Occasionally I come across items on financial websites that I can only shake my head at…see if you can catch the disconnect:

So, did you catch it?

Yes, on the same page as this retirement savings simulation are ads for savings accounts advertising their extraordinary interest rates of….1%. So, are we led to believe that savings accounts are good investment options for retirement (particularly for young people)? Talk about a losing strategy. As you know, with an interest rate of 1% on savings, you are LOSING purchasing power every year as inflation runs at 2-3% per year. Where are the low-cost, diversified index fund ads?

Oh, the sweet irony is that the article above it is titled “How a 28-year-old Who Retired with a $2 Million Net Worth is Investing in 2017.” She didn’t accomplish this earning 1% on  her savings account I assure you!

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Check out the NGPF Fine Print: Reading a Mutual Fund Fact Sheet

About the Author

Tim Ranzetta

Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.