Who does NOT have a bank account? Why not?

[mojodmonky1]

Originally Posted by therenegade23

How can you buy a house or a car without a bank account?

As crazy as it sounds, they take cash.

I am a firm believer in having a bank account, but I also agree with the members here who are saying cash = king.

Its not the sellers responsibility to determine where the purchase funds came from.  If someone has a shoebox with $100K and they wanted to walk into a dealership and buy a car straight cash, I'm sure EVERY car dealership would sell them the car.  Same goes for a house.  I had a conversation with my real estate broker when I was buying my house and he was telling me about some clients he had that came from overseas (China) and they were buying up houses straight cash.  No mortgage/loan, very very short escrows, literally showing up with $750K in $100's to the escrow title office at closing and walked away with the keys to a new house.

  

 

[mojodmonky1]

Originally Posted by therenegade23

How can you buy a house or a car without a bank account?

As crazy as it sounds, they take cash.

I am a firm believer in having a bank account, but I also agree with the members here who are saying cash = king.

Its not the sellers responsibility to determine where the purchase funds came from.  If someone has a shoebox with $100K and they wanted to walk into a dealership and buy a car straight cash, I'm sure EVERY car dealership would sell them the car.  Same goes for a house.  I had a conversation with my real estate broker when I was buying my house and he was telling me about some clients he had that came from overseas (China) and they were buying up houses straight cash.  No mortgage/loan, very very short escrows, literally showing up with $750K in $100's to the escrow title office at closing and walked away with the keys to a new house.

  

 

[timcity2000]

Originally Posted by jaywalkinsince91

I'm 19, work a part-time job averaging 16 hour weeks making 8.25 an hour......i get paid every week and the checks are only 70 bucks after taxes. I have an account but im thinking of getting rid of it, I went from having 180 in my bank to 138 before my first withdrawl and i withdrew 90(40 at atm and 50 in the branch) and checked my balance the next day and there was only 3 bucks left in my account(thats 90 unaccounted for) and i've only had the account for 3 weeks. why should i have a bank account?

if you seriously are missing money, then you need to contact your bank.  you have repercussions.

you should be able to go to your bank's website, log in to your account, and check the transaction history.
  

 

[timcity2000]

Originally Posted by jaywalkinsince91

I'm 19, work a part-time job averaging 16 hour weeks making 8.25 an hour......i get paid every week and the checks are only 70 bucks after taxes. I have an account but im thinking of getting rid of it, I went from having 180 in my bank to 138 before my first withdrawl and i withdrew 90(40 at atm and 50 in the branch) and checked my balance the next day and there was only 3 bucks left in my account(thats 90 unaccounted for) and i've only had the account for 3 weeks. why should i have a bank account?

if you seriously are missing money, then you need to contact your bank.  you have repercussions.

you should be able to go to your bank's website, log in to your account, and check the transaction history.
  

 

[Majorbread]

good looks on the high interest savings account online, never heard of them

love it when you got your $$ working for you

 

[Majorbread]

good looks on the high interest savings account online, never heard of them

love it when you got your $$ working for you

 

[2lipslegit]

Originally Posted by jaywalkinsince91

I'm 19, work a part-time job averaging 16 hour weeks making 8.25 an hour......i get paid every week and the checks are only 70 bucks after taxes. I have an account but im thinking of getting rid of it, I went from having 180 in my bank to 138 before my first withdrawl and i withdrew 90(40 at atm and 50 in the branch) and checked my balance the next day and there was only 3 bucks left in my account(thats 90 unaccounted for) and i've only had the account for 3 weeks. why should i have a bank account?

16x8.25=132

thats a lot of taxes....

 

[2lipslegit]

Originally Posted by jaywalkinsince91

I'm 19, work a part-time job averaging 16 hour weeks making 8.25 an hour......i get paid every week and the checks are only 70 bucks after taxes. I have an account but im thinking of getting rid of it, I went from having 180 in my bank to 138 before my first withdrawl and i withdrew 90(40 at atm and 50 in the branch) and checked my balance the next day and there was only 3 bucks left in my account(thats 90 unaccounted for) and i've only had the account for 3 weeks. why should i have a bank account?

