Want to bank at Goldman Sachs? Now the little guy can
Goldman Sachs (GS) is now the bank for the common man.
The Wall Street icon has opened an online bank that's available to anyone with $1, compared with the company's $10 million minimum for opening a private wealth management account.
There are a few points to keep in mind with new bank, GSOnline.com. First, it's only offering savings accounts, which means it's not going to replace a consumer's day-to-day checking account. Second, while Goldman offers a competitive annual percentage yield of 1.05 percent, there are banks that offer even higher interest rates on savings accounts.
"It's certainly competitive with other online savings accounts," said Greg McBride, chief financial analyst at Bankrate.com. "Their offering is one of four that are paying that same yield and available nationwide. There are five others that pay higher yields. It's new for them, but it's not new ground."
The banks that offer higher yields include Dime Savings Bank of Williamsburg in Brooklyn, New York, which is offering an APY of 1.1 percent. Still, some of those offers require high opening balances, such as $1,000 in the case of the Dime account.
Opening an online savings account is one approach toward creating an emergency savings fund, McBride said. That's something that many Americans lack, with research from Bankrate finding that almost two-thirds are unprepared for an unexpected $500 expense.
"Everybody in America needs an emergency savings account," McBride said. "The best place to put it is in an account that is federally insured, completely liquid and one that pays a competitive return. The top yielding savings accounts meet all three of those requirements."
It may seem like an abrupt about-face for Goldman, which is known for backing high-flying IPOs and financing mergers and acquisitions. The rollout of savings accounts for the hoi polloi comes as the investment bank is feeling pressure to diversify its revenue following recent hits to its core investment banking business and declining return on equity, according to The Financial Times.
Goldman's online banking venture has ties to the company's purchase of $17 billion in deposits from GE Capital, which was approved by federal regulators earlier this year.