Best High Yield Savings rn: Yotta
A savings for the people
tldr; a savings account with solid returns + the thrill of the small chance for a large windfall :D
Click this link to sign up! (Press “Get Started” and then use Invite Code: CLIFF)
I remember hearing about the concept of a prize-linked savings account from Freakonomics a while back and was excited about the prospects of it, especially for those financially underserved in our country.
There’s a stat out there that 2 in 3 Americans have less than $3,000 saved and that 40% have less than $400 saved. Meaning that an unexpected expense can significantly hurt the average American. What if there was a way we could incentivize people to save more instead of spending money on a chance of winning (buying lottery tickets), that’d be a win-win for us all.
Well, in an age of the past, we used to have high yield savings giving 2% or more, but in our current low interest environments, those have disappeared, with the highest yields currently around 0.5%. Thankfully, I found Yotta about 6 months ago and have been progressively putting more and more of my savings in with them.
Performance
I’ve been tracking my returns ever since the beginning (7/14/2020) and as of today (01/28/2021), my annualized return has been 2.49%.
In that time, I’ve had an average balance of about $17,000, won about $215 in prizes, and had a savings return of about $15. I did make a few small errors that likely would’ve increased my returns slightly, but still 2.49% for a savings account right now is pretty solid. I’ll share below some tips to avoid the errors I made :D.
Though that’s what my performance has been, what can you expect? It used to be about 2.5%, but they changed the odds of winning about 2 months ago, so now it’s closer to about 1.65%. That partly explains why my return has been higher, but I’ve also just been a bit luckier than the average.
Also, if you don’t have a lot in the account (say less than like $2,000), the expected return drops to as low as 1.2%. But, if you join a pool play (new feature released just recently!), it looks like returns can go up to about 1.75% with a sufficiently large pool. Join my pool automatically by signing up using the link! Or use code: RichBooksDestroy to join my pool.
Lastly, for deposits above $25,000, expected returns drop from 1.65% to 0.45%.
**update** 03/15/2021. projected returns dropped from 1.65% → 1.6%, but also now, if you do get lucky, those rewards are now higher, too.
How does it work
The basics is this: for every $25 you have deposited (up to $25k), you get one ticket in the weekly drawing.
The weekly drawing works similarly to a lottery like Powerball. For each ticket, you pick 6 numbers from 1 through 70 + 1 yotta number from 1 through 63. Then, a number is drawn every night at 9pm ET, going from Monday to Sunday.
If you match all 7 numbers, you win $10 million! If you match all 6 regular numbers, you win a Tesla Model 3 (~$38,000). Prizes get smaller with less matches.
Recently, they made it so that for deposits above $25,000, you get 1 ticket for every $150, so less incentive to save above $25k I guess.
The big difference between normal lotteries and Yotta is that you don’t have to spend more money to get more tickets…you just have to save more to get more.
And no, it’s not illegal. Prize-linked savings accounts were legalized back in 2014 with the American Savings Promotion Act :).
I really like the pooling feature that they just recently created. Not only does it make it that much easier to win the $10 million (lol), but it helps create more consistent returns for those who don’t have as much saved.
Lastly, in addition to the weekly prizes, you still get 0.2% interest!
How I use my Yotta
I use Yotta as my long term savings. Meaning, it’s my emergency fund + money that I’m saving up for an eventual home purchase. This shouldn’t be money that you’re going to need right away. It generally takes at least 2 days for the money to go back to your regular checking account, but it could take longer.
My short term savings ($1,000 + major monthly expenses like rent and debt payments), I keep in my Capital One savings.
Tips…or Errors to avoid
- If you know you will need to withdraw money sometime that week, then do it on Monday, before 9pm ET. If you do it during the week, you’ll lose your best performing tickets first. I withdrew money on a Thursday one time and my annualized return that week ended up being 0.66% :(.
- Conversely, when possible, deposit money on Mondays, too. You get the tickets as soon as you deposit (not when the money clears). If you deposit during the week, you will still get tickets for that week, but you can’t select the numbers that were already drawn during the week.
- Especially if you don’t have much in the account, join a pool play. Your expected return drops almost 0.5% if you have less in your account. Also, if you’re part of a large pool, you can further boost your return by about 0.1% (join my pool clicking the link below or using code: RichBooksDestroy).
Why I trust them
The reason I first heard about them was because they were a YC-backed company. YC (Y-Combinator) is a top tier accelerator/investor for startups, so I have trust that if something were to go wrong, YC would help them at least close in a clean fashion. Plus, funds are stored in a FDIC-insured account at Evolve Bank & Trust, so if anything, funds would be available there.
Plus, while using the app for the past 6 months, they also haven’t made it difficult to get my money out. The only limitation they put is that you need to wait about a week after money has been deposited, for you withdraw the funds you just deposited.
To get an extra 100 tickets your first full week, click the link below!
Press “Get Started” and then use invite code CLIFF during sign-up & also join my pool using code RichBooksDestroy! :)