16x8.25=132

thats a lot of taxes....

 

[mojodmonky1]

Originally Posted by 2LipsLegit

Originally Posted by jaywalkinsince91

I'm 19, work a part-time job averaging 16 hour weeks making 8.25 an hour......i get paid every week and the checks are only 70 bucks after taxes. I have an account but im thinking of getting rid of it, I went from having 180 in my bank to 138 before my first withdrawl and i withdrew 90(40 at atm and 50 in the branch) and checked my balance the next day and there was only 3 bucks left in my account(thats 90 unaccounted for) and i've only had the account for 3 weeks. why should i have a bank account?

16x8.25=132

thats a lot of taxes....

he's probably doing his withholdings incorrectly and is giving the gov't an interest free loan.  when tax time comes around he (like many americans) thinks he's coming up by getting a decent sized tax refund, when in actuality he is only getting his own money back that he should have had in his pockets months ago.

back on topic - if you plan on having your own business and seek out any sort of business loan, lease, or other type of financing, you better have a bank account.  Lenders usually want to see bank statements to see your month to month cash flow so they can confirm whether your deposits are in line with the revenue you are claiming.  I do most of my business with smaller mom and pop type outfits (1-20 employees, sole props or privately owned corps/llc's) that run a lot of their business on a cash/carry basis.  It's hard for me to confirm that they are claiming to bring in $2MM of revenue annually, but can only show deposits of $150K a year.  It definitely does not help their cause when they are asking me for a $100K advance which to me would represent an obscene 66% of their normal gross revenue.   

 

[mojodmonky1]

Originally Posted by 2LipsLegit

Originally Posted by jaywalkinsince91

I'm 19, work a part-time job averaging 16 hour weeks making 8.25 an hour......i get paid every week and the checks are only 70 bucks after taxes. I have an account but im thinking of getting rid of it, I went from having 180 in my bank to 138 before my first withdrawl and i withdrew 90(40 at atm and 50 in the branch) and checked my balance the next day and there was only 3 bucks left in my account(thats 90 unaccounted for) and i've only had the account for 3 weeks. why should i have a bank account?

16x8.25=132

thats a lot of taxes....

he's probably doing his withholdings incorrectly and is giving the gov't an interest free loan.  when tax time comes around he (like many americans) thinks he's coming up by getting a decent sized tax refund, when in actuality he is only getting his own money back that he should have had in his pockets months ago.

back on topic - if you plan on having your own business and seek out any sort of business loan, lease, or other type of financing, you better have a bank account.  Lenders usually want to see bank statements to see your month to month cash flow so they can confirm whether your deposits are in line with the revenue you are claiming.  I do most of my business with smaller mom and pop type outfits (1-20 employees, sole props or privately owned corps/llc's) that run a lot of their business on a cash/carry basis.  It's hard for me to confirm that they are claiming to bring in $2MM of revenue annually, but can only show deposits of $150K a year.  It definitely does not help their cause when they are asking me for a $100K advance which to me would represent an obscene 66% of their normal gross revenue.   

 

[jaywalkinsince91]

Originally Posted by Mojodmonky1


he's probably doing his withholdings incorrectly and is giving the gov't an interest free loan.  when tax time comes around he (like many americans) thinks he's coming up by getting a decent sized tax refund, when in actuality he is only getting his own money back that he should have had in his pockets months ago.

