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Earning Interest, Reviews, Strategies to Save

Review of Live Oak Bank’s Deposit Rates

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Live Oak Bank’s savings account

When it comes to the savings accounts with the highest interest rates, Live Oak Bank is up there with the best.

APY

Minimum Opening Deposit

1.00%

No minimum

  • Minimum opening deposit: $0
  • Monthly account maintenance fee: $0
  • ATM fees: None
  • ATM fee refunds: None

Live Oak Bank has one of the best savings account rates available listed on our site. The bank is lowering the bar for entry into the high-yield savings account space with a monthly maintenance fee and minimum deposit of zero — for both. Allowing anyone to take advantage of these high interest rates, no matter how much money they have, certainly makes Live Oak Bank stand out amongst competitors that require much higher initial investments.

Live Oak Bank wants you to use your savings account, and use it often, which is one reason why it has no monthly maintenance fee. If there is no activity on your account for 24 months and your balance is less than $10.01, Live Oak Bank will take the remainder of your balance as a Dormant Account Fee and close your account, so keep up-to-date with transactions. One way to do this is setting up automatic withdrawals to ensure you never incur this penalty.

Getting money into a Live Oak Bank savings account from an external bank account can take a little bit of time, depending on how you do it. If you request the money through Live Oak Bank’s online portal, the funds won’t be available for up to five or six business days. But if you send the money to Live Oak Bank from your current bank, the money will be available as soon as it’s received. Your Live Oak Bank savings account will start earning interest as soon as the money posts to your account.

You can easily withdraw your money at any time via an Automated Clearing House (ACH) transfer. Simply log into your Live Oak Bank savings account and transfer the money electronically to any bank account you wish. The funds will be available in two to three business days.

You are limited to making just six withdrawals per month from this savings account. That’s not a Live Oak Bank thing, Federal law mandates certain types of telephone and electronic withdrawals, including transfers from savings accounts up to 6 per statement cycle. If you can’t wait until the next month to make a withdrawal beyond the six per month, you’ll be charged a $10 transaction fee for each additional action from the bank.

Live Oak Bank CD rates

Live Oak Bank also has some of the best rates on certificates of deposit (CDs).

Term

APY

Minimum Opening Deposit

6-month CD

0.70%

$2,500

1-year CD

0.90%

$2,500

18-month CD

0.90%

$2,500

2-year CD

0.85%

$2,500

3-year CD

0.85%

$2,500

4-year CD

0.80%

$2,500

5-year CD

0.80%

$2,500

  • Minimum opening deposit: $2,500
  • Early withdrawal penalty:
    • CD terms that are less than 24 months — 90 days’ interest penalty
    • CD terms that are more than 24 months — 180 days’ interest penalty

Live Oak Bank consistently offers some of the highest CD rates listed on our site. This bank’s minimum deposit requirements also seem to be right on par with other banks’ requirements. At the time of publishing this article, the best CDs out there have minimum deposit requirements both above and below Live Oak Bank’s $2,500 benchmark.

It’s a relatively straightforward process to open a CD. Simply complete the forms online, provide any needed documentation (such as your current bank account details), and wait for an account approval. Once your account is open, you can transfer your deposit, where it will be held for five days before officially launching your CD. It’s important to note that only U.S. citizens and permanent residents are eligible to open these accounts.

If you are able to resist the urge to withdraw your money early, congratulations! Your CD will automatically renew into a CD with the same term length. However, don’t panic if that’s not what you want: You have up to 10 days after the CD has matured to withdraw your money penalty-free and move it to another bank account.

If you need to withdraw your deposit early, you’ll incur a penalty. If your original CD term was for less than 24 months, you’ll be charged 90 days’ worth of interest. If your original CD term was for longer, you’ll be charged a higher rate — 180 days’ worth of interest.

Conclusion

Live Oak carries an “A” health rating according to our analysis and has a top-notch online banking portal as well as a streamlined app. It’s easy to overlook Live Oak Bank for other larger, more established consumer banks like Ally Bank or Discover Bank. That might be considered hasty, as Live Oak has some of the best CD rates around and one of the best savings accounts available on the market based on our site.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

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Strategies to Save

What Should I Do with My Savings?

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If you’re wondering what to do with your savings, we’d like to offer some tips on money management strategies you might consider adopting.

Keep your savings in a high-interest savings account

Keeping your savings in a high-interest savings account means you can earn the highest return on your money as possible. High-interest savings accounts offer some of the best interest rates on the market, and because they are highly liquid deposit accounts, you can access your money whenever you need to.

