Are you crazy?
Stay with me here. Sure I know the stock market is rocky right now, but considering a few blue chip stocks still have dividend yields of above 5% and the average savings account only has 1 or 2% you might be better off over the long term.
Hmm, interesting. Perhaps not as crazy as it sounds.
Now before you get all freaked out on me, this isn’t the same money that you would put into your emergency fund (which you would need in a hurry) and you still should also have a regular bank savings account as well for stability and diversity.
But if you managed to build up your emergency fund to about $2,000 and have around $5,000 in your savings account, it might be that you try and build up the NEXT $5,000 into a high dividend yield stock instead.
So where can you find high div stocks?
Go and download my free report on the ones within the Dow Jones. Right now there are two in the Dow Jones that have div’s above 5% and they are AT&T and Verizon.
Both have also increased in stock price over the past twelve months as well – but the main focus here is on the dividend income.
If you compare the interest that you would receive on a 1.5% savings account on $5,000 with the 5.8% div yield you’d get with AT&T you can see that you’d make much more.
Over five years you’d earn: $368 interest in the savings account vs $1,628 in dividend payments.
Of course the issue here is what your money would be worth after five years with both methods.
Obviously with the savings account your initial investment is secure and so you’ll be guaranteed it back with your interest, but the stock market isn’t so you could have less, more or the same of your initial capital.
Now I personally think the stock market is set to rise again (the stock market cycle should be coming to an end within the next twelve to eighteen months), and we know that historically you are always better off in the stock market but it is still no guarantee of course.
So it comes down to how brave you can be and whether you are willing to take a risk and enter into stocks or prefer the nice and save savings account.
Only you can decide what’s right for you.
But it’s food for thought isn’t it …