Ally Bank vs. Robinhood Checking vs. Traditional Bank vs. Smart #Best Education Page #Online Earning

how's it going today guys welcome back

to the channel I hope you're having a

great day so far so in this video I'm

going to be doing a follow up to a video

I did I believe it was about a week and

a half ago talking about don't put your

money in the bank why you shouldn't be

putting your money in the bank and that

video pretty much went viral for this

niche that I'm in here so I didn't get

millions of views but I
know we're up

over a hundred thousand views on that

video so for those of you who found that

video and you know found my channel

welcome to my channel I'm glad to have

you guys here but I honestly did kind of

a disservice in that video first of all

I thought that was going to be a quick

you know five to ten minute video it

ended up being like almost twenty

minutes and I still left a lot of

details out and so I wanted to do this

follow-up video here and talk about what

are the other options out there as far

as putting your money in something

outside of a traditional bank account

because there are other options aside

from the option that I pointed you guys

towards which was investing in short

term bonds particularly Treasury bonds

and so a lot of people had some very

valid questions from that video so I'm

hoping to answer that in this video

talking about what are some of the best

options out there for your short-term

cash alright so starting off here with

option number one we have online bank

accounts and the most popular one out

there is allied bank Ally Bank is

offering you a two percent yield on your

savings account which is a very

attractive yield for a bank account and

so I want to talk about why is it that

allied bank is able to pay 2% meanwhile

your traditional bank your traditional

brick-and-mortar bank is paying you

about 0.06 percent right now

well reason number one for that is the

fact that online banks are handling

everything online they do not have any

branch locations they do not have any

ATMs that they have to maintain

everything is handled online and as a

result there is some massive savings

involved with that but there's also pros

and cons to that some people go to the

bank to get checks printed or they go to

the bank to socialize seriously I mean

literally I go into my bank sometimes

and there's just people hanging around

there it's like social hour for them but

whatever some people that's where they

go to socialize so there are all these

other perks involved with having you

know a physical

Bank and for some people that might be

worth that very small yield that you're

getting from that bank account so online

banks are typically able to offer lower

fees and higher rates simply due to the

fact that everything is handled online

they are FDIC insured just like a

regular bank account they are also

offering you pretty much three business

day access to your funds and you're

going to be taxed at ordinary income the

reason why I'm telling you guys that is

because option number four over here

what we discussed in that video you're

gonna have a slight tax advantage with

that so the interest paid to you is

taxed as ordinary income and if you're

kind of confused by that if you've never

gotten a tax form from your bank it's

because unless your interest income

exceeds ten dollars for the year they're

not required to send you that form you

are still supposed to report that income

but if you receive more than ten dollars

of interest income from your bank

they're going to be sending you that tax

form so that is pretty much what allied

bank and other online banks offer there

are a number of different ones and

Graham Steffen did a really good video

talking about them so I'm gonna link to

his video in the description below if

you're looking to learn more about these

online bank accounts all right option

number two where most people stick their

money where is pretty much the worst

place for your money aside from putting

it under your mattress is your

traditional bank account but again a lot

of people do this for convenience they

want to be able to go into the branch

they want to be able to get access to

their money through ATMs they have

checks all the time that they want to

cash or maybe they're operating a cash

business where they have to get cash

into their bank you know there's a lot

of reasons why you would want to have a

traditional bank account but a lot of

Millennials in particular you know

they're not using these services they're

doing mobile deposit on their phone they

pretty much are like allergic to cash I

like personally I never have any cash so

if you're one of these people then an

online bank might make sense for you but

if you still have a lot of cash that

you're using and you like going into the

bank this makes sense for you

you have FDIC insurance the same

three-day hold on you know transfers and

funds like that and it's going to be

taxed as ordinary income but most people

are not going to make you know more than

that $10 threshold

their bank is going to be you know

sending you that form reporting that

income to view and the IRS all right

option number three that kind of got

everyone started on this whole

conversation is Robin Hood and this 3%

checking account that pretty much

there's no trace of anywhere on the

internet now if you go on their website

now it simply says Robin Hood cash

management coming soon and there are

absolutely no details and that is

because of the fact that there was a lot

of backlash after Robin Hood announced

that they were going to be offering

there's 3% checking account because they

claimed it would be s IPC insured so

FDIC is what ensures bank accounts si PC

ensures brokerage accounts and they were

claiming that they were going to have si

P and si insurance of your money because

they were a brokerage account but there

was one loophole or one thing they

overlooked and that is the fact that si

PC protects your money for potential

investments so the cash that you have

that's going to be invested and also

your investments they're not protecting

you from losses but they're protecting

you in case you know the brokerage