Advantages of a high-interest savings account:

  • Low risk: If you open a high-interest savings account at an accredited institution, Federal Deposit Insurance Corp. (FDIC) insurance will protect your savings up to the legal limit if that your bank fails, so it’s a very low-risk option for your savings.
  • High rates: According to the FDIC, the average APY for traditional savings accounts is 0.09%. Meanwhile, the best high-yield savings accounts available today can have an APY as high as 2.20%.
  • Easy access: Unlike less liquid options, such as certificates of deposit (CDs), high-yield savings accounts are highly liquid, which means you can withdraw your money whenever you need to.

What to watch out for with a high-interest savings account:

  • Fees: A high-yield savings account that does not charge fees is ideal. Do the math to determine if you’d really be making more over the course of a year after factoring in any fees.
  • Not an investment: The rates of interest you get with a high-interest savings account are pretty good, but they won’t grow your money at an appreciable rate over the long term. The interest on offer is enough to beat inflation.

Use your savings to build up an emergency fund

Building an emergency fund should be one of the main goals of your financial life. That makes building an emergency fund one of the most important things you can do with your savings. An emergency fund is like a personal insurance policy that prepares you for emergencies like unemployment, serious medical problems or divorce.

The amount of money you need in an emergency fund depends on your lifestyle and financial obligations. Here are some pointers to help you think about how much to save:

Emergency fund size

Who it’s best for

Three months

People with a steady job, no dependents or a dual-income family that could rely on the income of a single person.

Six months

Individuals with dependents or those with medical conditions that could necessitate regular, lengthy hospital stays.

Nine months

Freelancers or self-employed people whose income might depend on one or two cornerstone clients.

An emergency fund that’s built with your savings should help you avoid taking on high-interest debt when you face unexpected financial emergencies. And that brings us to our next point.

Use your savings to pay off high-interest debt

If you have money saved up and you also have a significant amount of high-interest debt — either from personal loans or credit cards — use some of your savings to pay down debt. How much you allocate to paying off debt depends on your cash flow, your debt repayment plan and factors such as your investment philosophy and how much you already have in an emergency fund.

Some high-interest debt you might want to tackle first includes:

  • Payday loans: If you are currently in a payday loan cycle, using your savings to boost your payments. Ending the payday loan cycle is crucial to your financial well-being.
  • Credit cards: If the interest you are earning on your savings is lower than the amount of interest you’re paying on your credit card debt, you’re losing money every month. That’s why it’s ideal to use extra savings to start eliminating your credit card debt.
  • Personal loans: If you’ve taken out a personal loan with a high interest rate, using some of your savings to make a lump sum payment toward the principal of the loan could help you get into a more secure financial position sooner.

Maximize your retirement contributions

Putting money into retirement funds is a great way to get the most out of your savings. If your employer offers matching contributions to your 401(k), you’ll want to contribute enough to get the full match. Contributing anything less than the full matching contribution limit means you’re leaving money on the table.

After you’ve maxed out your 401(k) contributions, you don’t need to stop there. You can save additional money for retirement by making contributions to an IRA.

When choosing an IRA, you can opt for a traditional IRA or a Roth IRA, both of which offer tax advantages depending on your situation. The difference is largely in tax savings. A traditional IRA reduces your tax liabilities today, while a Roth IRA is funded with after-tax dollars, which means eligible withdrawals in retirement are tax-free. Either way, you’re getting the most out of your savings.

Start investing in the stock market

Another way to maximize your savings is to invest. The stock market can be intimidating if you’re just learning how to make money in stocks; however, online stock brokers and apps can help you decide what to do with saved money. Here are a few investment apps that might be useful:

  • Robinhood: Allows you to invest in stocks, options or exchange traded funds (ETFs) commission-free and with a $0 minimum spend.
  • Acorns: Helps invest your spare change in ETFs. Though there are no trade fees, there are monthly fees of either $1, $2 or $3.
  • Stash: Stash allows you to invest in stocks, bonds or ETFs by help you buy fractional shares. Their pricing starts at $1 monthly.

When should you tap your savings?

Tap into your savings when emergency strikes, or when you need money for big life goals, like buying a home or paying for college. In addition, you should use your savings to support your quality of life in retirement.

When you lose your job or face major medical bills

Your emergency fund is in place specifically for moments such as job loss or medical emergencies. Common sense dictates you should cut back any expenses you can while you’re in between jobs or facing a serious illness. Depending on how you lost your job, you may be eligible for unemployment benefits, but these don’t always pay for all necessary expenses. Meanwhile, health insurance seldom covers all of your medical costs. These are the right moments to tap your savings or your emergency fund to shoulder the burden.

