Many people believe that searching endlessly for a small percentage increase in a savings account of some sort, or a bank CD, is the key to building up your wealth in a significant manner. This is unfortunately not true, and depending on your income bracket, isn’t worth the time doing so.

When I mention not being worth your time, by that I mean when people move their money in and out of accounts as soon as a better deal arises, making it a time-consuming effort to track all the changes, as well as making the new deposit and transaction.

By far the most important part of any savings strategy is to make a simple plan, work the plan, and make few adjustments along the way.

This breaks down to finding the best interest rate and looking at the fee structure which could eat into your capital if you don’t manage your account well.

Once you find a solid interest rate, then it’s a matter of working your plan over and over again on a monthly basis. That usually means putting money faithfully into an account to build up a financial safety net, and/or build up a nest egg for retirement.

Just like people who think they’re players in the stock market when they attempt to time the market and in fact, make it look like “they’re a player in the stock market.” In other words, they are trying to impress people, not really build their wealth.

The truth is the majority of savings and other investing strategies should be fairly boring, with nothing much happening over a period of time, other than general fluctuation which don’t mean that much one way or another.

As far as the time factor, if you’re not making some serious money when you spend time transferring funds to a new account because of a better interest rate or introductory offer, it’s just not worth the time. You would need many thousands of dollars to justify it, and even then it would have to be significant enough to pay you for the time you’re spending doing it. Only you can determine if it’s worth it or not.

I’m not saying there won’t be an occasional time to do this, but it should be a higer enough rate to make a difference in your savings, and of course there shouldn’t be any fees for early withdrawal or some other penalty if you’re hunting for the highest interest rates at all times.

When it comes right down to it, consistency concerning making your deposits over a long period of time will outperform those moving in and out of the market, no matter what the investment is.

An even stronger benefit is the mindset you’re developing which will be your strongest financial asset as you work the best ways to build your wealth within your risk tolerance. Sticking to a well thought out plan is by far the best and safest way to save and build up your capital.

Tags: saving money, saving strategies, savings accounts, savings plan

This entry was posted on Wednesday, November 25th, 2009 at 7:00 am and is filed under tips. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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