I love to watch my money grow. So since the people who control interest rates say my savings account won’t help that growth, I’m heading toward greener pastures. If you feel the same, you’re welcome to join me.

Economists and financial analysts believe that low interest rates will persuade many Americans to take more risk to boost their savings. Those experts are certainly right about me.
In September 2007, I was absolutely giddy as I applied for my ING Direct Orange Savings account, which was paying a robust 4.50% APY. I didn’t have a penny in stocks or bonds, which is typical for most college students.
Today, my savings account sits ugly at 0.80% APY. So I plan to devote a large portion of my discretionary income into a diversified investment portfolio — not a penny more in my savings account, which holds my “backup”funds.
Like everyone else with money in the stock market, I have lofty expectations for financial gains. But we’re stuck in a confusing economic environment that may trouble even the most prudent investors.
“Be fearful when others are greedy and greedy when others are fearful,” says billionaire investor Warren Buffett. Those are words that guide my investment decisions and many others.
Yet the current economic climate is difficult to gauge.
The Federal Reserve’s low interest rate policy indicates fear and caution. Meanwhile, the stock market is reaching pre-recession levels, when greed ran rampant on Wall Street. Furthermore, the ups and downs in consumer sentiment are giving off mixed signals.
To my misfortune, the situation has seemingly rendered Buffett’s wisdom inapplicable.
But, it shouldn’t set me back by much. I’m sticking to one of the basic principles of investing: asset allocation. At 80 percent stocks and 20 percent bonds, I plan to pump money into the portfolio while maintaining that asset allocation.
When stocks go up, buy bonds. When stocks tumble, buy more stocks. It’s called re-balancing.
For some, this may sound like highly technical financial jargon, but that confusion is good. It is exactly what drove me to learn more about investing and actually doing it.
Taking this leap isn’t easy for many Americans. But I already have an emergency fund, no debt and low living expenses. So I am in a position to make such a commitment. You may not be.
But if you’ve had enough of the terrible savings rates and have some discretionary income to save, consider shifting that money into investments, preferably in tax-advantaged retirement accounts.
It may be a good move. It may not. But, the Fed’s decision to keep interest rates at historic lows until 2014 has convinced me to make the move.
Not to be a downer, but a little bird told me that one of the major online banks will cut its online savings rates soon (again).  Other banks will likely follow suit.
At this point, that isn’t surprising news. It’s just more support for my decision, and possibly yours too.

Renowned banking analyst Meredith Whitney spoke with CNBC Wednesday, and she issued a warning about the trajectory of the American banking industry: it’s going to be forced to push out the middle class. Due to new regulations and tightened credit standards, banks are making their business model less attractive to the vast majority of the country.  

CNBC.com:
“The unintended consequence is it’s really squeezing the middle end,” Whitney said. “You’re going to see more and more people living outside the system. When it happens, it becomes so much more difficult to operate…The pendulum swings to too much regulation and it squeezes out the system.”
Those people getting “unbanked,” as Whitney termed it, will turn more towards payday lenders and others at the periphery of the financial system to get access to money.
In her interview, Whitney pointed out that in the past home equity lending had provided an easy source of credit for middle-class Americans. But nowadays with billions in home equity having disappeared and credit tight besides, home-equity loans are simply not as readily available. Easy access to credit masked the stagnant wage growth the middle class has suffered in recent decades. With that credit now gone, the middle class is paying the price in lowered spending power.
So is this a cyclical problem, or a regulatory one? To that end, Whitney also specified that “regulation has been one of the biggest drivers [pushing people out of banking] over the last several years.” She estimated that one in three Americans is un- or underbanked, higher than the prevailing estimate of one in four.
Whitney is certainly worth paying attention to. After all, she made her name by predicting trouble in the banking industry in 2007, recognizing lurking problems for Citibank long before other analysts or commentators. On the other hand, her other big call — that there would be 50 to 100 large municipal bond defaults in 2011 — has yet to materialize. She might be overly bearish.
How exactly our banking industry could survive without the participation of America’s middle class is something that Whitney failed to discuss. It doesn’t seem terribly likely that the industry would do well by pricing out such a large chunk of Americans.
Besides, with so many company’s using new technologies to disrupt traditional banking models, the future of banking looks pretty good for the middle class. Dwolla is developing new and cheap ways to move money around; Lending Club and Prosper are developing ways for people to lend money to one another; prepaid cards, for better or worse, are giving people access to electronic payment methods, obviating the need for other traditional banking products like checking accounts.
There is plenty of disruption in the industry, both top-down disruption due to federal regulation, and bottom-up disruption from start-ups. Banking will likely be less profitable in the future due to new laws like Dodd-Frank, but it’s hard to believe the industry might actually show the middle class — the backbone of the American economy! - the door.

ATMs haven’t changed much in the roughly four decades since they first appeared — you stare at a keypad, enter some numbers and get your money. But that’s about to change. Dollar Bank will be among the first financial institutions in the United States to deploy live customer service via video on ATMs.