Didn't claim any dependents, and bout the figures i gave, they weren't exact....just me throwing numbers out there. I actually have an inconsistent schedule i.e my last schedule was 20 hours the one before was 11 which is why i said i AVERAGE 16 hours a week. my last schedule was 20 hours and that check was 130 after taxes which means they took 35. most of the 35 went to FED WITHHOLDING and FED OASDI/EE

 

[jaywalkinsince91]

Originally Posted by Mojodmonky1


he's probably doing his withholdings incorrectly and is giving the gov't an interest free loan.  when tax time comes around he (like many americans) thinks he's coming up by getting a decent sized tax refund, when in actuality he is only getting his own money back that he should have had in his pockets months ago.

Didn't claim any dependents, and bout the figures i gave, they weren't exact....just me throwing numbers out there. I actually have an inconsistent schedule i.e my last schedule was 20 hours the one before was 11 which is why i said i AVERAGE 16 hours a week. my last schedule was 20 hours and that check was 130 after taxes which means they took 35. most of the 35 went to FED WITHHOLDING and FED OASDI/EE

 

[ouch my feet]

Originally Posted by LetItShine24

Originally Posted by finnns2003

Originally Posted by Ouch my feet


Banks are pieces of %@*#. There is one thing and one thing only that banks do and that is make money off of their customers. These corporations have been outed as laundering channels for criminals and drug cartels, I don't understand how any sane person can have an ounce of respect or loyalty towards them.

Not only has it been an absolute eye opening experience getting away from banks, it has changed my life for the better. You have the power to lead your life in the way you choose, don't feel obligated or dependent on these power and money hungry scumbags.

Yep. Corrupt as it gets. 

Proof? Every business is out there to make money of customers, that's why it's called  BUSINESS. When your fortune is burned in a box of Nikes, don't make a post it on NT and whine about it. 

Please educate yourself on the institutions you hold your hard earned money with. I am not even saying that in a mad or condescending way, the reasons I am seeing in here for justifying a bank account are ridiculous. Hundreds of millions of dollars have been laundered for Mexican drug cartels through the largest US banks. How do you think they do it? Using your money.
Strong sense of how banks work and practice in here (not srs).

Read up and "get with the times" as one NT'er said:

http://www.guardian.co.uk/world/2011/apr/03/us-bank-mexico-drug-gangs

http://www.guardian.co.uk/world/2011/apr/03/us-bank-mexico-drug-gangs

there are so many reasons to have a bank account. when i was in high school, my parents MADE me get one.

i know interest is not much, but several online banks can get you 1.5%. stuffing your cash under a mattress is earning NO interest. in a sense, you're losing money....
your deposits are insured by the FDIC. seriously, you're not gonna just wake up one day and have a $0 balance. it is LEGALLY insured. i'm not sure where this distrust of banks comes in...
direct deposit usually results in quicker payment. my paycheck often shows up the night before payday. if you have to pick up a live check, go to a bank and cash it, you're wasting time (and gas).

and the list goes on....

1. Anyone without a bank account is hardly "stuffing their cash under a mattress". Stock investment, precious metal holdings, and any other investment are all fair game here. It doesn't matter if you have an account or not, no one is sitting on their money with a 0.5% interest return and looking at it as an investment.

2. FDIC insurance is good up to $100k per account and people without bank accounts don't wake up with $0 period.

3. Checks are sent to home addresses, you walk into a bank and walk out with cash.

If you are into having an account, thats wonderful. The reality of the situation is that unfortunately (and it shouldn't be this way) the cons outweigh the pros here.

 

[ouch my feet]

Originally Posted by LetItShine24

Originally Posted by finnns2003

Originally Posted by Ouch my feet


Banks are pieces of %@*#. There is one thing and one thing only that banks do and that is make money off of their customers. These corporations have been outed as laundering channels for criminals and drug cartels, I don't understand how any sane person can have an ounce of respect or loyalty towards them.

Not only has it been an absolute eye opening experience getting away from banks, it has changed my life for the better. You have the power to lead your life in the way you choose, don't feel obligated or dependent on these power and money hungry scumbags.

Yep. Corrupt as it gets. 

