According to Ramit Seti, two reasons are the secrets of building wealth

Focusing on savings can seem safer than losing money on mutual funds, stocks and bonds, but financial experts Ramit Seti I believe this approach can break you.

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2024 Report by Janus Henderson Investors It turns out that 48% of Americans don’t invest. Some cited a lack of investment expertise, but the need to repay debt or limited financial means as a reason meant 38% wanted to put cash into their regular bank accounts.

in Recent YouTube videosSeti explained why you need to save less and save instead Invest your money wisely.

You may think you are making progress by saving money, but donating a large amount of money each month will ultimately get you on track from your retirement goals.

Firstly, your money grows much slower as a typical savings account typically gets a rate that is much lower than the average return on investment. And there are hidden factors like taxes and inflation that you may forget that you can’t buy that much with your savings.

Seti gave examples of people who spent 30 years each month. Federal Deposit Insurance Company Data Although the national average savings account fee for May 2025 was 0.42%, Seti said the historical average annual return on investment (after inflation) was 7%.

According to Seti, those who saved would have around $383,000 in 30 years, compared to nearly $1.2 million from investors. So the Saver would have missed about $817,000.

Seti added: “This is a difference in hard work. I’ll retire at 65 versus Become a billionaire before the age of 50. ”

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Annual inflation rate Reports were reported in April 2025 at 2.3%, an increase of 1.88% over the average savings account 0.42%. So, it seems your savings balance is growing every year. Inflation could be taking you Some of your money’s worth.

For example, if you have $1,000 in your savings account, you might earn $4.20 a year, but you might lose $23.00 in inflation. Therefore, your money’s purchasing power would have been reduced by $18.80. In other words, you’re not really moving forward.

Seti explained that many people mistakenly believe that saving is a safe and noble route, but as the example shows, it actually makes it difficult to grow money efficiently.