@orthros Yes 10k is a helpful example. I certainly wouldn’t mind an extra $100 out of nowhere every year!
It sounds like Ally bank could be a happy medium - higher than 0 deposit rates, but also sufficient ancillary services and no fees. You mentioned branch services - could you briefly explain the importance of having local branches at a bank? What exactly do you need them for that you couldn’t do elsewhere?
Thanks!
Hi all,
So I just a WSJ article about some of the new trends in consumer banking. The article will be linked at the end.
Essentially, because of all the uncertainty that this year has brought, bank deposits swelled to all-time records. Banks that have been known to have low deposit rates (the interest a bank gives when they put deposited money to work), like Bank of America and JP Morgan, have kept their rates near 0%. Banks that attempt to attract customers with higher deposit rates, like Capital One and Marcus, have been able to cut their rates, as they too have an increased amount of deposits.
This is certainly an interesting article that highlights some of the new trends that 2020 has brought. The article also resonated with me on a personal note as well. Though I am a student and do not have much money saved in a bank, I do have some. Is it worthwhile to target a bank that can offer a higher deposit rate? Maybe 1.5% vs. .08%. I obviously understand the difference in 1.42% per year on the money in the account, but what are the other implications? Is there added fees or risk that comes with earning the higher return on my money?
Moreover, what else could I be doing with my money that I have saved up?
I would love to hear everyone’s thoughts on the article and my questions. Please comment!
Here is the link to the article:
Thanks for reading!
@rick505 that totally makes sense. I’ll look into it.
@rick505 Wow thats interesting. So essentially we should shift our focus specifically to medical bills?
@ctujackbauer thanks for the insight. So you think that our business model is not solid, given that the providers are already doing similar things, and that we have little credibility?
@zerenia Bill Gates is certainly a perfect example of the societal benefits of the endless opportunities offered in our country. We can only hope that all billionaires will follow his example.
@zerenia could not agree more.
but to be fair, those who do venture out on their own and succeed on a large scale certainly get compensated more than their fair share.
@zerenia very relevant and interesting. thanks for this!
it seems as if our initial thoughts weren’t too far off - more people have more time to put their ideas to work. good luck to them!
Hey guys. As some of you may know, I currently work for a FinTech startup (more info in bio). Even though I truly believe in the product and am confident that it can service consumers, we are having a difficult time gaining traction.
Do you guys have any suggestions on how we could gain more traction, aside from social media pages, cold emailing, and a little bit of advertising? I would love to hear.
Also, what are some of your favorite startups? Maybe I could check out their websites and gain some insight there.
Looking forward to engaging! Thanks!
@zerenia very insightful as always! Thanks. I definitely agree that there is much less to lose now for most people. I think the article also asserts that point. Hopefully the new business are able to gain the traction to stick around!
@zerenia thanks for engaging. Here’s the link:
I’d love to hear what you think!
@rick505 thanks for engaging Rick! I think your thoughts are very helpful.
To your first point, I am pretty sure that it formal businesses. Would it even be possible to gather data on “side gig” businesses? What would that even look like?
I think your second point is an interesting one. I wonder what the difference is between starting a company out of desperation vs. starting a company because you came upon a good idea is… which is more powerful?
I recently saw a headline that stated that new companies are being created at nearly twice the rate this year compared to previous years. This came off as super interesting to me. I will parse out my thoughts but would love to have a discussion about it.
The immediate question is why. My initial thoughts had to do with the heightened unemployment rate. For context, the unemployment rate is currently 8%, which is not too much higher than the average over the years. However, at its peak, unemployment touched 15% in April. Either way, the unemployment rate now is much higher than at its all-time lows pre-pandemic. With less people working, more people have time on their hands, which can spur creativity. The pandemic-driven unemployment may have given some the time they always needed to take the steps to start the company that has always been in the back of their minds. Similarly, if a person is out of work, the opportunity cost of the many hours it takes to start a company is far lower, now that they are not forgoing wages. I would be surprised if the heightened unemployment rate is not at least part of the reason for the wave of new companies.
The next question that came to mind was weather this was good or bad. On one hand, there are seemingly always new products and services that can make peoples’ lives better. On the other hand, some inspiring entrepreneurs might be putting their life savings into their new idea in an evidently saturated market. This could lead to further wide-spread economic supression. After all, how many startups actually succeed?
… which brings me to my next point. From where I sit, big companies keep getting bigger while there are fewer small companies that remain afloat. I continue going to Amazon for more and more products, while the local hardware store and diner have shuttered. I am just not convinced that these tiny startups have the ability to compete with the ever-growing, omnipotent global players.
