A 2.7 trillion dollar tech company going into financial services. No biggie right? (cough, cough, MONOPOLY!)
Apple is a tech giant. We all know that. Though I actually see them as a luxury goods biz of sorts. $1,200+ for a phone – surely that must count as luxury! And $549 for headphones. Gosh, I’m so tempted. But my account isn’t!
What you might not know about your fave tech biz is that it’s basically a bank of its own. Apple has a cool $51 billion of cash. Liquid dosh. That’s NOT a typo.
The amount of cash Apple has on hand is more than the total value of some of Britain’s biggest banks! The bank I work for has a market cap of £24.5 billion. Apple’s cash is literally double that. Wow.
Apple is getting together with Goldman to bring us their very own Savings Account!
Apple announced its Apple savings account (in partnership with Goldman) and the best part?? (apart from our fave tech biz offering us savings) is that the interest rate it will pay us on our cash is 4.15%!
This is 10x bigger than the average of 0.4% that high street banks will you for lending them your cash. Pretty hard to compete for that!
That’s what your deposits are. You’re lending your money to a bank and in return they compensate you (though not very well apparently) by paying you a couple basis points.
Meanwhile, they’re busy lending it out for a gazillion times that. Quite a cracking biz model tbh.
Mr Market thinks Apple is worth the price
This is why Apple’s got a big fat price tag. It’s technically a cash cow but it’s not sitting still and letting shareholders suck all their milk out. They do not stop innovating. Now you see how big companies get bigger and bigger.
Basically overnight, Apple turned its millions upon millions of iPhones into piggy banks with these fab high-yielding savings accounts. But here’s why you might not wanna remain covered in cash forever….!
But there’s something different about this one: it’s attached to an Apple Card aka a credit card. This is weird.
Usually we keep our savings and spendings accounts wayyyyy separate. We don’t wanna mix the two.
The super-duper convenience of having your spending + saving together is that you can transfer money from one to the other. Slick.
The big downside to having your spending + saving all in one place
It makes saving for big ticket items (like a car for ex) on the very same app that you’re using to buy your everyday stuff much harder. You can easily roll between the two of them and before you know it, you’ve made a right dent in your savings bucket.
Apple’s account is a brilliant way for you to manage your savings for a short time. Like saving for an upcoming holiday (I can already taste the sea in my mouth – it’s calling me!) and other small(ish) buys.
But the fact that it’s all in one app can make it way too tempting to go down the route of spending without even realising it.
The real trick is to treat it like a long term savings stash rather than an instant-access pot of money. Otherwise, that’d be the quickest way for you to blow a hole right through it! Psst: here’s how to add bling to your budgeting to make it less boring.
A savings account with 0 strings attached
Most high-yielding savings accounts have some strings attached. Like making you deposit a minimum amount (sometimes that can be in the thousands) and locking up your money for a fixed period of time (like 2yrs).
And when it comes to actually taking your money out from traditional online savings accounts it can usually take anywhere between 1 and 5 working days to transfer!
Basically, they’re anything BUT an instant-access liquid account.
But then Apple comes to the scene and shakes it up.
In your Apple account, you can move your money from your Apple Cash to your Apple Card. In the click of a button. And the best part? You get instant access to your cash. Literally. No need to wait around for anything.
That’s not necessarily a good thing, though.
The downside of having easy-access
Having some sort of block between you and your money is what will help from spending it all at once!
Imagine if we could access our retirement accounts. At the click of a button. Without penalties and fees. I promise you, most of us would have spent a massive chunk of it. If not all.
Friction is not necessarily a bad thing. You’ve gotta be aware that it being easy-peasy-lemon-squeezy to get your money is making you spend more, not less.
Apps make it 10000x easier to spend (not save). An interesting 2019 study by researchers at the Uni of Giessen in Germany found that the more we use payments apps, the more costly credit card moves we made: late fees, or only making minimum payments.
Having money at your fingertips (and money that isn’t even yours: aka your credit card loan) makes it so much harder to have self control.
Maybe the tech world could do with some old-fashioned frictions to help users actually ramp up their savings without having the option to dip into it whenever they feel like it.
Even waiting 5-10 minutes to access your cash really helps.
The problem is we want things here and now. How many of us are willing to wait more than 1 minute til our money hits our account? Or for our internet to load? Do we even listen to songs we hate anymore?
That’s why I still have a spotify free account. To train myself to not have things at my fingertips. All the time. I gotta listen to songs I hate as well as those annoying ads. Kidding.
I do this to save a tenner each month. But it’s legit trained me to not have what I want when I want. All that instant gratification being a no-no! I dare you to go Spotify-free. Speaking of tenner’s, here’s how to fund your future with the smallest of sums!
Why you gotta set up your own spending barriers!
You can create your own friction!
One way you can do this is by removing your debit + credit cards from Apple Pay if you wanna rein in your spending. This way when you gotta checkout, your’e forced to think about your purchase rather than clicking away.
You’ll feel more in control. And there’s nothing like it.
Ever since the death of cash, we’ve been spending more when we shop. We don’t have the weight of our money in our hands so there’s less to think about when making a purchase.
Tapping your phone/watch here and there very quickly adds up. But we often don’t realise what we’re doing because we’ve become sooo used to it.
So, enjoy the taste of getting 4.15% on your cash.
Just remember, it’s designed in a way that will get you to spend more.
Disclaimer: This blog is not investment or financial advice. It is my opinion only. This blog is not a personal recommendation to buy/sell any security, or to adopt any such investment strategy. Always do your own research before you commit to any investment.