Where to Save Cash: Ideal Options

Saving money is an important part of any strong financial plan. It helps you prepare for unexpected expenses and reach short-term financial goals. But with several options available, how do you choose the best place to save your cash?

Before deciding where to save, evaluate how soon you’ll need access to your funds. Avoid investing money that you might need in an emergency or for short-term goals within the next year or two. For the cash you can set aside, here are some options to consider:

1. Savings Account

Savings accounts are a fundamental choice for stashing cash, typically offered by banks and credit unions. Consider consolidating your savings and checking accounts at the same institution for easy transfers between them. You can usually access both accounts with a single ATM card.

Many savings accounts come with modest interest rates, but high-yield savings accounts—often available through online banks—can offer rates up to ten times the average. Be aware that while most savings accounts don’t have monthly fees, some might if you don’t maintain a minimum balance. Also, withdrawals are generally limited to six per month, with fees for exceeding this limit.

2. Money Market Account

A money market account blends features of checking and savings accounts. It typically offers access via debit card, checks, ATM card, and bank transfers, and usually earns interest on your deposits. Money market accounts often provide better interest rates than traditional savings accounts and can be more accessible in emergencies.

However, money market accounts may charge monthly fees if you don’t meet balance requirements and often require higher minimum deposits. Be mindful that you might not earn interest unless you maintain a certain balance.

3. Certificate of Deposit (CD)

If you have funds you don’t need to access for several months or years, a certificate of deposit (CD) could be ideal. A CD is a savings account where you commit to leaving your money untouched for a specified term, such as 18 months. In return, you earn a higher interest rate.

CDs generally offer fixed interest rates, meaning your rate won’t change during the term. While CDs don’t have monthly fees, you might face penalties for early withdrawals and need to meet minimum deposit requirements to open an account.

Consider your financial goals and needs when deciding where to save your money. Compare various savings, money market, and CD accounts to find the right fit for you. Remember, for short-term cash needs, it’s ideal to stick with low-risk savings options.

Investment advisory products and services made available through AE Wealth Management, LLC (AEWM), a Registered Investment Adviser. 2538304-08/24