George Kamel - How to Make Money While You Sleep (Totally Legal)

Episode Date: March 25, 2024

💵 Sign up for EveryDollar today. Create a free budget!    High-yield savings accounts are super popular right now. But what exactly is an HYSA, and how much passive income can you really make with one? In today’s video, I’ll give you the TL;DR on HYSAs so you can use one to maximize your income and reach your money goals.    Next Steps   📗 Order George Kamel’s new book, Breaking Free From Broke.    5 Worst Places to Keep Your Money: https://www.youtube.com/watch?v=PK5hwnJGDcc    Offers From Today's Sponsor  This episode is sponsored by DeleteMe. 🔒 Remove your personal information from the web at joindeleteme.com/george and use code GEORGE for 20% off. 🙌     🎙️ The Ramsey Show    🍸 Smart Money Happy Hour  💡 The Rachel Cruze Show  💸 The Ramsey Show Highlights  🧠 The Dr. John Delony Show  💼 The Ken Coleman Show  📈 EntreLeadership    Ramsey Solutions Privacy Policy  Learn more about your ad choices. Visit megaphone.fm/adchoices

Oh, oh, hey, didn't see you there. I was just making some money. Yeah, that's right. I figured out how to make money in my sleep. And guess what? It's not even that hard. In fact, I'm still trying to figure out how to make money while I'm awake. That's the hard part.

And one of the easiest ways to earn some scrilla while you snooze is a high-yield savings account, aka an H-Y-S-A, L-O-L. So many letters. BTW, I didn't really L-O-L-D-H, so ID-K-Y said that. SMH. But anywho, H-Y-S-A-S-A's are super, popular right now, and IMHO, they're a great way to make passive income without having to do any work. So what exactly is a high-yield savings account and how much passive income can you really earn

with one? Well, in today's video, I'll give you the TLDR on HYSA's, so you can use one to maximize your income and reach your money goals. HYSA, FTW. Enough already! But before we jump in, do me a favor and subscribe to this channel, like this video, and STFU, which stands for Share this fun video. I text my mom that every time a new video drops,

and I've been blocked. Okay, let's start with a simple definition. A high-yield savings account is a type of savings account offered by banks and credit unions with a much higher interest rate than a traditional savings account. And at the time of this recording,

traditional savings accounts are offering interest rates of around a quarter of a percent if you're lucky, which is sadly even lower than G-Lee's rating on Rotten Tomatoes. Trust me, I checked the to tomatometer. What? You say tomato meter, I say tomatometer. And I just checked on this. Chase and Bank of America are currently at a 0.01% APY, which is technically 0.01% better than nothing. Meanwhile,

high-eield savings accounts offer rates of four or even 5% at the time of this recording, which is a huge difference. Let me break it down for you. That means for every thousand dollars you have in that savings account, you could get 10 cents a year from Chase's regular savings account, or you could get 50 bucks a year from a high-yield savings account. That's a $50 bill versus a literal dime. So what's the catch? How are these interest rates so much higher? Well, believe it or not, there is no catch.

Just like there is no eye in team, there is no crying in baseball, and there is, in fact, no place like home. You see, most high-yield savings accounts are available through online banks, and online banks have less overhead than a brick-and-mortar bank. They don't have to pay for tellers, that rustic Italian decor, or fluorescent lighting that's exactly the shade of clinical depression somehow. So these online banks have less expenses, and they can pass on some of those sweet savings to you, the consumer.

And the best part is, these accounts have little to no strings attached, just like NSYN's third studio album. Man, that was a banger. So are HYSA is really a good way to make passive income? The short answer is, yeah, mostly. But let me be clear, this is not investing. This is not a way to build wealth. This is just earning some solid interest, so don't expect this to be the golden goose that replaces your income.

It's more like a gold-plated goose that squeezes out a few nuggets once a month. And an HYSA is a great place for your emergency fund or short-term savings goals, like saving up to pay cash for that car or saving up a down payment for a home. So basically, if you're going to have a big chunk of money parked somewhere for a while, you might as well be earning higher interest on it. But for long-term investing, say five-plus years, you're still better off investing in mutual funds or index funds through tax-advantaged accounts like your 401k or an IRA.

Why is that? Well, based on the historical return of the overall stock market over the last several decades, you'd likely be getting 10 to 12% over the long haul instead of 4 or 5%. So how much passive income should you expect from a high-yield savings account? We'll look at an example in just a moment,

but first I want to tell you about delete me. While passive income is great, one thing you don't want to be passive about is your information on the internet. And that's why you should do what I do and actively protect yourself with Delete Me. They find and remove data about you from hundreds of sites, and they send you an easy-to-read report outlining what they did.

