The power of one ... percent
Well what if I told you that there's at least one situation where ONE is not only important, but also as far from lonely as you can get? If you're following along you've probably already guessed that this post is about the power of an additional ONE percent interest, specifically compounding interest.
J.D. Roth of Get Rich Slowly turned me on to this easy-to-understand infographic that shows you the power of one percent and compounding interest when it comes to savings for retirement. If this doesn't help you overcome the psychological "meh" that comes from seeing the number One in an investment brochure, then I'm not sure what will.
You'll notice that the Wynns are only ahead by $20,000 when they reach their forties, but with a little work on finding the best rate, by the time they are ready to retire, the additional 1% of interest gives them a 38% higher spend rate. This lets them continue living how they want and enjoy the power of their money instead of cutting back and moving in with their kids.
While I'm not an advocate of rate chasing on a monthly or even bi-annual basis, if you aren't looking for a better return on investment at least every year or so you're going to lose out big time in the long-run. Money-Rates.com is a good place to start comparing interest rates if now is the time to move your money, but don't forget to pay attention to introductory rates and account fees that can quickly eat into your additional earnings.
Previously covered BankFox.com is another great source of bank interest rates, and you can even sign up to get an email anytime a bank changes rates, which is happening all too often these days.
Knowing how much you're earning on your savings and investment accounts will make it easier to identify a higher interest rate and how much of a difference it can make, even if it is only one percent!