Saving money gives you tremendous financial power, allowing you to fund future aspirations and weather life's unforeseen catastrophes. However, deciding where to put your money can be difficult, especially when there seems to be an infinite number of alternatives.A number of considerations come into play when deciding where to save money. These are typically interest-bearing accounts with little to no risk of losing money.
Inflation currently outpaces any yield available from a bank or credit union. To keep your money's purchasing power, you'll need to be comfortable with risk, which means investing in stocks.
Still, if you want to grow your savings with little risk, here are five places where you can save money while earning a little interest.
Where Should You Invest Your Money?
Before you open a savings account, ask yourself the following questions:
What exactly am I saving for?
When might I require this cash?
Assume you're putting money aside for an emergency and will need it quickly. You'll want to keep your money in an account that's easy to access and won't penalize you for withdrawing it. In this case, you could trade a higher rate for more liquidity.
If, on the other hand, you're saving for a down payment on a house and know you won't be buying any time soon, you might want to consider a less liquid account with a higher interest rate.
Where Should You Invest Your Money?
You may choose to have multiple savings accounts for different goals before opening an account for your savings. Your savings strategy is entirely up to you. The following suggestions can assist you in developing a plan to save and maximize your interest earnings.
- Account with a High Yield
If you want to keep your savings accessible while earning interest, a high-yield savings account is a good option. Many, if not most, savings accounts restrict you to six transactions and withdrawals per month. However, in exchange for less liquidity, you typically receive a higher interest rate than with checking accounts.
What Exactly Is a High-Yielding Savings Account?
A high-yield savings account works as follows:
two (2) High-Yield Checking Account
A high-yield checking account may be an appealing option for your savings, particularly if you want near-instant and unlimited access to your money while earning interest. Unlike savings accounts, checking accounts usually include a debit card or the ability to write checks. Furthermore, there are no limits on the number of transactions you can make within a statement cycle with a checking account.
These are good accounts to use if you want to save for a short-term goal, such as a vacation or a new appliance. They allow you to earn interest on your balance and quickly spend whenever you need to, such as when you swipe your debit card to take advantage of a sale.
What Exactly Is a High-Yielding Checking Account?High-yield
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