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I told somebody that they’re losing money by saving it in a bank account and they asked me to show them how… so here goes:
Wells Fargo stock (WFC) is at $44.39 per share.
It pays a DIVIDEND of 4.60% APY
However, if you put your money in a Wells Fargo savings account, you only earn 0.01% – 0.10% APY
You’re money is literally losing out on 4.5% – 4.59% per year.
- Invest: $44.39 turns into $46.43 (+$2.04)
- Save: $44.39 turns into $44.43 (+$0.04)
Multiply that across whatever you have sitting in a savings account. It starts to add up when it gets into the thousands of dollars saved. You’re losing out on $2 for every $44 you have saved…
If you have $4,400 in savings, you missed out on $200… on top of that you miss the compound interest… because that $200 would earn $9.20 per year… and so on. The numbers stack fast over years.
The bank invests the money of its account holders… so if they’re paying a dividend as high as 4.60% to share holders, they’re likely pulling in 10% or more ROI…
- Wells Fargo gets 10% or more (estimate)
- Share holders get 4.60%
- Account holders get 0.10%
We’re not done yet… the dividend is separate from the stock value… if the stock value jumps to $50… you’ve now made a $5.61 profit… and that $5.61 will earn a 4.60% dividend ($0.25 APY)…. which is still more than your entire $44.39 earns sitting in a savings account.
Let that sink in… $5.61 invested earns 6x more than $44.39 sitting in savings.
Learn how investing works if you wanna win the game and not just play it until you retire.
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