What you need to know
People looking for a safe place to stash their money have many options from which to choose. How can they know which type of savings account is right for them?
The first step is to learn about savings vehicles so you can make educated decisions. Consider the level of access you’ll need to your stashed cash — this is called liquidity. Do you need the ability to tap the money at a moment’s notice, or can you wait for a period amount of time?
Also, consider how much money a savings vehicle will earn. Safer vehicles often earn less, while riskier ventures usually yield higher profits. Finally, will your money be insured?
Here’s a quick breakdown of popular savings vehicles.
|Statement savings account||High||Lower||Insured|
|Money market account||Partial||Higher||Insured|
|Money market mutual funds||Partial||Higher||Uninsured|
|529 accounts||Highly restricted||Higher||Uninsured|