company goes insolvent they lose access

to your stocks or bonds or securities

and they lose your money you have a

certain amount of protection but the

thing is this money that you're putting

in Robin Hood is very clearly not being

used for the purpose of buying

securities and so si PC said we're not

insuring it so basically Robin Hood

realized that if they're not going to be

insured nobody's going to be putting

their money into this FinTech startup

company that's you know very very new

with a very limited track record you're

not going to be putting a lot of money

into this when you have no insurance and

so they've pretty much taken massive

steps backwards on this and removed all

traces of that 3% all right option

number four what I discussed in that

video is investing in short term bonds

and what I told you guys about was a

platform called betterment that offers a

feature called smart saver and if you

guys are interested in checking this out

I have a link for in the description

below it is an affiliate link you guys

don't have to use it but understand that

if you do you know it helps me out and

helps to support my channel but a smart

saver is basically invest

your money it's taking the excess cash

from your bank account and putting it

into very low risk short term bonds 80%

of your money goes into a short-term

Treasury bond fund and the remaining 20%

goes into another short-term bond fund

that is composed of short term

investment grade corporate bonds and so

basically by doing that what they are

able to get you right now

after fees is a yield of 2.0 9% so it's

slightly better than what is being

offered by Ally bank it's a hell of a

lot better than what you're being

offered at your traditional bank and yes

you know Robin Hood is offering you more

than this but this is not quite over yet

so this might be a good option for

people looking to protect the buying

power of their money but there are a

couple of things that you have to know

first of all you are not FDIC insured

urs IPC insured meaning you are not

insured against any losses incurred with

that investment but if for some reason

you know betterment lost your

investments or lost the cash that you're

going to invest you are insured up until

a certain dollar amount beyond that the

other difference here between these is

that the transfer time for moving money

between your accounts is four to five

days a little bit longer than these

other options out there but there is one

huge advantage here with smart saver and

that is the fact that 80% of your money

and smart saver is being invested in

short-term US Treasury bonds and US

Treasury bonds are exempt from state and

local taxes whereas any kind of interest

income from an online bank or a

traditional bank it's going to be taxed

as ordinary income so the returns that

you're getting from smart saver are

going to be taxed just on a federal

level not on a state or local level

resulting in tax savings here and maybe

if you have a very small amount of money

you know this isn't a lot to you but if

you have you know tens of thousands or

hundreds of thousands of dollars in cash

that could actually start to make a

difference and then beyond that the

other huge difference here between

investing in smart saver investing in

short term bonds versus leaving your

money in the bank is the fact that banks

are not going to keep up with the rising

interest rate environment that we are in

now we just saw our fourth rate hike for

the

and what you're going to find is that

you're going to immediately see a higher

return here with smart saver because you

are owning short term bonds and as soon

as you see interest rates go up short

term bond rates are going to go up as

well meaning that as interest rates are

rising your yield is going to increase

banks on the other hand set their own

rates now we know that in 2017 I believe

banks were paying 0.05 percent and on

average now that's been raised to 0.06

so you know there's a little bit of

movement there but not nearly as much as

is needed and while a lie Bank is paying

2% and it's FDIC insured while that is

great there's no guarantee they're going

to increase that to 2.25 or 2.5% as

interest rates rise we certainly hope

they do but banks set their own rates at

the end of the day and in a rising

interest rate environment you could

potentially end up getting left behind

as rates are rising so that is the big

difference here if you want complete

security you go FDIC and if you're a

young person who doesn't necessarily

need to go into a bank online banks are

a fantastic option if you want to go to

the bank to socialize and get checks and

you know deposit cash then you got to

keep your bank account maybe you put

your slush or your extra into an online

bank account if you're comfortable with

the very small amount of risk involved

with short term bonds and just so you

guys know Treasury bonds are considered

to be the safest investment out there

outside of you know Bank insured

investments if you're comfortable with

that very small amount of risk there are

many advantages to investing in short

term bonds and it's pretty much

guaranteed protection of your buying

power because it's going to be

increasing as rates increase as well but

anyways guys I just wanted to go over

this and cover the main differences

between traditional bank accounts online

bank accounts and then this smart saver

being offered by betterment just because

I feel like I really didn't cover it

that well in that original video but

anyways guys that's all I got for this

video I have a link down below if you

guys want to check out smart saver I

also have some other resources I'll

include as well but thank you guys so

much for watching and I will see you in

the next video

#Best Education Page #Online Earning

online earning,make money online, earn money online, online earning, online earning sites,

 make money online free, online money income, earn money online free, money online, best way to earn money online, online income site, money earning websites, best online earning sites, easiest way to earn money online, earn money payment bkash, online money income site