Dollar Bank, which has 65 branches in the Pittsburgh, Pa., and Cleveland, Ohio, will  introduce video teller banking services in the Pittsburgh market in the late second quarter of 2012.
Partnering with uGenius Technology, a developer of video banking solutions, and NCR, one of the world’s largest manufacturers of ATMs, Dollar Bank will introduce NCR’s APTRA Interactive Teller at walk-up and drive-thru ATMs at select branches.
“We have been evaluating this technology and now believe the video teller service can significantly improve the delivery of service for our customers,” said Robert Oeler, CEO of Dollar Bank, in a prepared statement.
The novelty of the service is a reason for concern. Customers may be surprised when a face pops up on their screen.
“We will introduce this new, convenient banking service to our customers by having a branch employee show them how the remote teller can be used for their daily banking transactions,” said Jim McQuade, senior vice president of retail banking at Dollar Bank, in prepared remarks.
Introduced in May 2011, NCR’s APTRA Interactive Teller service has the potential to recreate the banking landscape. Not only can banks offer live teller service for more hours,  adding nights and weekend service in locations where previously it was too expensive, banks can build smaller branches in underserved areas.
The greatest beneficiaries of this new technology may be online banks. Imagine ATM centers from ING Direct, Ally Bank or USAA. They would solve some of the online banks’ shortcomings — the inability to deposit cash and the lack of a physical presence.
The adoption by Dollar Bank sets the stage for these online banks, and all banks in the world, to transform how they interact with their customers.
“We have already signed contracts with a number of other institutions,” said Jeff Dudas, an NCR spokesperson, in an email. Dudas says that the names of some of these institutions will be disclosed soon.
People of a certain age will remember the charming, and now long-gone, behavior that marked the early use of ATMs. Back then, people were used to dealing with live tellers. The ATMs took some getting used to … and customers tended to adhere to old human-based behaviors when interacting with the machines. And so, when the machines spit out cash, customers often responded by saying “thank you” aloud.
Now, perhaps, that tiny bit of arcane civility may return … without generating snickers from the cynics behind you in line.
Here’s a video of the live teller ATM in action at Mid Hudson Valley Credit Union, who piloted the technology.

Say what you will about our attention spans, but hold your tongue when it comes to young people’s approach to borrowing money. Generation Y, Millennials — whatever you want to call us — have debt levels far below the national average, according to a new infographic released by Experian, the credit reporting agency. This may be a function of life cycle, to be sure, but it may also be an indication that we really do things differently.

Americans are in debt by an average of $78,030 according to Experian, and Generation Y (aged 19-29) carry an average of $34,765 — 55.45% below the national average. The bulk of this debt is tied up in student loans and auto loans. As a result of having a lot of debt and little credit history, Generation Y has a low average credit score: 672 on the VantageScore scale, which translates to a “D.” The so-called Greatest Generation (66 and up) have an average VantageScore of 829, by contrast, a low “B.”
“D’s get degrees” is the old underachiever’s saying, and perhaps that’s important to keep in mind when looking at Gen Y’s credit scores and debt levels. Faced with skyrocketing college prices and an economy that rewards college graduates more than in times past, Millenials have continued to raise levels of educational attainment in the United States despite increasing costs. They’ve financed this decision with student loan debt that would have been unimaginable for their parents’ generation. Even adjusting for inflation, the cost of a four year college doubled in the three decades between 1977 and 2007 — both public and private.
The other chunk of Gen Y’s debt comes from auto loans. The high burden of rising gas prices aside, this is a smart investment for young people. Baby boomers and Gen Xers are both saddled down by massive mortgage debts, while the Greatest Generation has paid theirs down for the most part. Generation Y isn’t yet tied to that many mortgages, even if we are tied up in auto debt. At least auto debt offers mobility; mortgages offer the opposite. That’s good for us.
Mobility and education will both be key assets in a high-tech ‘ideas’ economy, at least according to prognosticators like Richard Florida, demographer and author of “The Great Reset.” Gen Y has plenty of both to spare. And if our debt is concentrated in education and mobility,  we look well-positioned for success in this economy…once it gets going again.
Check out the infographic below:

TIAA-CREF, one of the more customer-friendly names in finance, has entered the online banking scene with bold offerings that give established competitors a run for their money. Among its products, the high-yield savings account deserves the most attention, with a 1.25% APY.

Called TIAA Direct, the new FDIC-insured online bank is a division of the more-recognized TIAA-CREF investment company that is known for offering investment, insurance and annuity products.
TIAA Direct launched last week, according to DepositAccounts.com.
Currently, the online bank offers a savings account, money market account, interest checking account and CDs.
Here are their rates as of Feb. 21, 2012:

TIAA Direct’s CD rates are in line with big-name competitors such as Discover Bank and Sallie Mae Bank, while its savings account takes the throne with the highest nationwide savings rate.
In addition to competitive interest rates, TIAA Direct offers consumer-friendly perks.
- No monthly service fees on all accounts.
– Free ATM card for savings and money market account. Free debit card for checking account.
– Free mobile banking application with remote check deposit for Apple iPhone devices.
– Free ATM access to MoneyPass or SUM ATM network.
TIAA-CREF is a well-known provider of retirement accounts, savings plans, life insurance, annuities and financial planning and management services.
In May 2011 report by Cogent Research, 63% of affluent plan participants expressed satisfaction with TIAA-CREF as the provider of their employer-sponsored retirement plans — topping other firms such as Vanguard, Fidelity and T. Row Price.
TIAA-CREF operates largely on a nonprofit basis, which means that financial gains are returned to customers. Its stock life insurance arm (TIAA) often distributes profits to policyholders through dividends. The College Retirement Equities Fund (CREF) is a not-for-profit corporation that gives investment returns back to participants.
The operations of TIAA-CREF resemble that of credit unions, which are regarded by consumers as better options compared to big banks. Credit unions are also nonprofit institutions that return surplus to members through low fees, higher deposit rates and lower borrowing rates.