually show you the inside of my SoFi account so you can see what it looks like. So, let's get into it. Okay, so first, let's talk about the fact that most people have a savings account at whatever big bank they've always used, right? Chase, Bank of America, Wells Fargo, the list goes on. Now, these banks, they're paying you 0.01% interest. And like I said earlier, if you have $10,000, they're paying you $1 in interest per year, which is absolutely insane. With some of these high-yield savings accounts, that same $10,000 would get you about $400 in interest. So, $400, $1, I'm going with the $400. Now, here's what's actually happening behind the scenes, right? Your bank is taking your money, they're loaning it to other people, right? They're doing mortgages, uh business loans, credit cards, stuff like that. They're charging them, let's say, 5 to 10% interest and then they're giving you basically nothing. So, they're making a ton of money off your deposits and paying you basically nothing. This actually gets me pretty mad and that's why I'm such a big proponent of high-yield savings accounts. And the thing is, they get away with this because most people don't know any better. They don't know that high-yield savings accounts actually exist. [music] This is why learning about personal finance is so important. A high-yield savings account is, in my opinion, one of the fundamental pillars of personal finance and it's pretty much the thing that everyone starts out with. So, now let's talk about what a high-yield savings account actually is. So, it's literally just a savings account, like a normal bank account. But instead of that, a traditional bank with a big office, your money's at online bank that pays you way more interest. So, right now, the best high-yield savings accounts are paying between 3 to 4% APY. This might change depending on when you guys are watching this video, but if you compare that to 0.01% at a traditional bank, right? That's like 400 times that. Now, the reason why they can pay so much more is because online banks don't have the overhead of all these physical branches. Uh there's no rents, there's no tellers, there's no big lobbies and they pass the savings on to you in the form of a higher interest rate. You might be thinking, maybe it's not as safe, but it is. They're all FDIC-insured up to $250,000 and it's the same exact protection as your Chase or Bank of America account. Your money is also totally liquid. You can transfer it out whenever you want, you can spend the money, whatever. All the best high-yield savings accounts also don't have any fees, there's no minimums. It's literally free. Like, there's zero downside. The only real difference versus a traditional bank you probably can't walk into a branch. Everything is going to be done through your app or a website. But honestly, think about it. When was the last time you guys actually walked into your bank? So, this is the part that really hits when you see the actual numbers. Now, your money's not disappearing from the account, right? It's staying there, but it just buys less stuff over time. Let's say you have $50,000 in a traditional savings account. So, in a year, that money has the buying power of about $48,800. You literally just lost $1,200 doing absolutely nothing. And that's exactly what's happening to any of your money in any of these bank accounts. Now, let's flip it, right? Let's say you put that same $50,000 in a high-yield savings account earning 4%. At 4%, that 50K is making you $2,000 per year in interest. That's about $166 per month. So, instead of losing $1,200 to inflation, you're actually gaining about $800 in real purchasing power. Now, over 5 years and over 10 years, this gap compounds and becomes absolutely massive. For example, over 10 years on that $50,000, we're talking like tens of thousands of dollars difference between a high-yield savings account and a regular savings account. And the only thing you have to do is just open an account. And one of the really cool things is that this is not investing, right? It's not risky at all. You're literally just choosing a better parking spot for your money. So, like I said earlier, about 7 to 8% of my total net worth is in high-yield savings accounts. And right now, that's earning me a couple thousand dollars per month in passive interest. This is money that I'm making without doing anything. Like, the money literally just shows up. Now, my high-yield savings account is where I pull money out of for my day-to-day living expenses as well as for my emergency fund. I also have a bunch of excess cash in my high-yield savings account right now because I'm thinking about doing a big purchase soon. And generally, the rule of thumb is you want 6 months of living expenses as an emergency fund minimum. That money should not be in a traditional bank account, it should definitely be in a high-yield savings account. In my opinion, it's a lot better to have this type of money in a high-yield savings account rather than investing in stocks and stuff like that because it earns interest, it's super safe, and you can access it very, very fast. And seriously, you guys, it's literally like having free money delivered to me. I'll show you guys later on in this video. Now, let's talk about how much money you should keep in your high-yield savings account and also when to stop. So, these accounts are great, but they're also not an investment strategy. What I think is, once you have about 6 months of expenses saved up in your high-yield savings account, you probably shouldn't be dumping that