Proof? Every business is out there to make money of customers, that's why it's called  BUSINESS. When your fortune is burned in a box of Nikes, don't make a post it on NT and whine about it. 

Please educate yourself on the institutions you hold your hard earned money with. I am not even saying that in a mad or condescending way, the reasons I am seeing in here for justifying a bank account are ridiculous. Hundreds of millions of dollars have been laundered for Mexican drug cartels through the largest US banks. How do you think they do it? Using your money.
Strong sense of how banks work and practice in here (not srs).

Read up and "get with the times" as one NT'er said:

http://www.guardian.co.uk/world/2011/apr/03/us-bank-mexico-drug-gangs

http://www.guardian.co.uk/world/2011/apr/03/us-bank-mexico-drug-gangs

there are so many reasons to have a bank account. when i was in high school, my parents MADE me get one.

i know interest is not much, but several online banks can get you 1.5%. stuffing your cash under a mattress is earning NO interest. in a sense, you're losing money....
your deposits are insured by the FDIC. seriously, you're not gonna just wake up one day and have a $0 balance. it is LEGALLY insured. i'm not sure where this distrust of banks comes in...
direct deposit usually results in quicker payment. my paycheck often shows up the night before payday. if you have to pick up a live check, go to a bank and cash it, you're wasting time (and gas).

and the list goes on....

1. Anyone without a bank account is hardly "stuffing their cash under a mattress". Stock investment, precious metal holdings, and any other investment are all fair game here. It doesn't matter if you have an account or not, no one is sitting on their money with a 0.5% interest return and looking at it as an investment.

2. FDIC insurance is good up to $100k per account and people without bank accounts don't wake up with $0 period.

3. Checks are sent to home addresses, you walk into a bank and walk out with cash.

If you are into having an account, thats wonderful. The reality of the situation is that unfortunately (and it shouldn't be this way) the cons outweigh the pros here.

 

[jaywalkinsince91]

Originally Posted by Ouch my feet


1. Anyone without a bank account is hardly "stuffing their cash under a mattress". Stock investment, precious metal holdings, and any other investment are all fair game here. It doesn't matter if you have an account or not, no one is sitting on their money with a 0.5% interest return and looking at it as an investment.

2. FDIC insurance is good up to $100k per account and people without bank accounts don't wake up with $0 period.

3. Checks are sent to home addresses, you walk into a bank and walk out with cash.

If you are into having an account, thats wonderful. The reality of the situation is that unfortunately (and it shouldn't be this way) the cons outweigh the pros here.

This man gets it, I'm about to close my account but i get my checks sent straight to my house the day before payday and know the tellers so they don't charge me for cashing my checks. And about having 'matress' money, I've had a CD account since i was 14 which i always managed myself so i know a bit about true interest rates and the ones provided through checking accounts are pure rubbish in my opinion. that plus the fact that i make lunch money after taxes are as good enough a reason as any to not need a bank account.

 

[jaywalkinsince91]

Originally Posted by Ouch my feet


1. Anyone without a bank account is hardly "stuffing their cash under a mattress". Stock investment, precious metal holdings, and any other investment are all fair game here. It doesn't matter if you have an account or not, no one is sitting on their money with a 0.5% interest return and looking at it as an investment.

2. FDIC insurance is good up to $100k per account and people without bank accounts don't wake up with $0 period.

3. Checks are sent to home addresses, you walk into a bank and walk out with cash.

If you are into having an account, thats wonderful. The reality of the situation is that unfortunately (and it shouldn't be this way) the cons outweigh the pros here.

This man gets it, I'm about to close my account but i get my checks sent straight to my house the day before payday and know the tellers so they don't charge me for cashing my checks. And about having 'matress' money, I've had a CD account since i was 14 which i always managed myself so i know a bit about true interest rates and the ones provided through checking accounts are pure rubbish in my opinion. that plus the fact that i make lunch money after taxes are as good enough a reason as any to not need a bank account.

