Tuesday, November 15, 2016

Saving account, annual percentage yield (APY)

  • look for free saving account, charge no fee
  • depending on where you open a saving account: at a bank, a mutual fund company, at a brokerage firm
  • restrict on the number of withdraws you can make or a minimum withdrawal amount
  • money you need to have for emergency (unexpected meidcal bills, lay off, split off ) belongs in a saving account where you can earn money
  • should cover at least 8 months of living expenses
  • if you and your partner have a common saving account (family fund), you also need to have your own saving account, 50/50 rule--if you have $200 to save every month, $100 goes into your own saving account, another $100 goes into the family fund
  • force yourself to save, save on autopilot ---authorize the bank where you have your checking account to automatically transfer money each month from the checking account into a saving account or money market account, it doesn't have to be at the same bank; you can choose the auto-pilot option when you sign up for a saving account
  • sign up for automatic deposits into ur saving account 
annual percentage yield (APY), get the highest APY
  • APY floats, rather than fixed. A financial institution can offer any APY, the rates can very widely from bank to bank. 
  • But all banks tend to follow the lead set by the Federal Reserve (US government's bank); Fed meet 8 times a year and decide if they want to raise, lower, or lever unchanged a key interest rate (Federal Funds Rate). 
  • Banks follow the Federal Reserve's lead. When the Federal Funds Rate rises, you typically see interest rates on saving/money market account rise. When the Federal Funds Rate falls, so will the interest rates on saving/money market account . Some financial institutions react instantly, others may make the adjustments monthly or quarterly. 
  • You need to know what the Federal Funds Rate is. Thus, a good saving rate should be right around that rate.
  • if your saving account interest rate is more than 0.75% below the  Federal Funds Rate, you should move your money to an account with a higher interest rate
  • for example, if Federal Funds Rate is 5.25 %, then a good saving account interest rate should be between 4.5% and 5% 
  • http://www.bankrate.com/  click "checking and savings" search for the best bank deals in your area, click on the "compare rates"
  • as of late 2006, internet banks offer the highest APY:
 https://www.emigrantdirect.com/EmigrantDirectWeb/index.jsp
HSBC  www.hsbcdirect.com
ING direct www.ingdirect.com

  • APR適用於信用方面的金融商品, 例如貸款, 扺押, 信用卡, 預借現金等, APR可以讓你比較金融商品所收取的利率, 及比較金融商品所收取的手續費用, 故當你要借錢時, 你應選擇APR最低的金融商品
Annual Equivalent Rate, AER
  • 為提供給儲蓄帳戶的選擇, 讓客戶可在相同的儲蓄商品之間, 選擇以年利率或月利率計息
  • 若你選擇的AER是一樣的, 那麼不管是年付或月付, 你所獲取的利息都是一樣的
  • 若你要儲蓄, 那你需要的是AER, 而非APR
certificates of deposit (CDs)---available as banks, mutual funds companies, brokerage firms, FDIC insured

money market mutual funds (MMMFs)---available as banks, mutual funds companies, brokerage firms, not FDIC insured

money market deposit account (MMDA)-- FDIC insured, open with a brokerage firm, an account within an account (you first open a brokerage account, within it is a place to hold and save your money), the brokerage account that houses the money market account provides you with more options than just saving--you can buy various investments, eg.., stocks, bonds, mutual funds, CDs, or even gold

money market account -- open with a brokerage firm, an account within an account (you first open a brokerage account, within it is a place to hold and save your money), the brokerage account that houses the money market account provides you with more options than just saving--you can buy various investments, eg.., stocks, bonds, mutual funds, CDs, or even gold 

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