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While going with riskier investments can yield you great financial rewards, they’re likely not for everyone. In fact, most people would rather keep their money in a safe place where they can earn moderate returns with little chance of loss. It’s not so bad either. Placing your assets in FDIC-insured accounts can get you decent yields at very little risks. The trick is to find the right savings program to maximize your returns while retaining every bit of security that your money enjoys.
Shopping AroundDon’t fall into the old-fashioned thinking of using savings as a glorified piggy-bank – putting aside money for a rainy day with little regard for how much you can earn in the process. There are plenty of options both in savings types and financial institutions, some of which will prove better for your bottom-line than others. Unfortunately, many refuse to look into what’s available and ignorantly leave their saved-up finances in standard 2% interest rate savings accounts. What kinds of savings do you have the option of putting all that hard-earned money into? 1. Savings Accounts The idea behind savings accounts is simple. You leave your money with the bank or credit union, giving them the right to use it until the time you choose to withdraw your funds. In turn, you will get a small (very small) amount as payment for letting them conduct business with your cash. A regular passbook or statement account, while a relatively safe place to park your money, brings little in terms of profit. There are a few things to make sure of when choosing a savings account. One, you want the bank to be covered by the Federal Deposit Insurance Corporation (FDIC). This guarantees that should the bank close, you can receive up to $100,000 to replace any funds you have with them. 2. Money Market Accounts Money market accounts (MMA) are a form of savings account that pays a bit more than regular passbook or statement accounts. In exchange for the small upsize in interest rates, you are allowed only a limited number of fund transfers out of the account every month. Like regular savings accounts, MMAs are insured by the FDIC. 3. Certificates of Deposit (CD) A certificate of deposit is a special type of savings. Unlike regular banking accounts which let you deposit and withdraw funds at any time, a CD ties your money up for longer periods from as short as six months as to as long five years or more. With CDs, you can see interest rates of up to 5 percent or higher. The longer the waiting period for maturity, the higher the interest rate you can get. If you choose to cash in your CD early, you can incur a penalty. Regardless, you will get your full deposited amount plus any interests previously earned. Savings Bond U.S. savings bonds are long-term methods of parking your money with very good interest rates. The federal government insures all bonds, making them a very safe investment. With maturity dates ranging from 20 years onwards, you can buy bonds at interests of up to 10% or higher.
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