PODCAST EPISODE: How to Beat Apple's High-Yield Savings Account
HOST: JUSTIN LEONARD
By now you have probably heard that Apple has launched a high-yield savings account for Apple Card users, which promises annual returns of at least 4.15 percent interest. And according to Apple, the percentage is more than 10 times the national average. Generally speaking, a high yield savings account is a good investment strategy for beginners or non-accredited investors because it’s more than you can make with a standard savings account. But today I’m going to show you… step by step how to EASILY make more money than Apple’s High Yield savings account. You are now tuned in to Leonard Innovation where the focus is on entrepreneurs who don’t come from wealth but have the potential to be great. My name is Justin Leonard. An interesting fact: The Chipotle CEO, Brian Niccol, is the former Taco Bell CEO… First off… peace to Jaron. Peace to Dave. Peace to the homie Tremaine. I appreciate your input, which is very motivating to me… So, again, today we are talking about this Apple High Yield Savings account, which is a great idea. But we are going to beat Apple. And everything discussed today is what I would do. I am not a trained financial advisor. It is even possible that some of the information I present today could be outdated within a few years. But I’m going to show you how to make more money than the Apple high yield savings account, without even trying hard. By the way, the savings account is technically made possible by Goldman Sachs, but just branded as an Apple product. So, let’s begin with the basic strategy: We want to invest in specific financial assets that have historically made returns greater than Apple’s 4.15 annual percentage yield. And today we will be looking at actual data. I have identified four steps which are needed to accomplish the goal of making more money than the Apple high yield savings account. And here they are. We have step one, which is to open a brokerage account. Step two: We need to do research on three specific stocks. And I will provide those shortly. Step three: We need to set up automatic deposit. And step four: We should set it and forget it. That is the overall strategy. So, let’s talk more about step one: opening a brokerage account. And yes, you can also open a brokerage account under a business name to potentially generate even greater returns. A brokerage account basically allows you to do… not only banking, but you can also invest in other asset classes like stocks and bonds. If it were me, I would consider opening an account with either Etrade or TD Ameritrade. For new investors, the trendier mobile apps are okay… for now. But as you become more sophisticated in your investing strategy, the popular apps won’t have the tools needed to really grow your account. Another way to look at it is… most of the people with, say, more than 100k in their bank account… or any account… typically don’t use entry-level apps like Stash, WeBull, or Robinhood. So instead, from the start we want to get you used to using more advanced platforms, just in case your net worth starts to approach the millions. That said, the mobile apps have a few features that I really like, such as the ability to buy fractional shares, which is great for new investors who may not be able to afford a full share of stock, which brings me to step two. So, in step two we are going to focus on three specific stocks. And they are SPY, VTI, and VOO. For timeliness, we are only going to explore SPY. Now, each of the three stocks follow the general direction of the S&P 500. The performance of which, in a historical context, has an upward trajectory. Also, each of the stocks is actually a cluster of strong performers within the S&P 500. It’s basically like an all-star team. Let me explain what I mean: So if we look at the different companies that make up our example stock, S-P-Y, we see that it’s an impressive list of names. It is led by Apple. But you also see Microsoft, Amazon, and even Google in the mix. So, whenever you purchase this one stock, you instantly get ownership in all these impressive companies. And even when one is having a bad day, the collective strength of the other players, keeps the overall stock performance in balance. Now, as I said, the general trajectory of the S&P 500 index is upward. Which means most of the time, the stock price will go up, especially long term. However, there will be quite a few bad days as well. But the good days will outnumber the bad days. To help explain this phenomenon, let’s use the Yahoo Finance website to look at the actual performance of S-P-Y, year over year. And maybe we can even look at different time periods. By the way, the Yahoo Finance app is one of my favorites. So, the other stocks that I mentioned VTI and VOO are a bit cheaper than SPY. But you still get exposure to the same highly successful brands like Apple, Tesla, Exxon Mobil, and even Berkshire Hathaway. As I said, I can’t guarantee anything, but it’s kinda hard to go broke when you are invested in that type of all-star team. So, do your research on SPY, VTI, and VOO… and see which one of these makes sense for you. Step three is simple. We are going to automate the purchase of our stocks. And there are a few ways to accomplish this. As you saw, a few of the suggested stocks are a bit pricey. But some of the mobile investing apps allow you to buy fractional shares, which means if you cannot afford to buy a particular asset, you can incrementally put money towards the stock and end up owning full shares over time. Ideally, you would do this on a weekly, bi-weekly, or monthly schedule. So, that’s one thing you can do. Another strategy is to set up automatic deposit into your brokerage account, then once you have enough funds, manually purchase the specific asset. So, as you are getting paid, maybe from your job or your business, you are going to autonomously set aside a specific amount to be transferred into your brokerage account. Once you do this, the money is simply going to sit… until you do something with it. Now, once you have enough money saved, the next step is to manually purchase either SPY, VTI, or VOO. The final step is to set it and forget it. So, we have automated our investment on a consistent schedule. The money is now growing with compounding interest. To make this thing grow to insane levels, we need to leave the money in the account untouched. And then watch it EASILY outperform Apple's high-yield savings account. That’s it. Once again, let’s go over the four steps: Number one is to open a brokerage account. In step two, we should research three specific stocks: SPY, VTI, and VOO. Step three we need to set up automatic deposit into the brokerage or automatic investment where we purchase either the whole stock or a fraction of the stock. And step four is to set it and forget it. Don’t touch it unless there is an emergency. And based on the historical performance of the S&P, which has been around 12 percent over the last decade or so, you should see your investment grow considerably faster than the Apple high-yield savings account. After a few years, compounding interest begins to have a profound effect. Check this out: This is called a future value of an annuity calculator. I will include a link to the calculator and other helpful resources in the description. But this will show you where the differences lie between the Apple account versus the strategy I might use. In year one, let’s say you save up $1200. So, $100 per month for 12 months. For demonstration purposes, let’s assume a minimum of 10% interest gets added to the $1200 saved. Year two, you might get to $3400… and another 10% gets added to that. Eventually, you hit 10K and 10% gets added to that. And it just grows and grows exponentially because of compounding interest. Lastly, if you enjoyed this presentation, the next one will be even better. And for more high value content, leonard innovation dot com is the place for free entrepreneur resources like the 90-day online launch guide, free online courses, and more. To learn how to start or grow your business, visit leonard innovation dot com today. Also, the audio version of leonard innovation is available through any major podcast service like pandora, AMAZON music, audible, google, apple, and spotify. And if you found this information helpful, please share it with a friend.