 

[hendrix watermelon]

Originally Posted by jaywalkinsince91

Originally Posted by Ouch my feet


1. Anyone without a bank account is hardly "stuffing their cash under a mattress". Stock investment, precious metal holdings, and any other investment are all fair game here. It doesn't matter if you have an account or not, no one is sitting on their money with a 0.5% interest return and looking at it as an investment.

2. FDIC insurance is good up to $100k per account and people without bank accounts don't wake up with $0 period.

3. Checks are sent to home addresses, you walk into a bank and walk out with cash.

If you are into having an account, thats wonderful. The reality of the situation is that unfortunately (and it shouldn't be this way) the cons outweigh the pros here.

This man gets it, I'm about to close my account but i get my checks sent straight to my house the day before payday and know the tellers so they don't charge me for cashing my checks. And about having 'matress' money, I've had a CD account since i was 14 which i always managed myself so i know a bit about true interest rates and the ones provided through checking accounts are pure rubbish in my opinion. that plus the fact that i make lunch money after taxes are as good enough a reason as any to not need a bank account.

But the thing I don't get is, if you're going to close the bank account then how will you build credit(considering you don't have any or its low)? 

 

[hendrix watermelon]

Originally Posted by jaywalkinsince91

Originally Posted by Ouch my feet


1. Anyone without a bank account is hardly "stuffing their cash under a mattress". Stock investment, precious metal holdings, and any other investment are all fair game here. It doesn't matter if you have an account or not, no one is sitting on their money with a 0.5% interest return and looking at it as an investment.

2. FDIC insurance is good up to $100k per account and people without bank accounts don't wake up with $0 period.

3. Checks are sent to home addresses, you walk into a bank and walk out with cash.

If you are into having an account, thats wonderful. The reality of the situation is that unfortunately (and it shouldn't be this way) the cons outweigh the pros here.

This man gets it, I'm about to close my account but i get my checks sent straight to my house the day before payday and know the tellers so they don't charge me for cashing my checks. And about having 'matress' money, I've had a CD account since i was 14 which i always managed myself so i know a bit about true interest rates and the ones provided through checking accounts are pure rubbish in my opinion. that plus the fact that i make lunch money after taxes are as good enough a reason as any to not need a bank account.

But the thing I don't get is, if you're going to close the bank account then how will you build credit(considering you don't have any or its low)? 

 

[presequel]

reading this thread makes me believe that 95% of people in here dont or will never invest in mutual funds or have a IRA.

and since most people here are fairly young, need to bring this up. I have plenty of cash, but I also have mutual funds and a roth IRA. its better to start young.

William and James are twin brothers who are 65 years old. 45 years ago (at the end of the year when he reached 20), William started an IRA and put $2K in the account at the end of each year. After 20 years of contributions, William stopped making new deposits but left the accumulated contributions in the IRA fund. The fund produced returns of 10% per year tax-free. James started his own IRA when he reached the age of 40 (just after William quit) and contributed $2K per year for 25 years, making his last contribution today. James invested 25% more money in total than William. James also earned 10% on his investments tax-free. What are the values of William’s and James’s IRA funds today?

Vintek sent along the answer in a spreadsheet. It’s eye-opening.

William has $1,365,227. James has $218,364. James invested 25% more than William, but through the magic of compounded returns, William’s IRA fund is worth more than six times as much! For some real fun, download the spreadsheet and plug in your own numbers. I’m having to contribute $5,000/year because I didn’t start in time. How about you?

(Note that the 10% assumption used in the charts and in the spreadsheet is arbitrary and for illustrative purposes only. An 8% return-on-investment is more realistic over the long term, and interest rates on CDs are half that. Still, the same principle applies regardless the rate, as long as the rates are consistent between sample cases.)
http://www.getrichslowly....terest-favors-the-young/


So yeah, cash is king, what do I need banks for, etc. Yes you can buy a house in cash. Yes you can buy a car in cash. But is it smart to have 600k in cash in your house safe? When it can be making a modest 5-8% in interest every year, then compounding? I know this thread was started just for regular bank accounts, but if you don't even trust them with that, then I know you guys won't be making any great investments. And having a savings through the bank doesn't cut it, you basically make no money off that.

