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How’s it going everybody this is beat the bush today i’m going to talk about robin hood’s three percent savings account a while ago robin hood sent out a notice for their three percent savings account you can sign up for it to get in line so that when they do release it you can be first in line to get these accounts after their announcement it was found out that
Their account is not actually fdic insured only si pc insured which is the same equivalent for investing accounts now the intention of the si pc insurance is really for investors not really for you to use as a checking savings account type of thing so si pc basically said nope we’re not gonna insure that i think mainly because of the way it was marketed the way
It comes off of us is that they’re marketing it as a three percent savings account so people are gonna try to put money in with no intention of actually putting it into a security they’re not gonna buy securities with it they’re not gonna buy stocks or anything they’re just gonna intend to just shove money in there shove all their cash in there just kind of like
A savings account and just collect that three percent yield naturally robin hood back down on that end on the app it no longer shows my place in life we’re getting this savings account on top of this they remove all the material on the website as well so with that said i don’t think this 3% checking and savings account is really going away for good i think the
Executives over at robin hood you know have this in mind they think that it will work financially so they just need to find some way so that is actually legal for them so what i think is gonna happen is one of two ways the first way is they’re gonna go back and then go okay we’re not gonna offer this as a checking and cygnus account we’re gonna offer this as a
Investor checking account which plenty of other banks do for example i just use a charged swap investor checking account with a point three five percent yield zero percent foreign transaction fee and you can use any atm in the world and they’re gonna reimburse you for the atm fees so i just use this in spain and i did not pay any fee for using just some random
Atm i found so route number two is they could actually register to become a bank they’re gonna get this whole fdic thing and then they’re gonna go okay yeah now we’re gonna have this three percent yield thing anyway so with that said let’s just wait for it to come out and i’m sure a lot of people are gonna sign up so i think this three percent thing is gonna be
Three percent by the time they release it probably i don’t know it could be weeks it could be like another month or two before they actually finally re-release this three percent savings account so now continuing on assuming they do have this three percent yield savings account i want to analyze if this is a good deal or not by the way if you’re interested in
Waiting for this three percent checking and savings account you can go ahead and register for the robin hood account first where you can get free trades you can sign up through my referral link down in the video description below where you can get a free stock and the expected value here it’s about five dollars expected value is kind of like a probability term
It’s on the average how much value everybody is gonna get on average it might be a very expensive stock it might be a very cheap stock but the expected value it’s roughly around their five dollars let me just begin by saying this three percent checking and savings account it’s being compared to a lot of other high-yield savings account and one of the better ones
Is the goldman sachs marcus accountant which is something i mainly use right now it’s yielding about a two point zero five percent apy now i like to do very very simple math here so every ten thousand dollars that you put in every single year you’re gonna get about two hundred and five dollars in interest every year robin hood on the other hand if you put in ten
Thousand dollars for a whole year yielding three percent well you’re gonna get three hundred dollars instead so this is a difference of about ninety five dollars for every ten thousand dollars that you put in pretty good for you know just switching over to a brand new account now if you’re rich enough where you have a lot of cash laying around having two hundred
Fifty thousand dollars of cash it’s pretty insane to me but some people do have this you know depending on the amount of wealth that you have so if you max out this two hundred fifty thousand dollars on robin hood you’re gonna get two thousand three hundred seventy-five dollars more than if you put your money at goldman sachs marcos account now this edition mm
$375 is pretty nice just for switching accounts but this assumes that the interest rate is gonna stay you know roughly where it is right now but we already know that the federal reserve is slowly increasing interest rate at a pretty predictable rate here is the 62 history of the federal funds rate historically from what i’ve seen in the past ten years or so your
Interest rate in your savings accounts gonna lag behind the federal funds rate by about point 1 to point 2 percent so the current federal funds rate it’s about 2.2 percent that’s why in the very best of the best savings account rate you get two point zero five percent as the federal funds rate keep on going up you’re gonna see your savings rate keep on going up
