It is hard to stay on top of your personal investments when you are a business owner. Growing your business or your new venture is your number-one priority. Sitting down and making investment decisions for your own money often gets pushed wayside.
One thing you can do right now to improve your investment situation is make sure you’re not making two very common mistakes with any cash you have on hand. Maybe you need this cash to re-invest in your business? Or maybe it’s there to pay off some debt in the near-term? Regardless, optimizing where your cash is stashed is an easy fix that a lot of entrepreneurs overlook.
Mistake #1: Leaving cash in your savings account at your local bank.
Why? The interest rate you’re paid per year on money you have sitting at your bank is most likely around 0.05 percent to 0.10 percent on a good day. Even when we take into consideration the slight increase in interest rates lately, interest rates are still very low across the board.
The Fix: “Online” high interest (or high-yield) savings accounts offer you up to 10x the interest rate that brick-and-mortar banks offer. They can offer higher interest rates to their clients because they have much lower overhead, primarily because they do not have thousands of branches they need to support. Online high-interest banks can pass on that cost savings to us in the form of higher interest payments.
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