Storing Your Savings
07/10/2024
Storing Your Savings
Deciding how to store your savings for the maximum return can be overwhelming and sometimes confusing. Whether you are just starting on your savings journey or are looking to vary your portfolio, learning your options is an excellent way to increase your financial literacy!
While there are more options than what we will go through, these tend to be some of the most common and accessible options for your savings. Each one has pros and cons, so it is very important for you to already know your savings goals before you decide. For example, if you are a teenager looking to save for a car or college, your decision will likely be different from an adult looking to save for retirement. Let’s take a look at some of the available options for storing your savings.
- Certificate of Deposit
- A savings tool from a bank or credit union that has a fixed maturity date and earns interest
- May offer a higher rate of interest than a savings or money market deposit account
- A wide range of terms are available
- May also offer higher interest rates for higher deposits or longer terms
- Often requires a minimum deposit
- Money cannot be accessed without penalty until the CD matures
- Money Market Deposit Account
- Easily accessible as they are offered by banks and credit unions
- Usually pays higher interest rates than traditional savings accounts
- May limit the number of transactions debiting account per statement cycle
- Savings Account
- Interest bearing account that holds cash deposits
- Good for emergency funds and short-term goals
- Stays in cash
- No limits to amount you can deposit
- Usually has restrictions on the number of times you can withdraw from the account each month
- US Savings Bonds
- A loan to the federal government that can be purchased by individuals
- Registered to a single owner and are not transferable and cannot be resold
- Can be cashed in early with payment of an interest penalty
- Backed by full faith and credit of the US government
- Buy with as little as $25
- Earn interest until the reach maturity which is between 20-30 years (Note: Savings bonds that are held past their maturity date do not continue to earn interest and may lose value due to inflation.)
- IRA
- Usually used for savings for retirement
- Accessible and easy to set up
- Only need to earn taxable income
- You can open through many banks or brokerage firms
- Limits to how much you can contribute each year
- Some are tax-advantaged (Roth IRA)
- Contributions made with after-tax dollars
- Can be invested in stock or mutual funds
- Can be good for emergency funds
If you would like to know more about the savings options available at The Savings Bank, visit us online at TheSavingsBankOhio.bank or call 1-800- 582-2265.
Sources:
https://treasurydirect.gov/savings-bonds/
https://www.consumerfinance.gov/ask-cfpb/what-is-a-money-market-account-en-1007/