You should have opened a high yield savings account (HYSA) yesterday. Here's why.

As of August '24, the average bank savings account offers 0.46% ([FDIC](https://www.fdic.gov/national-rates-and-rate-caps/monthly-update-august-2024)) while USD inflation stands at 2.9%, slowly recovering from the recent 9.1% high in June '22 ([YCharts](https://ycharts.com/indicators/us_inflation_rate)). Even with these inflation levels and 2-year treasury bills paying 3.99% on an inverted yield curve ([YCharts](https://ycharts.com/indicators/10_2_year_treasury_yield_spread)), many large banks are not passing these higher rates on to their common account holders.

### The Big Bank Problem

>"The truth is, Big Banks don't feel the need to compete."

Bank of America and Chase Bank offer just 0.01% yield on their consumer savings accounts with numerous stipulations on withdrawals, minimum deposits, and even fees. Many online banks, however, are offering upwards of 5% APY on a HYSA. So why is it that many big banks don't offer High Yield Savings Accounts?

Some argue that big bank operations are too expensive compared to online banks, which can provide services to customers without brick-and-mortar locations or expensive sponsorships like NFL stadiums. It is true the big banks have higher operating expenses and their physical branch networks are becoming less efficient than in previous decades. Through July '24, 539 branches across the US had closed ([Daily Mail](https://www.dailymail.co.uk/yourmoney/article-13621197/bank-branch-closures-wells-fargo-chase-bank.html)). And now through August '24, 277 branches have closed in the state of California alone - the most closures since 2020 ([FrankNez](https://franknez.com/more-massive-california-bank-branches-are-now-closing-for-2024/)) with the pandemic event.

>Efficiency Ratio = Noninterest Expense ÷ Total Net Revenue

>Long Term Debt Ratio = Long Term Debt ÷ Total Assets

In their 2023 annual report, Bank of America reported a 66.79% efficiency ratio and a long-term debt ratio of 9.50% ([Bank Of America](https://d1io3yog0oux5.cloudfront.net/_56c90f1f1d2a491bf6829a320ac7580a/bankofamerica/db/867/10038/annual_report/BAC+2023+Annual+Report.pdf)). Ally Bank, one of the most popular online banks, reported a 2023 efficiency ratio of 62.86% and a long-term debt ratio of 40.99% ([Ally Bank](https://www.ally.com/content/dam/pdf/investor-relations/2023-10k.pdf)) - a much riskier position than BOA. Based on this, we can say that the online banks spend less to make their revenue likely in relation to their operating in riskier environments.

However, these factors aren't the primary reason Chase and Bank of America don't offer competitive HYSAs. The truth is, big banks don't feel the need to compete.

![investant-money-roll-lincoln-face-wrapped.jpg](https://res.cloudinary.com/dnmr13rcg/image/upload/v1724455892/investant_money_roll_lincoln_face_wrapped_a795b4102c.jpg)

### Lack of Competition

JPMorgan Chase, Bank of America, and Wells Fargo alone hold 41.8% of the US market share ([FDIC Data via Wallet Hub](https://wallethub.com/edu/bank-market-share-by-deposits/25587)). The larger banks have earned customer trust and built their enormous market shares through decades of consistency and convenient banking practices for both consumers and enterprises. Many of us hold accounts with the same banks our parents used and are unlikely to switch. A Frost Bank Survey found that 44% of participants responded to have no plans to change their bank ([Frost Bank](https://www.frostbank.com/dam/Docs/Newsroom/NewsRelease/FinancialBelonging.pdf)). But why?

>"I think the biggest reason people don't change banks — and of course, I'm biased on this, but I believe it in my bones — they just don't know what some banks offer."
-Phil Green, Frost Bank CEO

While online banks are competing for consumer deposits through lower fee structures, higher returns, and more convenient practices, many big banks are happy to stay still because their clients are unaware of their competition.

### Take Action

At investant.net, we're urging you to take action by getting informed and opening a HYSA if you haven't already! Taking advantage of a HYSA to earn upwards of 5% returns on your savings and cash reserves is crucial in today's inflationary environment.

Some of our favorite options today in August '24 (who Haven and I use ourselves):

- Wealthfront  |  [5.0% Cash Account](https://www.wealthfront.com/cash)
- M1 Finance  |  [5.0% Savings Account](https://m1.com/earn/high-yield-savings-accounts/)
- SoFi Bank     |  [4.6% Savings Account](https://www.sofi.com/banking/savings-account/)

For more options, checkout [BankRate](https://www.bankrate.com/banking/savings/best-high-yield-interests-savings-accounts/) to select and compare some other HYSA offerings! Whoever you choose, ensure they are FDIC insured and make the most of it!

![OriginalLogoInvestantTHIN.png](https://res.cloudinary.com/dnmr13rcg/image/upload/v1701147178/Original_Logo_Investant_THIN_1c2347d933.png)

Big Banks aren't cutting it. Why you should have opened a high yield savings account yesterday.

