Are you really getting the most on your annual returns from the banks? I can confidently say that your answer should be no.
But the banks want you to think that their measly 0.06% Annual Percentage Yield (APY) is something you should be happy with. I’ll tell you now that they’re ripping you off. I wouldn’t be happy with a daily return of 0.06%, never mind a yearly return at that rate.
There are other options.
For example, this stock will pay you 100x more in a single day than your bank pays in a year. Think about how much money your wasting by keeping it in your bank account.
As I’ve mentioned, the average annual yearly rate of return from your standard savings account is 0.06%.
But there are many other ways to see over 100x that in returns if you know where to look.
Take the stock market, for example. Many people are skeptical that the stock market will just eat all their money.
The problem many people have is that they don’t understand how little the risk of the stock market can become if approached correctly.
Look at Foot Locker for example.
Foot Locker (FL) returned over 100x your bank’s return in a single day back in August, when it jumped up 11.9%.
This movement from FL is becoming extremely relevant now for one reason: the 11.9% jump happened right after they reported 2016 Q2 earnings.
FL Q3 earnings saw a 10.6% jump during the following weeks in November, and we’re going to see Q4 earnings before the market opens this Friday.
Now, a lot of people are skeptical about the market, and say that the 0.06% return from the banks is a lot safer, but at that rate you might as well not invest any money at all.
Just to clarify how much of a return a long-term investment in FL would’ve given you, it has gained 109% since 2014. That’s over a 33% return per year.
To make sure you understand how big of an impact a long-term investment like this could’ve paid you, consider the following:
Purchasing 100 shares of FL back in 2014 for a total of $3,100 would have paid out $7,900 after just 3 years.
If you would’ve had that $3,100 in the bank, it would take over 1000 years to turn that into $7,900. I don’t know about you, but I don’t have the time to sit and wait that long, even if it was physically possible.
If you’re the type of person that’s happy with way less than 1% growth each year, then by all means stick your money in a bank account and continue that trend, but if you’re the type of go-getter that I think you are, keep your eyes on FL through Friday to see what type returns their earnings report is gifting this quarter.
And if you’re adamant that the stock market is too risky to invest in, I at least encourage you to consider investing in the S&P 500 ($SPX), a major U.S. index that tracks hundreds of stocks, and has returned an average yearly gain of 10% since its inception in 1928.
In the past 3 months alone the S&P 500 has already gained 12.7%.
And you don’t even have to pay $2,300 per share thanks to ETFs that track the S&P 500, such as ProShares UltraPro S&P 500 (UPRO), which provides 3x the payout, while running at a much cheaper price (currently around the $94 mark).
I’m sure by now you see the obvious reasons for investing in stocks like FL and UPRO, instead of letting your money rot in a savings account.
There’s nothing wrong with leaving 50% of your savings in the account to test the waters, but I assure you when you start to see the returns, you’ll be questioning why you didn’t start investing in stocks like these sooner.
