A few readers have asked for some performance updates on my Save app Market Savings investment, where your principal is FDIC-insured but the interest is linked to market returns via investments in index ETFs. If you put in $10,000 for example, you’ll always get $10,000 back no matter what. However, unlike a bank certificate, your interest is invested in things like stocks and not guaranteed. You might get 8% ($800), you might get 0% ($0). Please see my full Save App review for more details.
Here are some actual (not back-tested) returns for their multiple investment options: Conservative, Moderate, Growth, Multi-Strategy, and ESG. I personally picked the middle-of-the-road Moderate portfolio. I made my initial investment in mid-December 2022, so I’ve only received two full months of returns information. Here are the performance numbers they sent me for January 2023:
Interesting that the Moderate and Growth portfolios had similar returns in January, but the Multi-Strategy and ESG returns were noticeably different. They also mention the specific ETFs used in their portfolios.
Here are the returns numbers they sent me for February 2023:
Again, the Moderate and Growth portfolios had similar returns in January, and Multi-Strategy and ESG did their own thing.
Here is what is held in my “Moderate” Portfolio:
My personal returns.. Here’s a screenshot from my Save app dashboard, which shows that I invested $1,000 in mid-December 2022. I don’t really pay much attention to these numbers because I am committed for a full year and just like with the stock market, my final numbers may not look anything like this by the end of my term. For example, I could extrapolate my 1.69% returns for roughly 3 months out to 12 months and get 6.76%, but I don’t think that is useful information.
The primary reason I was inclined to make this investment was that by opening via a referral link (that’s mine, if you need more info please contact me directly), I was able to get an extra $5,000 in “equivalent investments”. This means I’ll get my $1,000 back after a year, plus the interest amount as if I held $6,000 total. This improves my range of potential outcomes, since 8% of $1,000 is $80 but 8% of $6,000 is $480.
Finally, I was surprised to learn that the returns on Save app are taxed as long-term capital gains due to the fact that you are investing in lieu of receiving interest and holding it for at least a full year. For any given income level, the long-term capital gains rate is usually lower than how traditional bank interest is treated (ordinary income). See this blog post for details.
Excess returns will go in my Project Free IRA Goal for 2023.
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Probably meant 10 K? If you put in $10,000 for example, you’ll always get $1,000 back no matter what.
Fixed, thanks!
They’re offering returns of 6-8% (potentially) with no risk to principle. The only way I can see this working, is with lots of hedging, which will create a real drag on returns. ie if the S&P goes up 20%, the investment might make 8%. If the S&P goes up only 10%, the investment returns might go to zero. Do you have any info on past returns for the various strategies? I only see that they’ve “hypothetically backtested” the strategy, but haven’t found historical, actual returns.
If the market goes up 30%, is the return on the CD limited to 6-8%?
I think it would be unreasonable to expect the full upside if your downside risk is capped such that you are guaranteed your principal back even if the stock market drops by 50% (or 100% for that matter).
thanks for the review and details of your experience. using your referral link i signed up and just got approved. looking forward to see how this does over the next year – market savings is now 8.96%
Jonathan, I am confused. Mark says on March 19, 2023 at 8:20 pm
Probably meant 10 K? If you put in $10,000 for example, you’ll always get $1,000 back no matter what.
If you invest $10,000, wouldn’t you get back your initial investment of $10,000 (not $1,000).
Also, do you have your Monthly Update for March,2023? Thank you
There was an error in my post above that has since been corrected. I did get March 2023 performance numbers. Note the numbers below are only for a single month and only for my portfolio choice (Moderate).
It says save made an investment for you for 1 year of $2650, shouldn’t it be $5k which is the referral fee?
You are depositing money into bank account. Bank offers 0% interest account but pays a fee on back side to save to invest in the basket investments. Purchasing low risk high probility win options for length of holding period I believe 🙂 with the fee money and running odds based off black scholes options pricing model. I can’t disclose too much but that is what is happening. It does appear to be legit but I can’t comment on that for sure. There is a formula based off the bank fee paid and the options purchased that derive the return of the investment. Higher bank fee higher return odds generally speaking. No investment advice offered. Invest and do your own due diligence.