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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.
Full Transcript
- 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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