At my savings bank, I'm basically getting 0% interest on my savings account, which is a joke. My grandma still swears by it, but I wonder if I shouldn't put my money somewhere else instead. What do you guys do with your savings?
With 0% interest, a savings account really doesn't make much sense anymore for longer-term savings - your grandma used to do that back when you could still get 3-4%, but those days are long gone. You'd probably be better off with a money market account (you can still get something out of those right now), or if you don't need the money for a while anyway, an ETF savings plan could be interesting - the returns obviously aren't guaranteed, but historically they're way better than nothing. So what's your time horizon here - do you need the money in the next few years or more medium to long-term?
A savings account really only makes sense these days for an absolute emergency fund if you need the money within a few months - otherwise your purchasing power just disappears because of inflation 😅 A lot of people are looking at high-yield savings accounts instead, but heads up: the interest rates are super volatile and drop fast once the central bank cuts interest rates. If you can invest it for several years, something else would be worth it, but it really depends on how much risk you're willing to take and whether you want to mess around with this stuff or just prefer to keep things simple.
Savings accounts are just a relic from a different era 😅 What a lot of people forget: even if you factor in inflation, your money in a savings account loses buying power every month. Sure, savings accounts don't bring you much more either, but at least something - and ETFs or stock funds are usually way more interesting in the long run if you can handle the stress of price fluctuations. Your grandma just experienced different times, I'd say.
For a pure emergency fund, a savings account definitely still has a place, but I'd look at it more differentiated than the previous answers. Sure, 0% is bitter, and yeah, inflation eats away at your money - but a savings account has one big practical advantage: you can't access it as easily. If your money is on the same account as your checking account, you'll spend it faster. That's psychologically really something else. Your grandma isn't completely wrong either, even if the interest yield today is laughable.
But for longer-term savings you definitely need something else. Savings accounts these days give significantly more than 0%, and if you don't need to touch it for several years, it's also worth looking into fixed-term deposits or savings plans. Some banks even regularly have better conditions for new customers. I personally put together a mix of different things - emergency fund on the savings account (because it's practical), the rest on a savings account, and something else for the longer term. But beforehand I'd make it clear to myself: how long do I not need this money and how does that fit with my risk comfort. That's the real question, not whether savings account yes or no.
Your savings bank is offering you 0%, but the problem goes deeper than just "low interest." With current inflation at maybe 2-3% per year, you're losing real purchasing power - your money becomes worth less even if your account number stays the same. That's the thing a lot of people underestimate. If you really won't touch that money for several years, a savings account is actually a bad choice.
That said: Before you dump all your savings into something else, you need to be clear about what that money is for. Do you need it for an emergency fund (3-6 months of expenses)? Then quick access matters more than returns - you could look at money market accounts instead, which offer way better interest right now than your savings account. For longer-term savings (5+ years), you could think about other options, but that's a totally different calculation.
One warning though: Don't just throw everything somewhere else at once if you haven't really thought through what you're getting into. It's tempting to quickly find something with better returns, but some people end up in products they don't even understand or that have fees eating up the returns anyway. Think it through first, then act.
Log into answer.
