The number one goal of your money should be to beat inflation. Your money will never grow in your bank account and most can’t save enough on their own without those funds also growing as it sits. If your money isn’t making money, will you ever be able to save in the near future? If not, you probably need to move away from using your standard bank account. The average rate of inflation ranges 3-4%. This means your bank account, falling far behind every single year.

Chase, Bank of America, and Wells Fargo are the top banks in the country but they also pay the worst interest rates on your money—pretty much nothing actually. For your every day banking, your money should be in a high yield savings account HYSA which pays a far higher percentage than those banks. Instead of earning 0.5% on average (which is a nickel per $100), even in times like now, an HYSA is paying 3-4% on average (which is $3-4 per $100). Banks like SoFi, Barclays, Capital One, and Marcus by Goldman Sachs all pay much more and have low or no fees to use their bank. I have accounts in all of them for various reasons and my favorites are SoFi and Capital One because their apps are so fast and easy to use to move money, open other accounts, invest, and put money into different places but also pay bills in a click. With these accounts, your money is at least staying up with inflation and helping you stay afloat.

Your money for the long term (6 months+), should be put into a Roth IRA if you don’t plan to touch the money often or at all. IRAs do have withdrawal rules and penalties on any gains earned but your own deposits, aka contributions, are an exception to the rules so you can deposit and withdraw if needed while your money is making even more than an HYSA or CD from those banks because within IRAs, you appoint your contributions to ETFs and stocks that average 6-12% gains, year over year. For example: My IRAs are invested into simple and basic ETFs like VOO, VTI, QQQ, SCHD because they pretty much always make great returns every year and I can buy them in fractional shares every paycheck. They’re cheap and easy to invest in over time and do all the work to make me money better than my HYSA accounts.

For example: The ETF VOO is one of the most popular funds and you can find thousands of videos on it online and this is why. It’s worst ROI in the last few years is about 12%. Last year, was 26%!!! B of A is giving you a penny per $100 for most checking and savings. If you have their money market account, you get a nickel. With VOO, you are making $12-26 while the fees are about three cents annually. No brainer.

I have more articles on this and I definitely recommend working with a financial advisor at least once or twice to help you set them up if you feel lost still. Check out my other blogs on this!

If you’re needing the gains to help you grow your balance, then your money should be in an HYSA. If you’re just tucking money away and letting your own contributions add up, the IRA will do that AND the gains made will be there for you in retirement and you didn’t have to save additional money separately that you may not have right now. In this way, you’re saving for a home and retirement at the same time with the same dollar.

Your second best account is an HYSA. Because SoFi makes the IRA investment game so freaking easy, fast, and cheap, they’re my absolute favorite. I can buy shares of ETFs for as cheap as I wish. If you only have $10 right now to invest, do it. Every time I had a spare $5 or $10, I put it into VOO and other ETFs like VUG, SPY, VTI, etc and it added up so quickly after a few months! It took 8 seconds to invest and a couple buttons to push. That’s it and I’m making money. This is what most people don’t understand is that whenever you open any type of IRA you must also invest the money within those accounts into various funds. I don’t like investing in individual stocks because they don’t have as strong gains so you don’t make as much and they’re pretty risky. ETFs are such low risk and cost that I don’t see the reason bothering with stocks.

The type of IRA you get is dependent on your current needs and future expectations. A financial advisor through companies like Edward Jones (as an example because that’s one of the companies I use), they can help guide you which is best as can your CPA because the biggest difference are the tax implications between the two. Roth IRAs and 401ks are taxed now and not in retirement while traditional IRA and 401ks are taxed in retirement. If you’re hoping or expecting to live on more in the future, you are probably best getting taxed now in a lower tax bracket with a Roth plan than later in a traditional plan. If you’re making good money now but planning to not need as much to live off later, a traditional retirement plan is better most likely. Also, have an IRA at the very least but if you have an employer who offers a 401k also, get both! When you leave though they tend to cost fees if no longer employed, so make sure you rollover all old 401k accounts into your current IRAs. Again, this is best to be set up through an advisor service so it’s done right and saves you money and taxes. I max out both accounts each year. You can have many but the total max is across in total, not individually.