I realize most people here are young, but save at an early age, put it into a T Rowe Price account or Vanguard account and you'll be rewarded later on. It can be risky, dependin on the route you take, but even with safe returns its much better. With a roth IRA you can only contribute 5k a year, but in the above example, the guy only put in 2k every year, for 20 years, starting at age 20. Then he stopped. thats 40k. He never touched it again. He ended up with $1,365,227. Tell me if your shoe box can do that in your closet without you touching it.

Hopefully other members here who are knowledgable on this subject can jump in as well.

 

[presequel]

reading this thread makes me believe that 95% of people in here dont or will never invest in mutual funds or have a IRA.

and since most people here are fairly young, need to bring this up. I have plenty of cash, but I also have mutual funds and a roth IRA. its better to start young.

William and James are twin brothers who are 65 years old. 45 years ago (at the end of the year when he reached 20), William started an IRA and put $2K in the account at the end of each year. After 20 years of contributions, William stopped making new deposits but left the accumulated contributions in the IRA fund. The fund produced returns of 10% per year tax-free. James started his own IRA when he reached the age of 40 (just after William quit) and contributed $2K per year for 25 years, making his last contribution today. James invested 25% more money in total than William. James also earned 10% on his investments tax-free. What are the values of William’s and James’s IRA funds today?

Vintek sent along the answer in a spreadsheet. It’s eye-opening.

William has $1,365,227. James has $218,364. James invested 25% more than William, but through the magic of compounded returns, William’s IRA fund is worth more than six times as much! For some real fun, download the spreadsheet and plug in your own numbers. I’m having to contribute $5,000/year because I didn’t start in time. How about you?

(Note that the 10% assumption used in the charts and in the spreadsheet is arbitrary and for illustrative purposes only. An 8% return-on-investment is more realistic over the long term, and interest rates on CDs are half that. Still, the same principle applies regardless the rate, as long as the rates are consistent between sample cases.)
http://www.getrichslowly....terest-favors-the-young/


So yeah, cash is king, what do I need banks for, etc. Yes you can buy a house in cash. Yes you can buy a car in cash. But is it smart to have 600k in cash in your house safe? When it can be making a modest 5-8% in interest every year, then compounding? I know this thread was started just for regular bank accounts, but if you don't even trust them with that, then I know you guys won't be making any great investments. And having a savings through the bank doesn't cut it, you basically make no money off that.

I realize most people here are young, but save at an early age, put it into a T Rowe Price account or Vanguard account and you'll be rewarded later on. It can be risky, dependin on the route you take, but even with safe returns its much better. With a roth IRA you can only contribute 5k a year, but in the above example, the guy only put in 2k every year, for 20 years, starting at age 20. Then he stopped. thats 40k. He never touched it again. He ended up with $1,365,227. Tell me if your shoe box can do that in your closet without you touching it.

Hopefully other members here who are knowledgable on this subject can jump in as well.

 

[timcity2000]

http://www.guardian.co.uk/world/2011/apr/03/us-bank-mexico-drug-gangs

there are so many reasons to have a bank account. when i was in high school, my parents MADE me get one.

i know interest is not much, but several online banks can get you 1.5%. stuffing your cash under a mattress is earning NO interest. in a sense, you're losing money....
your deposits are insured by the FDIC. seriously, you're not gonna just wake up one day and have a $0 balance. it is LEGALLY insured. i'm not sure where this distrust of banks comes in...
direct deposit usually results in quicker payment. my paycheck often shows up the night before payday. if you have to pick up a live check, go to a bank and cash it, you're wasting time (and gas).

and the list goes on....