The High Yield Savings Account In 2024

Worrying about finances can be mentally taxing. More people spend hours micromanaging their finances than they do enjoying the things they love. In this blog post, we will be walking through how to set up a system that works for you so you can spend less time focusing on money management, and more time on the things you love. Here is a personal finance waterfall that you can implement into your financial system.

### 401k
If you have a 401k through your company, the money contributed to this account will be taken out of your paycheck before the money hits your checking account. It is recommended that you contribute up to the employer match if your employer offers one (more if you're able). Check with your HR department to get this set up. 

### Checking Account
The first account we will start with is a Checking account. This will be your financial “home base.” On payday, your salary will be deposited into your checking account, and from there we will tell our money where to go. You can use any traditional or online bank for this account.

### High-Yield Savings Account
The next account type that we want is a “high-yield savings account.” This account will be your emergency fund. It is recommended that you keep 3-6 months of living expenses in this account in case you lose your job or your car breaks down. You can also save up for big purchases here, as this account will earn more interest than your checking account. You will set up a recurring transfer to this account and fund this first before moving on to investments. I personally use Wealthfront for my HYSA (high-yield savings account). 

### ROTH or Traditional IRA
If you are in a low tax bracket, a ROTH IRA will be the next account you’ll want to contribute to. Contribute as much as you can afford, the goal is to have monthly transfers going into this account. You can later up the amount you contribute as you earn more money later in your career. I personally use Vanguard for my ROTH IRA. You'll need to set up recurring transfers on the platform your ROTH is on and link your checking account to the platform. 

### HSA
If you are young and healthy you may want to consider sending money to a HSA. This account requires you to have a high deductible health plan but is triple tax-advantaged. You can contribute extra money here for medical expenses and some HSAs allow you to invest and grow your money tax-free. This can be used as an additional retirement account as well. Talk to your HR department to see if your company offers an HSA and ask them how to enroll. 

> Here is an example of the financial system I use for my own money.

![Personal Finance Waterfall](https://res.cloudinary.com/dnmr13rcg/image/upload/v1725229248/Artboard_1_78986396c8.png)

![OriginalLogoInvestantTHIN.png](https://res.cloudinary.com/dnmr13rcg/image/upload/v1701147178/Original_Logo_Investant_THIN_1c2347d933.png)

Create a financial system and automate your money.

Creating a Financial System for your Money

Since the rise of the internet, brokerages have employed new tactics to get customers to broker trades consistently. One of these tactics is the rise of the “commission free” platforms. Confetti animations and gamified platforms have made it easier than ever for clients to broker trades using complex financial instruments that they reasonably should not have access to. The firms using this model very rarely disclose the risks of using these financial tools as they know that the more trades the client makes, the more money they will make off of either commissions or [payment for order flow](![OriginalLogoInvestantTHIN.png](https://res.cloudinary.com/dnmr13rcg/image/upload/v1701147178/Original_Logo_Investant_THIN_1c2347d933.png)). 

### Options are not Investment Tools

Options trading has become a popular term in recent years, with more young people associating options trading with “investing.” In reality, they are using financial instruments that are primarily designed to be a way of managing liquidity risks by major financial institutions. Options are risk management tools, not investment tools. Options have a unique way of making people think that they are generating income when placing a put or call option. This however is false. On a risk-adjusted basis, options traders do substantially worse over long periods of time than the buy and hold investor. 

### Day Trading is Gambling

Online influencers in recent years have notably used day trading as a way to sell courses to a young audience. Day trading by its nature involves the short term buying and selling of securities in order to capture a profit off of short term price fluctuations. The problem? Day trading is akin to gambling to the retail investor. They are trying to arbitrage a profit off of a guess on where a stock price is going. After the [hidden fees](https://www.forbes.com/sites/simonmoore/2019/10/01/the-hidden-costs-of-commission-free-trading/) that the client pays to the broker, they are highly unlikely to consistently make a good return on their capital. Day trading is a [zero sum game](https://www.investopedia.com/terms/z/zero-sumgame.asp). In order for you to win, someone else has to lose. It is not a sustainable way for retail investors to build wealth. Even the best hedge funds in the world cannot consistently beat the market over decades.

### What is Investing?

Investing at its core is putting your money into something (whether a business, real estate, index funds) with the expectation that it will produce returns for you over time. The stock market, is a giant distraction from the business of investing. The stock market reports the valuation of what millions of people are predicting the future will hold (which is impossible to predict). Responsible investing means diversifying your portfolio to avoid [idiosyncratic risk](https://www.investopedia.com/terms/i/idiosyncraticrisk.asp) and having reasonable expectations. For most people, investing means making diligent contributions to a well thought out portfolio over the course of a lifetime. Brokerages have purposefully employed tactics to make it easier for people to gamble with their money and use tools that are not to their benefit without the proper disclosure of what they are getting themselves into. 

![OriginalLogoInvestantTHIN.png](https://res.cloudinary.com/dnmr13rcg/image/upload/v1701147178/Original_Logo_Investant_THIN_1c2347d933.png)


Brokerages have gamified investing at the expense of their clients.