Going forward, will this rise in new companies have any material impact on the economy? While the economy continues to become more normalized, will the inspiring entrepreneurs abandon their risky projects and go back to normal wage-paying jobs? Or will they throw every last penny they have at their aspirations and end up having material impact on unemployment, consumer spending, poverty, etc.?
I am not sure. I think it is an interesting question. Obviously, entrepreneurship is a huge positive for society. Where would we be without the likes of Bill Gates, Mark Zuckerberg, Steve Jobs, etc.? However, the need for middle-class wage-earners will never go away. Is the scale becoming unfavorably tilted?
I would love to hear everyone’s thoughts! Please comment!
@zerenia wow this is super informative and insightful. thanks for participating!
Guys let’s have a discussion about a super important economic concept. We see this at work behind the scenes in our everyday life. It is called “time value of money”. Let’s take a look:
Would you rather have five dollars today or five dollars and fifty cents in a year from now? I would wager that most said that they would prefer five dollars today. Whether or not you are conscious of it, you probably understand the time value of money. For various reasons, money is more valuable in the present than it is in the future. There are all sorts of equations and thought processes that seek to explain the phenomenon; however, it is quite simple in my mind. The logic is based off what you can do with the money in the meantime.
As we all know, money can be used for many things. It can be saved, spent, invested, etc. All of these activities provide benefit to the transactor. Traditionally, the time value of money is founded on the benefit of saving that money and earning a compounded interest rate. Here is the fancy equation that I was referencing previously:
FV = PV x [ 1 + (i / n) ] (n x t)
Where future value equals present value, times one plus the interest rate earned, divided by the number of compounding periods per year (this can vary), to the power of number of compounding periods per year, times number of years.
The key takeaway from the equation is simply that there is value in having money now versus having money in the future, as there is a small amount of money that can be made in the meantime. Moreover, the amount of value is fluid and undetermined. If your money is simply held in a savings account, you will typically earn a little bit less than 1% per year. Though this does not seem like much, it is not moot. Time value of money becomes even more realized if you are being more aggressive with your money. Say that you are invested in a mutual fund that seeks to earn a conservative 7% per year. In this case, your money becomes even more valuable in the present, as you can take more advantage of having that money now. But going back to the 1% interest in a traditional savings account, having $1,000 now would be equal to having $1,010 in a year.
We have already examined how having the ability of saving and investing money creates value in having money sooner rather than later. Additionally, I suggest there is a third thing that gives present money value – that thing is spending. This mechanic relies more on human psychology than mathematical formulas. Having a desire for something, whether it is a house, car, pair of shoes, TV, etc., has the ability to distort logic. We have all been in a situation where we know that something will be on sale soon, or have a decreased price in one way or another in the future, however we did not have the ability to delay our urge, and ended up buying this thing immediately, ultimately costing us money. This is certainly human; however, it does demonstrate how having the ability to buy something now also serves to give present dollars added value over future dollars.
Time value of money is an accepted fact and can be leveraged. Does anyone know about any businesses that our using the phenomenon to support their business model? I would be really interested to learn. Let’s discuss!
Guys, I need your help. Do you try to follow the news? Have you run into issues trying to get news from different sources but found yourself spending too much on subscriptions? Let me tell you about what I have experienced.
I am a college student who is trying to stay engaged with what is going on in the world, while also juggling many other expenses. I constantly hear that regardless of the profession I choose, being current on world events is very important. However, what I do not hear is advice on the best ways to accomplish this vague task.
After diving in headfirst, inspired and motivated by the challenge posed to me, I started signing up and subscribing to all the news that I could. At first, I found little issues, as many places offer free trials, while some of the poorer sources are able to disguise their lackluster content for a time. I was a happy camper consuming news, with little cost (other than my free time!).
As they say, “all good things must come to an end”. This was the case for me being able to have access to all the news I want without it hurting my financially vulnerable position. After my trial periods were up, these media outlets were asking me for all kinds of money that I was unable to pay.
My initial thought was to try to find out what I could afford. After a little bit of digging, I realized that I could hardly even afford access to one high-quality media source (I decided, and still believe, that it is most important to consume quality media, and not misinformed, lackluster journalism).
My financial constraints posed the problem that I was initially worried about – only hearing one angle of the issue/story. It is very important to be able to form your own opinions, and this simply does not happen by only consuming the news from one source. I was at a real crossroads.
Ultimately, I knew that I needed to consume news effectively and ended up getting a part-time job to be able to afford it.
Is this really the best solution? It is really eating into my time and I do not know if I will be able to keep it up. Does anyone else have other solutions? I would be super interested to hear! Please comment!