You will NEVER get wealthy with a savings accounthttps://abs.twimg.com/emoji/v2/... draggable="false" alt="🤷🏼‍♂️" title="Achselzuckender Mann (mittelheller Hautton)" aria-label="Emoji: Achselzuckender Mann (mittelheller Hautton)">

Let me explainhttps://abs.twimg.com/emoji/v2/... draggable="false" alt="🤝" title="Handschlag" aria-label="Emoji: Handschlag">

(thread)

Before I get into the analysis

I want to say this... savings accounts are GREAT for emergency funds

I, myself, hold my emergency fund in a savings account

However

You will NOT be able to become wealthy with just a savings account, you must investhttps://abs.twimg.com/emoji/v2/... draggable="false" alt="🤷🏼‍♂️" title="Achselzuckender Mann (mittelheller Hautton)" aria-label="Emoji: Achselzuckender Mann (mittelheller Hautton)">

As of 2020, the average interest rate of a savings account is 0.05% https://abs.twimg.com/emoji/v2/... draggable="false" alt="🤢" title="Angewidertes Gesicht" aria-label="Emoji: Angewidertes Gesicht">

“BuT wHaT AbOuT HiGh InTeReSt SaViNgS AcCoUnTs?”

Personally, I bank with Ally, and my current “high interest” savings account rate is 0.80%

So let’s run an analysis on bothhttps://abs.twimg.com/emoji/v2/... draggable="false" alt="🤝" title="Handschlag" aria-label="Emoji: Handschlag">

Let’s assume the following people already have a fully funded emergency fund!

https://abs.twimg.com/emoji/v2/... draggable="false" alt="👩" title="Frau" aria-label="Emoji: Frau"> “invests” her money into a 0.05% savings account

https://abs.twimg.com/emoji/v2/... draggable="false" alt="👨" title="Mann" aria-label="Emoji: Mann"> “invests” his money into a 0.80% savings account

https://abs.twimg.com/emoji/v2/... draggable="false" alt="👨‍🦱" title="Man, curly haired" aria-label="Emoji: Man, curly haired"> decides to invest his money into the stock market (8% average return)

All 3 of our people set aside

$400/month into their accounts for retirementhttps://abs.twimg.com/emoji/v2/... draggable="false" alt="💰" title="Geldsack" aria-label="Emoji: Geldsack">

They are all 25 years old

They all plan to retire at 55 and live off their investments (hopefullyhttps://abs.twimg.com/emoji/v2/... draggable="false" alt="👀" title="Augen" aria-label="Emoji: Augen">)

Let’s do ithttps://abs.twimg.com/emoji/v2/... draggable="false" alt="🧐" title="Gesicht mit Monokel" aria-label="Emoji: Gesicht mit Monokel">

After 5 years

They each have contributed $24,000https://abs.twimg.com/emoji/v2/... draggable="false" alt="💰" title="Geldsack" aria-label="Emoji: Geldsack">

https://abs.twimg.com/emoji/v2/... draggable="false" alt="👩" title="Frau" aria-label="Emoji: Frau"> account will be $24,029

https://abs.twimg.com/emoji/v2/... draggable="false" alt="👨" title="Mann" aria-label="Emoji: Mann"> account will be $24,478

https://abs.twimg.com/emoji/v2/... draggable="false" alt="👨‍🦱" title="Man, curly haired" aria-label="Emoji: Man, curly haired"> account will be $29,390

Not much of a difference here... YET

Let’s look after 15 yearshttps://abs.twimg.com/emoji/v2/... draggable="false" alt="🧐" title="Gesicht mit Monokel" aria-label="Emoji: Gesicht mit Monokel">

After 15 years

They each have contributed $72,000https://abs.twimg.com/emoji/v2/... draggable="false" alt="💰" title="Geldsack" aria-label="Emoji: Geldsack">

https://abs.twimg.com/emoji/v2/... draggable="false" alt="👩" title="Frau" aria-label="Emoji: Frau"> account will be $72,269

https://abs.twimg.com/emoji/v2/... draggable="false" alt="👨" title="Mann" aria-label="Emoji: Mann"> account will be $76,471

https://abs.twimg.com/emoji/v2/... draggable="false" alt="👨‍🦱" title="Man, curly haired" aria-label="Emoji: Man, curly haired"> account will be $138,415

Notice how https://abs.twimg.com/emoji/v2/... draggable="false" alt="👨‍🦱" title="Man, curly haired" aria-label="Emoji: Man, curly haired"> is starting to pull away from the packhttps://abs.twimg.com/emoji/v2/... draggable="false" alt="👀" title="Augen" aria-label="Emoji: Augen">

Let’s look after 30 yearshttps://abs.twimg.com/emoji/v2/... draggable="false" alt="🧐" title="Gesicht mit Monokel" aria-label="Emoji: Gesicht mit Monokel">

After 30 years, planned retirement age for all 3 of them

They each have contributed $144,400https://abs.twimg.com/emoji/v2/... draggable="false" alt="💰" title="Geldsack" aria-label="Emoji: Geldsack">

https://abs.twimg.com/emoji/v2/... draggable="false" alt="👩" title="Frau" aria-label="Emoji: Frau"> account will be $145,082

https://abs.twimg.com/emoji/v2/... draggable="false" alt="👨" title="Mann" aria-label="Emoji: Mann"> account will be $162,688

https://abs.twimg.com/emoji/v2/... draggable="false" alt="👨‍🦱" title="Man, curly haired" aria-label="Emoji: Man, curly haired"> account will be $596,143

What does this teach us?https://abs.twimg.com/emoji/v2/... draggable="false" alt="🤷🏼‍♂️" title="Achselzuckender Mann (mittelheller Hautton)" aria-label="Emoji: Achselzuckender Mann (mittelheller Hautton)">

Savings accounts are GREAT to hold your emergency funds

BUT

They are not a great way to build wealthhttps://abs.twimg.com/emoji/v2/... draggable="false" alt="🤢" title="Angewidertes Gesicht" aria-label="Emoji: Angewidertes Gesicht">

Even those “high interest” savings accounts aren’t going to build you wealth either

And, you’ll lose to inflation toohttps://abs.twimg.com/emoji/v2/... draggable="false" alt="🤷🏼‍♂️" title="Achselzuckender Mann (mittelheller Hautton)" aria-label="Emoji: Achselzuckender Mann (mittelheller Hautton)">

What’s the best way to build wealth?

INVESTINGhttps://abs.twimg.com/emoji/v2/... draggable="false" alt="🤩" title="Vom Star geblendet" aria-label="Emoji: Vom Star geblendet">

Your money will be in a place it’s working FOR YOU

Not against you (or even losing you money to inflationhttps://abs.twimg.com/emoji/v2/... draggable="false" alt="😔" title="Nachdenkliches Gesicht" aria-label="Emoji: Nachdenkliches Gesicht">)

I hope this thread helps explain the importance of investing

Rather than a savings account to build wealth

If you found value in this thread, feel free to share ithttps://abs.twimg.com/emoji/v2/... draggable="false" alt="🤝" title="Handschlag" aria-label="Emoji: Handschlag">

I appreciate you reading this far and I plan to continue to provide VALUE on your feedhttps://abs.twimg.com/emoji/v2/... draggable="false" alt="🙏" title="Folded hands" aria-label="Emoji: Folded hands">

@DecadeInvestor