1. Anyone without a bank account is hardly "stuffing their cash under a mattress". Stock investment, precious metal holdings, and any other investment are all fair game here. It doesn't matter if you have an account or not, no one is sitting on their money with a 0.5% interest return and looking at it as an investment.

2. FDIC insurance is good up to $100k per account and people without bank accounts don't wake up with $0 period.

3. Checks are sent to home addresses, you walk into a bank and walk out with cash.

If you are into having an account, thats wonderful. The reality of the situation is that unfortunately (and it shouldn't be this way) the cons outweigh the pros here.

my responses were geared specifically towards the people posting in this thread who are young, have way less than $100K in cash, have little credit, and are not investing in stocks, commodities, etc...

a bank account makes sense for them. 

  

 

[timcity2000]

http://www.guardian.co.uk/world/2011/apr/03/us-bank-mexico-drug-gangs

there are so many reasons to have a bank account. when i was in high school, my parents MADE me get one.

i know interest is not much, but several online banks can get you 1.5%. stuffing your cash under a mattress is earning NO interest. in a sense, you're losing money....
your deposits are insured by the FDIC. seriously, you're not gonna just wake up one day and have a $0 balance. it is LEGALLY insured. i'm not sure where this distrust of banks comes in...
direct deposit usually results in quicker payment. my paycheck often shows up the night before payday. if you have to pick up a live check, go to a bank and cash it, you're wasting time (and gas).

and the list goes on....

1. Anyone without a bank account is hardly "stuffing their cash under a mattress". Stock investment, precious metal holdings, and any other investment are all fair game here. It doesn't matter if you have an account or not, no one is sitting on their money with a 0.5% interest return and looking at it as an investment.

2. FDIC insurance is good up to $100k per account and people without bank accounts don't wake up with $0 period.

3. Checks are sent to home addresses, you walk into a bank and walk out with cash.

If you are into having an account, thats wonderful. The reality of the situation is that unfortunately (and it shouldn't be this way) the cons outweigh the pros here.

my responses were geared specifically towards the people posting in this thread who are young, have way less than $100K in cash, have little credit, and are not investing in stocks, commodities, etc...

a bank account makes sense for them. 

  

 

[rockajs]

Originally Posted by presequel

reading this thread makes me believe that 95% of people in here dont or will never invest in mutual funds or have a IRA.

and since most people here are fairly young, need to bring this up. I have plenty of cash, but I also have mutual funds and a roth IRA. its better to start young.

William and James are twin brothers who are 65 years old. 45 years ago (at the end of the year when he reached 20), William started an IRA and put $2K in the account at the end of each year. After 20 years of contributions, William stopped making new deposits but left the accumulated contributions in the IRA fund. The fund produced returns of 10% per year tax-free. James started his own IRA when he reached the age of 40 (just after William quit) and contributed $2K per year for 25 years, making his last contribution today. James invested 25% more money in total than William. James also earned 10% on his investments tax-free. What are the values of William’s and James’s IRA funds today?

Vintek sent along the answer in a spreadsheet. It’s eye-opening.

William has $1,365,227. James has $218,364. James invested 25% more than William, but through the magic of compounded returns, William’s IRA fund is worth more than six times as much! For some real fun, download the spreadsheet and plug in your own numbers. I’m having to contribute $5,000/year because I didn’t start in time. How about you?

(Note that the 10% assumption used in the charts and in the spreadsheet is arbitrary and for illustrative purposes only. An 8% return-on-investment is more realistic over the long term, and interest rates on CDs are half that. Still, the same principle applies regardless the rate, as long as the rates are consistent between sample cases.)
http://www.getrichslowly....terest-favors-the-young/

So yeah, cash is king, what do I need banks for, etc. Yes you can buy a house in cash. Yes you can buy a car in cash. But is it smart to have 600k in cash in your house safe? When it can be making a modest 5-8% in interest every year, then compounding? I know this thread was started just for regular bank accounts, but if you don't even trust them with that, then I know you guys won't be making any great investments. And having a savings through the bank doesn't cut it, you basically make no money off that.