In fact, I was just looking at my report, and they've already saved me about 11 hours of work that it would have taken me to find and remove that data on my own. And with my special code, you can get a one-year plan for less than $9 a month to help keep your personal info off the web. Go to join DeleteMe.com slash George today for that 20% off discount,

or just click the link in the description. Here's an example to show you how much money you can expect to make with a high-yield savings account. Let's say that you've saved up six months of expenses in a fully funded emergency fund. Well, if your monthly expenses are $4,000 a month, that's $24,000 you would have sitting in that account. Plenty of money to cover a little mishap like your toilet exploding. You use it every day at your most vulnerable, but you never expect it to do this. Now, if you park that in a high-yield savings account and it's earning 5%, you would be earning $100 a month or over $1,200 a year.

in interest alone. Not too shabby for literally not doing anything. Let's take a look at another example. Let's say you're saving up for a down payment on a nice little mid-century ranch home in the perfect location, equidistant between Costco and Chick-fil-A, the American Dream. Well, if your down payment is $50,000 and you keep that in a high-yield savings account for a year, you could make an extra $2,500 by doing nothing over that year. And if your down payment is $100,000, double it. That's $5,000 that you would make over the next 12 months, just because you put that in an H-Y-Y-S-A. Chafrican-Ching, my friends.

Interest. It's an amazing thing. You make money without doing anything. But wait, there is one catch. Any income that you make from your savings account is taxable income. So be prepared to pay when the taxman cometh. And you'll get a tax form from your bank at the beginning of the year, letting you know exactly how much you made. So by now you might be wondering,

how do I get one of these passive income-generating savings accounts? Well, opening an H-Y-SA is like opening any other bank account, and you can do it right from your smartphone while you're in the Taco Bell drive-thru line, waiting for your Cheeto Burrito. Just look for one with no minimum initial deposit, no minimum balance to maintain, and no penalties for withdrawing your money. Then you can say,

buy, bye, buy to annoying fees and restrictions. See what I did there? A little in sync callback? No, no, I don't. I was more of a backstreet guy myself, to be honest. A little more soul. You know, I just felt like they really meant it. But seriously, make sure you look over

all of the fees involved with this bank account. You don't want to be charged just for using some of your own money. And do a little Googling to make sure that you're choosing a high-yield savings account that has good customer service and a good user interface, since the main way you'll interact with this account is with an app on your phone. Otherwise, the only other things to look out for with these accounts are transfer times and withdrawal limits.

Now, transfer times are important because if you have an emergency, you want to be able to access your money pretty quickly. Now, withdrawal limits are less important, but still worth considering since they limit how many times you can take money out in a given period. For example, some of these accounts only allow you to take money out six times a month. But that's really not a big deal if you're going to use this account. account the right way for things like your emergency fund or saving up for a down payment. You're not withdrawing money constantly. And lastly, make sure that your HYSA is with a bank that's FDIC insured or if it's a

credit union, NCUA insured. All that means is that your money's protected up to $250,000 per depositor, per bank and per account ownership category. And remember, when it comes to interest, broke people pay it, wealthy people earn it. And before you rush to open an HYSA, make sure it makes sense for what your goal is. If you're looking for a place to invest money so it can grow for the future, a high-yield savings account is a bad choice, just like that Cheeto Burrito. And like I said earlier, investing in good mutual funds and index funds is a much better option, as long as you won't need that money for five years or more. So if you're looking for a place to keep some cash you've saved up, a high-yield savings account is the way to go. You'll be able to keep that junk liquid and earn some good interest while you're at it. And beware, while interest rates are amazing right now, they probably won't stay that way forever.

They are variable and they will likely go back down to normal levels over the next few years. So take advantage of it while you can. And since I know you'll ask in the comments, I will let you know what high-yield savings account I use in the description below. I'll drop a link to it. No affiliation, no advertisement here. I just don't want to gatekeep from you guys. Now, we all know HYSAs are having a moment right now,

but that doesn't mean people aren't toting savings options that, for a lack of better words, are a load of crock. So make sure you check out this video on the five worst places to keep your money so that you steer clear of making a huge mistake as you figure out what to do with your dough. And as always, don't forget to like this video, subscribe to the channel, help us get to 200,000 subscribers, and share this video with all of your friends who need an HYSA, ASAP, L-O. Thanks for watching, TTYO.