much more money into it. For example, if your monthly expenses are, let's say, $3,000, that's about $18,000 in your high-yield savings account. So, this is just your safety net, right? Beyond that, any money you make should be going into actual investments. These would be things like index funds, real estate, crypto, and any other types of investments. And still, the highest ROI investment anyone can make is investing into themselves, into your own business. But aside from that, right? A high-yield savings account, if it earns 4% for sake, it's great, it's really safe, but the S&P 500 has averaged about 10% per year historically. So, that's a pretty big difference and that's why I think that most of your invested money should be in index funds. Now, the exception is if you're saving for something specific, just like I'm doing. Since I'm buying something in the short term, that's why I have more money in my high-yield savings account. It's a perfect place to park that money cuz it's safe, you can access it super fast, and then it gates any inflation that's happening. So, really think of your high-yield savings account as your foundation. It keeps you safe and also gives you this base to help you sleep better at night. And then everything we build on top of that base is where real wealth comes from. And with every type of investment out there, stocks, real estate, crypto, whatever, the more risky it is, the more potential return you have. A high-yield savings account has literally zero risk, but you still get a pretty solid 4% return. So, guys, you need to set this foundation first, right? Like, open up that high-yield savings account and then you can start to climb the ladder. Now, the only bad part about high-yield savings accounts are that the rates are variable. So, they can go up or they can go down. So, for example, if the Fed cuts rates, then it's very likely that most high-yield savings accounts' rates will also go down. For example, right now, we're at about 4% for the best high-yield savings accounts, but a few years ago, some of them were above 5%. What I personally would do is have a really small amount of money in the checking's portion and all the rest should be in the separate high-yield savings account. If you're running low in your checking account, just move some money over from your savings. That way, your money can get 4% in this bucket right here while this short, short-term money is not making any money. Now, you might be wondering, what are the best high-yield savings accounts? I made videos about this. The truth is that they're mostly the same. I use my SoFi account extensively. I really recommend it. have one of the highest interest rates of any high-yield savings account. And right now, if you guys actually use that link down below, you'll get a bonus of up to $400 for opening up your account. Yeah, beyond SoFi, there's a bunch of other ones like Synchrony, Barclays, CIT. All the rates are relatively similar. I'd say that for most people watching this video, SoFi is going to be the best one. Okay, so this is the inside of my SoFi high-yield savings account just to show you guys what it looks like. These online savings accounts actually have really great interfaces and honestly, they're a lot easier to use than the traditional banks. That's cuz these are more like tech companies, so they invest into their platform, their tech, all that stuff. So, here is where all the activity in my account is. You can see I have my checking's here and my savings here, so I can toggle between both of them. Checking, you can see money coming in, those are my direct deposits. I also have automated transfers into my savings account from the checking portion. They have autopilot, so you can set up recurring transfers, which is really cool. You can also have different vaults, so these are separate accounts, basically. These are really good for saving for things. For example, if I'm saving up for a car, I can click on this and create this car vault. And then autopilot is basically where you manage your deposits, withdrawals, and transfers. So, yeah, setting my account took me 5, 10 minutes. All you need is your ID as well as your bank info to link your existing account. Okay, so guys, if there's anything you can take away from this video, it is that there is zero reason to let your savings sit in a normal bank account. Please, please, please, just open up a high-yield savings account. Over the course of, let's say, 20, 30 years, you're going to make thousands to hundreds of thousands of dollars more by having this high-yield savings account. And so, yeah, just take 5 minutes to make it. I have all my favorite high-yield savings accounts in the link in the description down below. And again, it's completely free, it's super safe, and they're actually easier to use than normal banks. For most of you guys watching this, just go SoFi. I think that is the clear winner for me. But again, you can't go wrong with any high-yield savings account. Hopefully, by watching this video, it's going to put a lot more money into your pocket. Share it with a friend that you think should have a high-yield savings account and you guys will thank me later. All right, if you guys got any value from the video, make sure to hit that like button and subscribe for more content just like this. I do a ton of videos about personal finance, entrepreneurship, tutorials, and my whole goal is to help you guys live a financially successful life. Thank you so much for your time and I'll see you in the next video. Peace. [music] >> [music] [music]