Having recently sold my land in Portugal and with no intention of putting more FIAT into crypto because (1) I've got enough in there and (2) pretty much all the FIAT I've got from the land sale I'm going to spend probably in the next year on some sort of tangible investment: either a van or going back to school, or land, or hell I might just even pay the mortgage off, but whatever I'm just stacking it in 'high' interest accounts.
It's all relative of course, nothing in the FIAT world comes close to the 20% return on offer on HBD, but at that rate it's a disaster waiting to happen if it doesn't come down, but anyway...
The problem with High interest accounts is that the ones with the highest interest rates don't allow you to hold that much money in them.
For example, the three I've got are:
- Account 1 which offers 5% up to £1500.
- Account 2 - An ISA account (flexi) - 3% on up to £20K
- Account 3 - 2% up to £10K
Anything over these amounts is rewarded with a paltry interest rate!
Now obviously what I've done is fill up account one first, then it's account two and then account three.
But the thing with account one is that I've also got loan payments going out every month for the next two years. The loan is at 3% so it's not worth paying off when it's balanced with the ISA return, and it's lower than the mortgage too, so it makes no sense to pay this off first.
But what I got to thinking is hmmm.... what would be the opportunity cost every month of my not topping up that £150 every month by just keeping the money in the 3% ISA.
The answer is simple, its: (£150 times 0.05/ 12) - (£150 times 0.03)/12
Which = 0.25 a month...
Now why that doesn't sound like a lot that is £3 over the course of a year, or 0.01% of a £30K a year salary, which personally I think is pretty significant when all I have to do is set up a monthly Direct Debit from the 3% account to 5% account for £!50.
That took me about 10 minutes and that's equivalent to £18 an hour, or getting on for double the national wage!
It's one of those micro work tasks that you simply makes no sense not to do if you do any work for a living!