Today we’re going to talk about why saving money is a horrible strategy. In fact, saving up piles of cash might be the least financially intelligent thing you could do with your money in 2025.
You’re going to learn about the major downfalls of saving money. We’re going to discuss smarter strategies for investing cash, and how to make more financially intelligent decisions instead of following the status quo. I hope you enjoy this episode of Investing in Real Estate!
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Saving money doesn’t work because interest rates are too low to help you accumulate any type of significant return. The average yield on a traditional savings account is only .61%. Many banks are offering rates as low as 0.1%.
Plus, inflation eats away at your account. If you have money in a savings account, I’m sorry to tell you, but you’re essentially becoming poorer every day! Here’s why: when inflation occurs, the purchasing power of your dollar decreases. So the prices of everything are rising, and your dollar is worth less! The inflation rate in 2023 was 3.4%. So unless your savings account has rates above that inflation rate, you’re losing money.
You can’t build wealth by storing up dollars that are losing value. A pile of cash isn’t going to get you very far. Even if you are able to build up a substantial savings account, at the end of the day it’s still a finite amount of money. A pile of cash can only cover so many expenses; you need streams of cash that are continuously bringing money in.
So what can you do instead of saving money? Here are a few ideas:
Only park your funds in accounts that can keep up with the rate of inflation. There are some high yield savings accounts out there. The drawback is that many of them are online, and some require high minimum balances to claim the higher interest rate. If you must use a savings account, shop around and make sure your rate is higher than the inflation rate.
Try alternative accounts, like investing in short-term real estate notes.
Create streams of income, not piles of cash. Whether you’re an entrepreneur, a real estate investor, or an employee, it’s important to create multiple revenue streams that can support your lifestyle, cover your expenses, and keep you out of debt in the event of a financial emergency.
Invest in performing assets. Hard assets like rental properties are the #1 way to build wealth in this economy. There’s no better place to invest cash than in a piece of real estate that is a hedge against inflation.
Commit to building your financial intelligence. If you’re falling prey to traditional financial advice like “put your extra funds in a savings account,” or “invest in a 401k,” then we’ve got some work to do. Traditional financial advice is outdated, and it’s not serving anyone. When you look at the numbers, it’s clear: saving money doesn’t get you anywhere, the 401k doesn’t fund a comfortable retirement, and the middle class is disappearing. It’s time to forge a new path. We can’t wait around for these old systems to change, we have to become financially intelligent, financially empowered, and take matters into our own hands.
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DISCLAIMER: I am not a financial adviser. I only express my opinion based on my experience. Your experience may be different. These videos are for educational and inspirational purposes only. Investing of any kind involves risk. While it is possible to minimize risk, your investments are solely your responsibility. It is imperative that you conduct your own research. There is no guarantee of gains or losses on investments.
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