“A Penny Saved…”


Benjamin Franklin wrote in Poor Richard’s Alamack that “a penny saved is twopence dear”.  I learned the saying as “a penny saved is a penny earned” which is apparently a misquotation (thanks Wikipedia).  Regardless of how you say it, the adage holds true with investing and saving.  I’ve noticed that my bank for more than a decade is not necessarily the best deal in town (or online).  I’ve been a loyal customer due to my bank’s convenience, good customer service, and user-friendly website.  However, the more I look under the hood I realize I could do better elsewhere when it comes to saving and investing.

For savings, I searched for a good APY for my emergency fund.  While savings accounts provide terrible returns, not all savings accounts are equally terrible.  I found two candidates for my new savings account:  Barclays and Ally.  Barclays currently provides a slightly higher APY at 0.90% vs. Ally’s APY at 0.87%.  While these APY’s seem small in comparison to investment vehicles, they are still 5 to 6 times greater than my current savings account.  I tried creating an account at Barclays first but was alerted at the end that I needed to call customer service to finish my application.  I called and waited about 5 minutes and lost patience for the moment.  Next, I applied online with Ally which receives good reviews on several finance websites.  After a few minutes of completing the online savings account application, I was on my way to becoming an Ally customer.  Just like that, I was able to increase my savings account returns by 5 times.

My next and greater frustration is with the commission fees of my currently unnamed financial institution which sit at almost $9 per trade.  Again, with some quick research I found a lot of good competition available.  I haven’t opened an account yet, but I’m leaning towards starting a new Roth IRA at OptionsHouse which executes trades at $4.75.  That is almost a 50% savings.  Once my transition is complete, I’ll lose the one-stop convenience with my current financial institution in exchange for savings and higher returns.

It feels good to save a little money with minimal effort.  You have to appreciate the competitive options that the online environment has created.