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Personal Finance Videos 520 videos

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Personal Finance 101 Part 4: Bank Accounts 458 Views


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Transcript

00:01

We speak student!

00:05

Personal Finance 101

00:08

Bank Accounts

00:10

a la Shmoop

00:13

Let's bring it back to some practical advice.

00:17

So you're saying put the money in the bank

00:19

instead of putting it under your mattress.

00:21

What are my options?

00:24

Do I put it in a savings account?

00:25

Do I put it in a checking account?

00:27

Should I have both types of accounts or just one?

00:30

When I'm 16 years old, what do I need?

00:32

So it depends if this $100 was a one-off thing.

00:36

If it was a one-time thing and you're not saving money regularly,

00:41

it probably is better to put it under the mattress,

00:43

because banks will charge you money for storing

00:47

your money in their bank

00:49

if there isn't a minimum amount.

00:51

The reason is banks incur costs.

00:55

It costs them money. They don't want an account that has a hundred dollars in it.

00:59

They want an account that has a few thousand dollars and maybe they break even

01:03

with just that amount of money.

01:04

Because banks take the money that you deposit into them,

01:07

loan it to other people

01:09

at a marked-up interest rate,

01:10

and they live on the spread, or difference,

01:12

between what they have to give to you and what they collect from people they rent it to.

01:16

So if it's a hundred dollars once,

01:19

the mattress thing is better.

01:21

If it's a hundred bucks a month every month and you can commit to it,

01:24

most mutual fund and index fund places, which is probably where you oughta go,

01:29

will give you very low fees

01:32

and no entry fees most of the time.

01:34

If you commit to, say,

01:36

$2000 over the next two years,

01:39

they'll give you very low commission, very low break points, and so on

01:42

to enable young people to get invested.

01:45

Now, obviously, it makes a lot of sense

01:46

for the fund company to do that.

01:48

Because if they can attract young people to start

01:51

giving them money to manage and invest,

01:54

over long periods of time, they make a fortune.

01:56

[ woo! ]

02:00

[ whoop ]

02:02

Do I put my money in a savings account, checking account, or both?

02:08

[ woo! ]

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