Banking is a commodity.  Plain and simple. Just like you need food, you need a bank. So, what really differentiates a bank?

In my opinion, it's simple. Customer Service and Convenience. Most people use a bank that is close to their house, or one that has been with their family for years. I want to explain the way I do banking and why you may be missing out.

First, I bank with Suntrust and ING Direct. Why? 

ING Direct --> Best Rates

Suntrust --> Customer Service

What I do is I have my direct deposit go to ING Direct, and then I send money to my branch banks if I need to take out cash. Now, why is this important? ING Direct does not have any overhead for branch locations like other banks. Instead, they offer higher interests rates to the consumer. It's a brilliant business model, and most importantly, it is great for the consumer.

THE even cooler thing with ING Direct is you can set up sub accounts with their own account numbers and start an automatic savings plan. For retirement, I have a "T Rowe Retirement" sub account. T. Rowe automatically takes money out of that account, and my 'primary checking' doesn't go down. Simply, it's being proactive. I know how much "disposable income" I have in my checking because I automatically deduct certain amounts each month for bills and savings.

Next, let's talk about Suntrust. First and foremost, almost all of their Executives are Hokies =). Secondly, they have amazing customer service. I have been with Suntrust since I was a freshman in college, and I haven't turned back since. 

A lot of my friends use Bank of America. Did you know there were almost more people closing accounts than opening new ones last year? Why is that? They had negative experiences. There's an old saying in marketing, which is "Happy Customers Tell 3; Angry Customers Tell 3,000." It is worth a company's time and resources to have great customer service, because the grave repercussions of the negative experiences.

According to Socialnomics, 78% of consumers use their social network (facebook, twitter) when purchasing a product or service. For instance, my sister recently said, "Should I go with Verizon Fios of Comcast for my cable?" Most of her friends said to go with Fios, so she did!


Below, you will find a twitter conversation between @AskSuntrust and I. They were so helpful, and they solved my issue...no problem. It took them 15 minutes to help me, and now I am writing a positive review of their product. Maya Angelou said, "People will forget what you said, people will forget what you do, but they will never forget the way you made them feel." I felt like I was a special customer, and for that I am forever grateful and forever a loyal customer.

There are so many different banks to choose from, and it is important that you choose the bank that is right for you. 
What is important to you?

• Customer service?
• Location/Convenience?
• Highest rates? 
• Best online system?
• How long they've been in business? 
• How much of the financial crisis were they tied up in (Credit Default Swaps,  bad real estate investments?
• Social responsibility?
•  Privately/Publicly held?
• How many products they offer; are they a one-stop shop?

In my opinion, Suntrust is the best branch bank and ING is the best overall bank. I have banked with BB&T, M&T Bank, Bank of America, and PNC Bank. I still have some money in PNC, and I think they are great, but there are no PNC Banks close to me.

Many of you know what a CD is, but for those who do not, I will define it for you. A CD stands for a Certificate of Deposit, and it is considered a pretty safe investment by many. You put your money away and earn a set interest rate. The longer you put your money away, the higher your rate. Makes sense right?

This is a typical advertisement of a CD you will see when you enter into a bank. This is actually from a credit union, which offers higher rates than your typical bank (Suntrust, PNC, BB&T, BofA, et cetera)

This picture is kind of ironic. You don't make any "money" by investing in a CD either! A CD mirrors the inflation rate, but often times, a CD offers rates below inflation. If you take out taxes, 9 out of 10 times a CD will not even beat inflation. Now, what does this mean? As inflation goes up, your purchasing power goes down. This means that the value of a dollar is less. The Government typically gives their employees something called a "standard of living" raise each year, which is supposed to match the inflation rate. In inflation, everything gets more valuable, except money. Your purchasing power stays exactly the same with a CD

 Inflation + Taxes > CD Rates

It's unfortunately an easy answer: A CD is FDIC insured. What does this mean? The FDIC stands for the Federal Deport Insurance Corporation, and it means that any money that is FDIC Insured is backed by the United States Government. People see FDIC and they think "Oh, this investment is 100% safe and has no chance of defaulting." The US Government has just gone through the biggest recession since the Great Depression, and the FDIC has had to eat the costs of many of the banks bad investments. I'd be skeptical to be 100% sure that all US investments are 100% safe.

