Could this be the reason no one saves money in a savings account?
Our forebears always put a little away “for a rainy day”. After surviving three bank holidays in the last century, my grandparents put their cash under their mattress. Seriously.
My parents used a savings account. Those were the days when the accounts earned an average of 4-5% interest. Over the years, the “compounding daily interest” (the incentive banks used to get us to have savings accounts while they used our money for other—more profitable—investments) more than made up for the approximately 4% annual inflation.
That was THEN, now?
Not so much.
OK, not at all.
Wait a minute!
Then, as now, the IRS taxes the yields on our “savings”. The contents of our investments are the disposable income from our earnings, our wages—which have already been taxed!
Talk about double dipping!
Since the new interest rates, 1% or less, on our already taxed income in a savings account…what’s the point of having one when inflation surpassed the average of 4% years ago?
Those banks who pay so little on our money charge between 19-29% on the credit cards—and that’s another reason I’m Grouchy G’ma.
My grandparents had the right idea, after all.