Choosing the “right” savings tools isn’t always easy. It can be daunting to figure out an account that will get you the most bang for your buck and one that will be the best for you and your family. A traditional savings account isn’t always your best or only option when it comes to growing your savings. Here are some tips to help you choose the right savings tool for your.
Short-Term Savings Goals
Low-risk accounts earning compound interest with higher Annual Percentage Yield.
- High-Yield Savings Accounts: Pays up to 10 times the interest rate offered by traditional accounts.
- CDs (Certificate of Deposit): Must leave funds for full-term to avoid early withdrawal penalties in most cases.
- Money Market Accounts: Interest rates vary with the market.
Mid-Term Savings Goals
Low-medium risk accounts earning higher Annual Percentage Yield.
- 529 College Savings Plan: For educational purposes only, can be invested.
- Mutual Funds: Medium risk with potential to yield higher returns. Annual fees required.
Higher risk accounts that can be invested over a longer period of time.
- 401(k) or IRAs: You can withdraw penalty-free at 55 and 59 1/2 respectively.
These are just a few of the options available to you, but of course if you need additional investment recommendations and are looking for a financial professional, please let me know. I can help connect you with someone. Setting a financial goal will also help you choose which type of savings account will help your reach your goal. You can read more about financial goals and savings strategies here.