When it comes to saving your money you have many different options available to you. There are savings accounts designed with specific saving purposes in mind. In addition when you begin to build wealth and really grow your money, you should look at investing tools as well as the basic savings accounts. It is important to steer clear of savings bonds for most of your investments, but you should consider other options like mutual funds. This is an overview of the accounts, so you can match your savings goals with the correct account.
1. Basic Savings Accounts
The first type of account is a basic savings account. These account offer lower interest rates and have low minimum balance requirements than the other savings tools. It offers easy access to your money. This is a good account to start saving money. It is also a good place to put your $1000.00 emergency fund. You can shop around at different banks to find a good interest rate, and you may also consider credit unions or online banks. If you go with an online bank make sure that it is FDIC certified. The Christmas savings account is usually a basic savings account.
2. Certificate of Deposit (CDs)
These accounts offer a higher interest rate, but the money is more difficult to access. You lock in the money for a set length of time, and you will lose the interest your earned or receive another penalty if you pull the money out early. The rate of return is usually just a bit higher than a money market account. It is a safe investment since the funds are guaranteed, but it is not a great way to grow your money. It is way to keep it safe.
3. Mutual Funds
Mutual funds are an investment tool to consider once you are ready to begin investing your money. They allow you to begin to grow your wealth. The funds are not guaranteed, and you do run the risk of having losses if you choose to use this tool. Mutual funds are a safer way to invest your money since it spreads the risk of loss over several different stocks. You should look for mutual funds that are spread over a wide variety of stocks and that have a good track record. It is important to invest in order to build wealth.
4. Money Market Savings Account
A money market savings account is another savings account that you can get through your bank. The funds are still guaranteed by the FDIC. It offers a higher interest rate, but it has a higher minimum deposit requirement. It also has fairly easy access, although some banks may limit the number of transaction per month on this account. It is a good place for your three to six month emergency fund.