To meet your life goals

Everyone has different goals in their life that require advance saving to achieve it. This could be aspirations of homeownership or putting yourself or your dependents through post-secondary education. Maybe you dream of starting a business or perhaps you’re trying to start a family and need funds to do that. A big life goal is a great time to use your savings rather than using loans or credit cards to fund your dreams.

When you retire

Once you’re eligible to make withdrawals from your retirement savings accounts you’ll want to start doing so to help you reduce your work hours and enjoy the benefits of that time period in your life. Depending on what your retirement goals are you might also consider using funds from other savings accounts or investments to help make your life goals in retirement a reality.

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Strategies to Save

How to Build Wealth at Any Stage in Your Career

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Setting aside a certain amount of money each month to slowly build your savings is a key financial strategy. Overhauling your entire financial life and setting new priorities across the board is how you start building wealth.

A healthy savings account balance can help pay for your kids’ college education — but having wealth means you’ll be able to live the life you want, and pay for the college education of your grandchildren, too. You’ll need both new priorities and a great savings account to build wealth — below you’ll find our guide on how to build wealth at any stage of life.

6 Steps to Build Wealth

Set investing goals to build wealth

Your wealth-building journey should begin by setting long-term investing goals. If you’re married or share expenses with a loved one, that means having a detailed conversation about how you want to invest your money.

These are only a few points you may need to address:

The more detailed you get about these goals, the better. Because believe it or not, when it comes to investing, sometimes we’re our own worst enemy. As Matt Cooley, a certified financial planner and founder of Inspire Wealth Partners, explained, research suggests our natural biases can prevent us from making sound investment decisions. This is why it’s so important to set investing goals before funneling money into the stock market.

“Whether you’re a personal investor, an investment manager, a financial planner, or anyone else, you can benefit from understanding the internal driving forces behind your investment decisions,” added Cooley.

Invest in the stock market to build wealth

Once you’ve set goals, it’s time to invest your money in the stock market. If the stock market frightens you, Leibel Sternbach, an accredited portfolio management advisor suggests keeping in mind that since its creation in the 1800s, the market has offered an average 6% annual return — meanwhile, the current average savings account interest rate is a measly 0.27%. If you truly want to build wealth, you must be invested in the stock market.

When you invest in the market, your money grows without much effort. This is key to building wealth: passive income. If you need help figuring out how, exactly, to go about investing in the market, you can check out a robo-advisor like Betterment, which makes investing as easy as possible.

One way to break into the market is to research mutual funds that have a good historical track record and stick with them for the first few years. This will allow you to learn about the market while being invested with relatively low risk. You could also try investing in index funds, as they’re low-cost and consistent.

Don’t forget to keep building your savings

You’ll still need to build your savings as part of your wealth building strategy. One easy way to do that is to follow the 50/30/20 rule: this guideline suggests that you budget 50% of your after-tax income to needs (like paying for housing and basic living costs), 30% to wants (dining out and other discretionary spending) and 20% to savings. You might want to break each of these categories into their own separate bank accounts, which could make it easier to track. Keep those savings in a high-yield savings account.

The 50/30/20 rule will help build your savings by painting a clearer picture of your financial habits. For example, if you see that your needs are exceeding 50%, you can dig deeper and figure out why. Perhaps you need a less expensive car so your insurance isn’t so high. The concrete numbers of the 50/30/20 rule will keep you on the right track toward building a healthy savings cushion.

Reduce your expenses to build wealth

The more money you can free up from your expenses, the more you can funnel your investments for wealth. One easy place to cut back? Subscription services. Those monthly charges of $6 here and $12 there add up — and probably to a higher total than you even realize.

According to a study from West Monroe Partners, 84% of Americans underestimate how much they pay each month on subscription services. Start tracking your subscription services and then cut any that you haven’t used within the last two months.

Renegotiate your salary to build wealth

You can build wealth faster if there’s more money coming in, so try to renegotiate your salary. Before talking with your boss, research salary examples for your role and set your goal. You want to be realistic and leave some wiggle room for the actual negotiation process.

Go into the meeting with clear examples of how your performance has helped the company’s bottom line and some ways you will continue this trajectory. Your boss is more likely to give you a raise if they see your benefit.

Build wealth by avoiding lifestyle creep

Once you start getting traction in the stock market and a higher salary, don’t spend the extra money. This is the definition of “lifestyle creep” — the tendency people have to spend more as they earn more. One financial expert we spoke with cited lifestyle creep as one of the biggest mistakes that people make when attempting to build wealth: you suddenly have some extra cash and so, well of course, you buy a bigger car.

Avoid lifestyle creep by living as if you never got that raise, or never saw those extra gains from your investments. Funnel them into your investments and add more to your savings account every month. If you can avoid spending more as you earn more, you’ll turbocharge the wealth building process.