Also, a CD is always advertised heavily by banks because it gives them more deposits. Anytime you forego consumption, you should AT LEAST return the risk free rate. The CD is seen as a 'safe investment,' which it is..but it is not liquid necessarily. There are penalties for withdrawing money early. Well, Brandon...what about a Ladder CD? Doesn't that help improve liquidity? Yes...but your money is not constantly working for you. Anytime you have money at home that you do not need...you are missing out on an opportunity.

In the United States, the risk free rate is known as the rate of US Treasury Bonds. According to the US Treasury website, the current rate of T-Bonds are .04, .08. and .16 for 1 month, 3 month, and 6 months respectively. Now....the FED has lowered i-rates to record highs, which is supposed to act as a catalyst for lending/borrowing activity. Just as a comparison, on January 1, 2007, the rates for T-Bonds were 4.79 (1 mo), 5.07 (3 mo), and 5.11 (6 mo).

Historically, the risk free rate is usually around 4%. A CD usually does not equal the risk free rate.

In conclusion, people want security. Or, a perception of security. The FDIC symbol provides them with a sigh of relief....they know their principal is safe. Also, the banks advertise CDs and it is convenient to invest in them. A standard checking account pays .025%, and a CD at 1.05% looks attractive in comparison.

Be on the lookout though. When banks advertise CDs heavily, this means they are desperate for deposits. Look at their financial health if you see this a lot over the course of a year.....anyway...

An annuity is just as safe as a FDIC insured product nowadays....and this brings to my next point

An annuity is a contract signed by a company designed to provide structured payments to the holder at specified intervals, usually at retirement. The holder (the person who buys the annuity) is taxed only when he/she starts taking out distributions or if they withdrawal funds from this account? What does this mean? This means that annuities can be tax deferred, meaning that the earnings from investments in these accounts grow tax-deferred until you withdrawal funds from the account. Fixed annuities guarantee a certain payment amount, while variable annuities do not, but they do have the potential for greater returns. You can also purchase something called a rider, which could guarantee a certain payout with a variable annuity. An annuity also has a death benefit equivalent to the higher of the current value of the annuity or the amount the buyer has paid into it. If the owner (the holder) dies during the accumulation phase, his or her heirs (usually kids or spouse) will receive the accumulated amount in the annuity. If the person who receives the money is in a low tax bracket, this could be a great estate tax option, but that is for another day. Here is a visual picture of what an annuity really does: 

As you can see with this picture, you will earn 5-7% on your money (and it will be liquid) on average per month. It will come in a form of a "coupon"....a payment and it has protections against a market downturn. However, this money is not necessarily worth 5% because it is in the future. I don't want to get into time value of money, just know that it is a very safe investment that offers higher payouts than a standard CD

Well, first let's define a mutual fund. A mutual fund is nothing more than a collection of stocks and bonds. Investopedia defines it perfectly. You can think of a mutual fund as a company that brings together a group of people and invests their money in stocks, bonds, and other securities. Each investor owns shares, which represent a portion of the holdings of the fund. If you go to yahoo finance and check out a mutual fund, you can see their top 25 holdings. Below is an example.

Historically, the market has returned (on average) around 7-9% depending on how you look at the "market." This means that a mutual fund, which is a pretty liquid investment should be a viable option....especially one that mirrors the market (like a Vanguard S&P Index Fund)

A CD is not a good investment option, especially for retirement purposes, especially when you can be taking advantage of the tax-savings by investing in a Roth IRA or a 401(k). An annuity can be advantageous, and a mutual fund is a pretty safe investment. A CD, which often times does not match inflation rates, actually may decrease your purchasing power AND penalize you for taking out mpney early.

A CD, because of the low interest rates should be avoided at all costs (for the most part)

If you want to invest in mutual funds, there are a variety of ways to get started. I suggest investing in a no-load (no broker commissions) index fund. Vanguard has a pretty good fund located here:

If you want to look into annuities, talk with someone at your bank. And to end everything, I have a funny picture with a funny youtube video by the one and only Louis CK