Recently I discovered a new investment platform named "Beam" that I think has the potential to become a great part of the Engineering a Fortune portfolio. This platform is still taking "reservations" and is not yet open to the public for me to test and confirm but I decided to share it none the less and I am signed up for the service once it goes live.
Beam: What is it?
Back in pre-crash 2008 I was advising friends and family to start a savings account with ING Bank. At the time they were offering 4% interest on their savings accounts and for those who didn't feel comfortable risking any money in investments 4% is still an inflation beating return. Shortly after the crash those rates slowly deflated until ING was sold and were were left with sub-1% interest rates on savings accounts. Needless to say I closed my account and moved on.
Beam is attempting a return to these these rates for savings accounts. Claiming to pay more money to their depositors than standard banks through reductions of fees and taking a smaller percentage, the bank is targeting a base 2% interest rate with the possibility of reaching 4% (more on that later). While a 4% return will not make you a millionaire over night, it is inflation beating and eyebrow raising in our current low interest environment.
The Good
There are enough winning points in Beam's initial offerings to make it a good product with the possiblity of making it great. On the short list:
- Base interest rate of 2% - While it does not beat inflation, 2% is more than double what most banks are offering on their savings accounts currently.
- FDIC Insurance - This is a secured deposit not an investment and is therefore safe from the stock market swings or any other losses.
- Possibility to earn higher interest rates up to 4% - This is the number that I am most interested in. If I can beat inflation on a secured deposit there are uses for this outside of a cashbox.
- No fee savings account - Per their website Beam promises absolutely no fees on their accounts.
The Bad
Generally speaking there are no free meals. In my opinion Beam has the following drawbacks:
- It is not live - Currently I am unable to verify anything that Beam claims they will do as they are not a live service. There is the possibility that their model shifts dramatically before they become public.
- "Earning" a 4% interest rate - Beam's website states that you can earn the higher interest rate of 4% by "a number of daily engagement features (e.g. bonuses and rewards that arrive daily) that users can use to boost your rate up to 4%". How long will these daily activities take to complete? A quick survey in the morning is probably worth 2%, 30 minutes a day however, I might pass. I will be keeping a close eye on these requirements and customers will have to make a time vs. value decision themselves.
- Stock Indexes beat 4% on average - 4% alone won't grow your money very fast. Against long term stock investments you are losing out.
The Usefulness
Even at 2% an account with Beam has applications in the Engineering a Fortune portfolio. With the large changes to my career and outlook that happened recently, the value of an emergency fund came to the forefront for me. Cash is important for an emergency fund as you want the funds to be available and not to swing with the broader markets. That said I am currently raking in 0.4% interest on the money sitting in my emergency fund. I would love to make 10 times as much and that is my current plan. Should Beam become a reality I will move my emergency fund to it for higher interest payments. That is the safest way for my emergency fund to not lose purchasing power to inflation while still being FDIC insured. Check out Beam's website for additional information and I will keep updating as the service changes/goes live.
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