How to build wealth at any age

The first thing to keep in mind when starting to build wealth is that it’s a big picture effort. But you make that big picture happen by taking many small steps: making a budget, scheduling monthly deposits in savings, learning more about the stock market whenever you have free time.

“Above all, focus on making small incremental changes,” said Sternbach. “Don’t worry about how much you need to retire, [and] focus instead on just setting aside the savings. Any amount will do; try to increase that amount each year and two. [And] once you invest, don’t look at your investments for another few years.”

When starting out, keep a strict budget, reduce expenses and maintain your savings rate. Add additional revenue streams if you can — maybe there’s a side-hustle like selling items online that could help boost your income. Do plenty of research on the stock market and be sure to max out any retirement plans, especially if your company offers a 401(k) matching program. Remember, these small first steps will form the path that eventually leads to wealth.

Strategies for building wealth in your 20s

The sooner you start saving, the more time you’ll have to build wealth. When you’re young, don’t be so worried about setting aside huge chunks of change every month. Instead, save as much as you can and pay down debt. Stick to a detailed budget and invest in yourself through higher education. Be consistent.

“Consistent discipline is the key to building wealth,” said Cooley. “For most, it can take decades of savings to build real wealth. Building good habits and automating your saving and investing is critically important.”

How to build wealth in your 30s

Your 30s are when you should be ramping up your rate of saving and investing. Make sure you’re maxing out your 401(k) at work, as well as investing in the market outside of your retirement account.

Sternbach recommends investing in things that will eventually reduce your expenses. This includes buying a house or purchasing life insurance: “These are things that over time get more expensive, so buy them early on when they are cheap and you will save a bundle.”

Wealth building in your 40s

Be mindful of lifestyle creep in your 40s, since you’re likely making more money than ever. Increase your savings rate and diversify your investments. Make sure you’re prioritizing yourself.

“Save for your retirement first before you save for college,” said Cynthia Meyer, a certified financial planner and founder of Real Life Planning. “There are many ways to pay for college, but only one way to pay for retirement.”

Keep building wealth in your 50s

As you close in on retirement, it’s time to get a bit more protective of your money.

“Start shifting your investments to more conservative investments that have less volatility, so that if you do need to retire early you have the financial ability to,” explained Sternbach. “Few people retire when they plan to — layoffs or medical issues are a leading cause — and the last thing you want is to have to start draining your nestegg while the market is down, locking in those losses permanently.”

Where should you stash your wealth?

Build wealth by choosing the right online broker

Because investing in the market is one of the primary ways you’ll build your wealth, it’s important to choose the right investment broker. Look for one that matches your needs as closely as possible.

Hands-on investors are people who like reading about a broad selection of investment options. They like to pick their own assets, and build a portfolio themselves. The best choice for hands-on investors is an online brokerage account.

Hands-off, or passive, investors are people who want to put their money to work in the market, but would prefer not to get too involved in the details of their investment portfolio. They may not know as much about markets as a more hands-on investor, or they may have too many other things going on in their lives to devote extra time to managing investments. Hands-off investors should check out our listing of the best robo-advisors, special brokerage platforms that make investing easy.

How to choose the right savings account for your wealth

When stashing your wealth, look for savings accounts that offer you the best interest rate, and, typically, online banks have the highest rates. If you don’t already have an HSBC account, check out its HSBC Direct offering. This online-only account comes with a 1.01% APY on all balances. The catch, like we said, is that it must be your first HSBC account.

If you’re a fitness buff, check out Fitness Bank. It ties your savings rate to your monthly step count. If you log 12,500 steps or more, you’ll get the highest rate — 1.20%. However, make sure you keep your steps up, as the rate drops as your steps drop.

Credit unions also offer robust savings options. Digital Federal Credit Union offers a staggering 6.17% APY, but that’s only on the first $1,000 in the account; after that, you’ll earn 0.25% APY.

Build a CD ladder

Another strategy for stashing your wealth is to create a certificate of deposit (CD) ladder. A CD ladder is a collection of several CDs that have varying terms. You might break it out by opening a 1-year CD, a 2-year CD, a 3-year CD, a 4-year CD and a 5-year CD — all with $1,000 each. By staggering the CDs, you’re guaranteeing each CD will complete its term at predictable intervals. And because CDs carry higher interest rates than savings accounts, you’ll be sitting on a nice money generator.

The downside of a CD ladder? It’s a lot of cash locked away and, should rates increase, you won’t be able to take advantage of them if your money is tied up. However, if you’re interested in this nuanced approach of building wealth and can make it happen financially, a CD ladder could be a smart strategy.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.