I realize most people here are young, but save at an early age, put it into a T Rowe Price account or Vanguard account and you'll be rewarded later on. It can be risky, dependin on the route you take, but even with safe returns its much better. With a roth IRA you can only contribute 5k a year, but in the above example, the guy only put in 2k every year, for 20 years, starting at age 20. Then he stopped. thats 40k. He never touched it again. He ended up with $1,365,227. Tell me if your shoe box can do that in your closet without you touching it.

Hopefully other members here who are knowledgable on this subject can jump in as well.

It's all about the compounding interest that is some powerful shiet, that is if you live long enough to get to retirement son!

 

[rockajs]

Originally Posted by presequel

reading this thread makes me believe that 95% of people in here dont or will never invest in mutual funds or have a IRA.

and since most people here are fairly young, need to bring this up. I have plenty of cash, but I also have mutual funds and a roth IRA. its better to start young.

William and James are twin brothers who are 65 years old. 45 years ago (at the end of the year when he reached 20), William started an IRA and put $2K in the account at the end of each year. After 20 years of contributions, William stopped making new deposits but left the accumulated contributions in the IRA fund. The fund produced returns of 10% per year tax-free. James started his own IRA when he reached the age of 40 (just after William quit) and contributed $2K per year for 25 years, making his last contribution today. James invested 25% more money in total than William. James also earned 10% on his investments tax-free. What are the values of William’s and James’s IRA funds today?

Vintek sent along the answer in a spreadsheet. It’s eye-opening.

William has $1,365,227. James has $218,364. James invested 25% more than William, but through the magic of compounded returns, William’s IRA fund is worth more than six times as much! For some real fun, download the spreadsheet and plug in your own numbers. I’m having to contribute $5,000/year because I didn’t start in time. How about you?

(Note that the 10% assumption used in the charts and in the spreadsheet is arbitrary and for illustrative purposes only. An 8% return-on-investment is more realistic over the long term, and interest rates on CDs are half that. Still, the same principle applies regardless the rate, as long as the rates are consistent between sample cases.)
http://www.getrichslowly....terest-favors-the-young/

So yeah, cash is king, what do I need banks for, etc. Yes you can buy a house in cash. Yes you can buy a car in cash. But is it smart to have 600k in cash in your house safe? When it can be making a modest 5-8% in interest every year, then compounding? I know this thread was started just for regular bank accounts, but if you don't even trust them with that, then I know you guys won't be making any great investments. And having a savings through the bank doesn't cut it, you basically make no money off that.

I realize most people here are young, but save at an early age, put it into a T Rowe Price account or Vanguard account and you'll be rewarded later on. It can be risky, dependin on the route you take, but even with safe returns its much better. With a roth IRA you can only contribute 5k a year, but in the above example, the guy only put in 2k every year, for 20 years, starting at age 20. Then he stopped. thats 40k. He never touched it again. He ended up with $1,365,227. Tell me if your shoe box can do that in your closet without you touching it.

Hopefully other members here who are knowledgable on this subject can jump in as well.

It's all about the compounding interest that is some powerful shiet, that is if you live long enough to get to retirement son!

 

[chazc]

Originally Posted by 2LipsLegit

Originally Posted by jaywalkinsince91

I'm 19, work a part-time job averaging 16 hour weeks making 8.25 an hour......i get paid every week and the checks are only 70 bucks after taxes. I have an account but im thinking of getting rid of it, I went from having 180 in my bank to 138 before my first withdrawl and i withdrew 90(40 at atm and 50 in the branch) and checked my balance the next day and there was only 3 bucks left in my account(thats 90 unaccounted for) and i've only had the account for 3 weeks. why should i have a bank account?

16x8.25=132

thats a lot of taxes....

Yeah bro. Talk to your hr and have them give you a new w-4 to fill out.