4-10% APY Savings Accounts w/ DeFi
DeFi is another relatively new financial concept that has piqued my interest...
If you remember last week’s newsletter called, SPACs, NFTs, and Equity Crowdfunding, I wrote, “The financial world is rapidly changing. It seems almost every week there is a new development. So much so, that I spend nearly all of my working hours studying and researching financial markets, investing strategies, and general business, yet I can barely even keep up.”
And, well, DeFi is another one of those relatively new financial concepts that I hadn’t heard of until recently.
It caught my attention because of the interest rates you’re able to earn by utilizing DeFi.
It’s no secret that interest rates on bank accounts are at historic lows — many earning a dismal 0.05%. When I saw I could earn 4-10% APY using DeFi, my interest was piqued.
DeFi is short for decentralized finance.
But, if you’re like me, you’re wondering, “what the heck is decentralized finance?”
Decentralized means that it isn’t controlled by one main source, and well, if you subscribe to this newsletter, you should know what finance is. Combined, decentralized finance is a broad term that covers various finance-related products/services in crypto and blockchain that have the goal of disrupting the middleman.
In a traditional transaction, there is a financial institution sitting between you and the merchant you’re paying. The financial institution is the middleman and can stop, pause, or alter, the transaction as it sees fit. However, with decentralized finance, there is no middleman.
That’s pretty much DeFi in plain English, and I’m telling you about this because I get emails and direct messages on social media all the time asking about the different software programs and platforms I use. Whether it’s for accounting software, bank accounts, property management, stock market investing, or crypto investing, I’m always asked which platforms I’m using.
So, I decided that I would start sharing with you guys the new platforms I start using, as part of this newsletter.
Plus, my goal is to help you all invest your time and money better — if I come across an opportunity that might just help you do that, I will share it with you, along with my experience.
Since my interest was piqued, I wanted to give it a try, so I set out to find the right platform for me to use.
I came across a bunch to choose from, but I ultimately chose Donut.
First, how can you not like that name?
But seriously, you know I’m a big fan of simplicity, and Donut emphasizes simplicity, so that stood out to me. Donut also emphasizes security and transparency, both of which are also important to me. It has partnered with another company I love (Plaid — I can’t wait for an IPO…), it has great UI/UX and branding, all while offering a significantly higher APY than my current high-yield savings account.
So, I downloaded the app, created an account, and transferred some money in to give it a try.
The signup process was simple, as promised, and I was up and running in minutes. In about a month or so, once I’ve spent more time using Donut, I will report back to you guys with an update on my experience.
Let me know what you think about this type of newsletter — do you like hearing about new platforms I’m using and new ways I’m finding to invest or save more money?
All the best,
Great article. Investment community definitely needs more information about mentioned topic!
This is a really attractive concept. I’m wondering though is this more like a fund with a certain level of risk than a savings account? The deposits are not FDIC insured like most savings accounts and while it doesn’t say explicitly on a DeFi bank site I’m assuming it comes with the risk of potential 4-10% plus losses as well.