The banks might pay 3% interest, whereas even non-volatile conservative investments like cap notes or bonds would pay something like 7%.

Plugging it into a calculator:

1.03 ^ 18 = 1.70

1.07 ^ 18 = 3.37

Example numbers, but you're effectively taking half of the money that your kid would have had on their 18th birthday, and giving it to a banker.

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MBCook 3 hours ago | parent | next [-]

3% is amazingly good. It’s not hard to beat that, but a savings account at a common bank can easily be below 0.05%.

I looked up BoA. 0.04%.

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hiddencost 13 minutes ago | parent | next [-]

3% is roughly inflation.

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eks391 3 hours ago | parent | prev | next [-]

3% is becoming more common as of the last few years, at least in the US. I know several banks off the top of my head that offer 3.5% or higher (and more if you are a new customer) for their savings accounts. I would persuade people who use banks that haven't moved on from near-zero APY to move on themselves.

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MBCook 2 hours ago | parent | next [-]

Yeah just off the top of my head I’d expect Discover and AmEx to be around 3.5%. Apple is at 3.4%.

I moved away from near 0% savings accounts more than 20 years ago, it’s amazing to me it’s still so common.

You don’t have to try very hard or go wrong to someone you’ve never heard of to get a good rate.

	▲	wingworks 6 minutes ago \| parent [-]
		The rate goes up and down with inflation, high inflation, high interest - low inflation, low interest. But even then, yes some banks still offer no or 0.5% accounts.. because they can, and many people can't be bothered to figure out a better option, or "trust" there bank and don't want to move. (or the bank has high interest account, but make it complicated to use)

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JKCalhoun an hour ago | parent | prev [-]

FWIW, savings rates have been coming down.

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Danox 2 hours ago | parent | prev | next [-]

I’ve been thinking about moving some money over by selling some shares and opening up a savings account with enough money to make a difference.

	▲	ghaff 2 hours ago \| parent [-]
		I'm definitely at the point where, if not sticking money in my mattress, I'm keeping a lot in pretty safe investments. Did sort of an equity housecleaning a couple years back and consolidated some investments, in part to make them easier to track and manage.

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nsvd2 2 hours ago | parent | prev [-]

3% is typical for a HYSA (Ally, for example)

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groundzeros2015 3 hours ago | parent | prev | next [-]

Yes… I also wouldn’t park money in a savings account for 18 years.

But 7% is not the risk free rate! The S&P and these other things have risk!

But show me a bond I can buy that’s paying 7% and I’ll show you below investment grade.

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AussieWog93 3 hours ago | parent [-]

LFSPA.

Not risk free, but not volatile either. Although even that underperforms compared to an index fund.

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groundzeros2015 2 hours ago | parent [-]

Index funds are not risk free! We have had a solid 15 years and everyone forgot that there are decades of declines or stagnation.

	▲	AussieWog93 2 hours ago \| parent [-]
		LFSPA is a cap note, not an index fund. Hence the lower returns, haha. Not saying it's necessarily the ideal vehicle but anything beats the banks.

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ghaff 2 hours ago | parent | prev | next [-]

Truly conservative investments are more in the 3-4% range these days; money markets were running around 5% a few years back but they've come down. I have some bonds (including treasuries) that are higher than that but I bought them quite a while back. For long time horizons I'd be more weighted on equity indexes and maybe dividend-heavy stocks.

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SideQuark 3 hours ago | parent | prev [-]

You’re not giving it to a banker, you’re trading risk for return and flexibility. One can access savings at any time, any amount. Not true with bonds, maybe if you fiddle with indices.

Also bond returns have averaged 5% over decades, not 7.

Not taking all this into account, and simply claiming bogey men took your money, is misleading.

	▲	HWR_14 2 hours ago \| parent [-]
		While true, funds for retirement, college or to give as a gift when your kids move out do not need liquidity. Therefore, those should not be in savings.