In tandem along with it it’s important to note that the federal funds rate it’s set by an institution it’s not something that is created by market demands so zooming in to the past few years of this federal funds rate chart you can see that over the past two years the federal reserve have been increasing this rate steadily it almost looks like a linear increase
And over the past two years it’s been going up about 0.8 percent every single year so from this chart and from what the federal reserve says we can just kind of anticipate that okay over the next two years from this point on it’s also gonna increase the federal funds rate by about 0.8 percent every year i just kind of extrapolated this data and just go okay you
Know the federal funds rate it’s roughly gonna look like this and by the time we have this robin hood checking and savings account they’re gonna peg it at 3% and to me once they release this 3% special checking and savings account deal they’re not gonna make it always that much better than the federal funds rate they’re gonna cap it at 3% and then people are gonna
Flow in and i feel like robin hood is gonna keep that to be percent there while the federal funds rate keep on creeping up closer to closer to 3% so i’ll balling this this robin hood’s account it’s only gonna be a very good thing for about the first six months or so until the federal funds rate catches up to this 3 percent and then what happens after like many many
Checking and savings account is that they go oh we have obtained a lot of customers they’re just trying to grab a lot of customers and they them already and there’s a certain frictional haas involved here for a customer to go okay you know what your interest rate is not as good anymore i’m gonna move my money to another bank that has better interest rate and to me
By that time where the federal funds rate has caught up with this 3% i feel like there’s always gonna be other banks that has a little better deal but most people is not gonna pick up and leave robin hood just because they’re better by 0.1% so what i think robin hood is gonna do is when the rate catches up they’re going to try to catch up with that rate as well
But they’re gonna lag behind a little bit i’d say about point 1 to point 2 percent so as you see it come up robin hood will be like 3% if the fed rate comes up to 3 point 2 percent or something robin hood might come up another point 1 percent and then go okay you know it’s not 3 percent now it’s 3.1 percent so they’re gonna try to you know not bleed customers at
Two quicker rate so i think in the coming year after this savings account is released they’re gonna be kind of dragging their feet in increasing the right just like many other banks have so with that said if you put $10,000 into robin hood in the beginning i said oh you’re gonna get about $95 of an increase over putting your money over at the marcus goldman sachs
Bank because they’re gonna lag behind in the interest rate it’s not really $95 how you’re gonna get it’s gonna be roughly half of this if you look at my chart from before the area above the federal funds rate it’s roughly the delta increase of interest that you’re gonna get and this is roughly half of that square so instead of getting $95 you’re gonna get about
$50 additional interest for that first year on $10,000 so it’s giving 50 extra dollars to all your customers for signing up for this brand new account if they put in $10,000 is that such a big deal to me this is not that big a deal because i just signed up for hsbc savings account i put $5,000 in and i got $350 putting $5,000 there over the course of six months so
This is paying out a lot more in terms of signup bonuses over what rob hood is going to pay so robin hood giving this 3% it’s not actually all that great if you compare it to churning checking and savings accounts so with that said you’re probably interested if i am personally going to put my money into it i feel pretty secure because i sort of trust robin hood
I feel like it’s a good company i also think if they kind of change the marketing material and just say this is going to be an investor checking slash savings account and you get 3% yield on it si pc is gonna be ok with that because a lot of other banks do the same thing and i certainly would still invest my money or just put my money in there just to get that 3%
Yield even if it’s s ip c– insured only so another 50 dollars over the course of the next one year per $10,000 that you put in it’s not bad it’s not one of the best but i think if i have a bunch of money laying there in one checking account for example goldman sachs i will move that into a 3% robin hood account thanks for watching this video everybody don’t forget
I do have that referral link for robin hood down in the video description below if you’re interested in getting a free account where you can get free sock trades as well as you can just kind of anticipate getting this 3% checking account i think they’re still gonna release it so you can sign up for this and just kind of wait around until they let you sign up don’t
Forget to give me a like on this video comment down below let me know if you’re gonna sign up for this 3% high yield robin hood account and as always don’t forget to push that subscribe button and ring that bell icon thanks for watching
Transcribed from video
Robinhood 3% Cash Management Account By BeatTheBush