I have been a firm believer in keeping more Money in high interest savings account and skipping the brick and mortar banks. Essentially the rate of interest is way much higher and you have an option to setup high yielding Certificate of Deposits (CD) or No Penalty CDs which is an easy way to grow your money. The best part about No Penalty CDs is you can think long term and get a higher rate of interest for your money but if you absolutely need the money, you have an option to close it and keep the interest without fees. Its a sweet deal because if you rather go with the usual CDs and if you want your money back prior to maturity, you end losing interest earnings plus fees. There are a number of online banks that have started offering this which is great but the challenge has been the rate of interest has been going down with each day/month. The best savings interest rate as of today with a quick internet search has been around 0.45-0.55% APY. How good is that ? Well it basically means, lets say you start today and deposit $10,000 in the bank offering 0.55% APY for the next 5 years, your money will rise to a final balance of $10, 302.40. But don't forget inflation which I covered in the previous article, it essentially eats into the power of what $1 will be able to buy in the future. You can try out a number of inflation calculators out there to estimate how much $1 has depreciated over the years.

Based on the inflation calculator on officialdata.org "$1 in 2000 is equivalent in purchasing power to about $1.59 today, an increase of $0.59 over 21 years. The dollar had an average inflation rate of 2.22% per year between 2000 and today, producing a cumulative price increase of 58.54%." The bottom line is your savings from the interest earned in the bank is not really enough to keep your money really growing. Technically speaking at this rate, we end up losing money.

This can also be seen across if you carefully observe the Consumer Price Index (CPI). That sounds complicated, but let me explain. CPI essentially is a way to measure inflation (purchase power of $1). It measures the average variations across the prices of products consumed by household - example Food and beverages, housing, apparel, transportation, medical care etc.

This brings me to the main point of today's blog is looking into Cryptocurrency investments. Full disclosure, cryptocurrency investments can be really volatile if you see the value of bitcoin or any such other currency out there. Cryptocurrencies are also not FDIC insured and hence the US Government will not step in to protect your investment. The third reason for risk is cryptocurrency accounts can get hacked and your cryptocurrency moved to a hackers account which makes it extremely hard to recover back.