Short Term Savings | Some Short Term Saving Options: A safe, liquid, and (hopefully) interest-bearing account is the best place to keep short-term savings money you might need in the next two years or less. Here are a few possibilities for you to consider.
Short Term Savings | Some Short Term Saving Options
Easy decision To Make, Savings Account That Open On Internet
It’s never been easier to open an FDIC-insured online savings account. Easy to open and manage, these accounts pay up to five times the national average savings rate.
Your checking account or other bank accounts can electronically transfer money in and out, usually within two business days.
There is fees and no minimum balance requirements on most online savings accounts, so there’s no reason not to use one for short-term cash reserves.
Consider Opening A Checking Account With Bank Pays Interest
Although interest-bearing checking accounts are less common than high-yield savings accounts. You can still find them if you’re willing to alter your normal checking arrangement. (There’s some paperwork, but it’s not as onerous as it first appears.)
Interest from an interest-bearing checking account may not be worth it if you only have a few thousand dollars in your account at any given time.
However, if your average checking balance is higher, switching might make more sense. Even with a $5,000 average daily balance, a 1.00 percent APY yields $50 in a year.
What About Deposit Certificates?
Long-term savers should consider a certificate of deposit for the best return on their money. Also, CDs typically have terms ranging from three months to five years. The CD rate will rise in line with the length of the term.
CD prices fluctuate frequently, so shopping online is your best bet. Generally, CDs require a minimum deposit of $500 or more, and investors who are willing to wait for a higher interest rate on a longer term CD can benefit from it.
Is It Good Idea To Put Your Emergency Funds To Work?
FDIC-insured banks guarantee that the money you deposit will never lose any of its purchasing power. Investing involves assuming some risk in exchange for the potential for greater reward.
While you may be able to earn a much higher return than you would at a bank on your money, you run the risk of walking away with less than you started with.
For the majority of people, an online savings account with a competitive interest rate is the best option for short-term savings. If one have a large checking account balance, you may want to consider switching to an interest-bearing checking account.
For risk-averse savers who can keep their money in a certificate of deposit for a year or more, it’s still a viable option. It’s risky to invest money you’ll need in two to five years, but there are many robo-advisors that will make investing for any goal simple.