I’ll be the first to admit: It’s not easy deciding how and where to save your money.
Sure, choosing higher-risk investments may yield higher returns, but they may not be FDIC-insured and oftentimes are aligned with a potentially volatile stock market. However, as interest rates rise, opening an FDIC-insured account at your local financial institution may be a great option for you.
It’s important to remember your money will grow slowly with little or no associated risk, but it will grow! And better yet, you may have full access to your funds, with few, if any, restrictions. Here are some of the different types of savings options that can help you reach your financial goals.
1. Savings accounts: Savings accounts are offered by nearly all financial institutions. The money in your savings account is FDIC-insured, and can be accessed whenever needed. However, you may be restricted on how many withdrawals can be made in a month. If you surpass the amount of withdrawals allowed for the month, or don’t maintain a minimum balance, you may be assessed an excess withdrawal fee or monthly service charge.
Interest rates for savings accounts are generally low; however, having access to your money when you need it most is a reasonable trade-off. (You can learn more about Bank of the West’s Any Deposit Checking account in this video.)
2. Certificates of Deposit (CD): Just like savings accounts, CDs are FDIC-insured and also offered by most financial institutions, but they generally offer a higher interest rate because you “lock in” your funds for a specified amount of time. However, if you decide to withdraw the funds before the maturity date, you may be assessed an early withdrawal penalty.
Here at Bank of the West we offer a range of CDs which allows you to customize your deposits based on your current needs.
3. Individual Retirement Account (IRA) CDs: IRA CDs are a great choice if you want to put money away for retirement. They often come with fixed interest rates and potential tax advantages to help you reach your retirement goals. When your IRA CD matures, you can automatically renew it, or transfer the balance into another retirement account and continue to let it grow.
4. Money Market Account (MMA): An MMA is a great option if you want to earn a higher interest rate than a savings account and have a good amount of savings, since there is typically a balance threshold to avoid a monthly service charge. In addition, you may access your funds by check. However, like the Savings Account, you may be restricted on how many withdrawals can be made or checks written against the account for the month. If you surpass the number allowed, you may be assessed an excess withdrawal fee.
5. Savings Bonds: Backed by the U.S. government, some people say that savings bonds are one of the world’s safest investments, as you can build savings for the long term at the cost of a relatively low investment.
Two of the most popular types of bonds issued by the US government are Series EE bonds and Series I bonds. The difference between the two is that Series EE bonds accrue interest monthly based on a fixed rate at the time they are issued, whereas Series I bonds pay a variable rate of interest.
Whatever type of account you decide on, savings allow you to earn modest income while still having access to your funds (for the most part). Do your research and talk to your banker or relationship manager to choose the product that offers you the best rate and provides flexibility, because you never know when you’ll need to access those funds in the future.Read More ›
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