Tuesday, July 1, 2008

Bank Interest - My Favorite Form of Passive Income

This morning I started my counter over there on the right at $0. As you know, my goal is to get $900 each month in additional income. As of 4:30, I changed it to $14.17 - so what happened????

Simple, I added up my bank interest.

I love bank interest. It is my favorite form of Passive Income. (My second favorite is savings.) Why do I love it? Because it is so easy!

Other investments like mutual funds, stocks, even the intriguing Prosper.com all have elements of risk, and to be frank - work. Whether it is research on the front end or regular re-diversification, there is work to be done. But my bank is my bank. I have an online savings account and I have an account with a local credit union I've had over 15 years, and these are the accounts I pretty much stick with. I put my money in, it is safe and secure, requires no additional work on my end, and each month they give me money. It is a beautiful thing!

There is one other reason I love bank interest:
Because when I am getting it, it means there is money in the bank. I will be honest here, this whole situation makes me nervous. I know that each month I need to keep the repo-man in mind so I don't end up going belly up. I am feeling good about taking on this challenge, and I know it is the right thing for me to do, and yet, I am also very aware of the pitfalls too. If I slack on my goals, it is going to hurt - a lot. So, having money in the bank means I have a cushion, I have some "wiggle" room. I am not living paycheck to paycheck, I know that to make my goals I don't have to starve. That's pretty important.

So, while bank interest isn't as sexy as index funds it still makes me incredibly happy.

Fun photo from Squeaky Marmot.


passivefamilyincome said...

Dawn - What is the rate you are earning on your bank interest? I put CD's in this category as well. The only thing I need to do is research the current rates. They normally pay a higher rate, so that is my preference!

Dawn said...

Hey there! The interest rate is 5% on my local bank and 3% on the online account.