Best 4 Savings Accounts for Investors : Do your homework before deciding to open a savings account if you’re considering doing so. Every savings account is not made equal. Your ideal account will vary depending on a number of variables. These consist of your target date for savings, the amount of money you have set aside for an initial deposit, the possibility that you will need to take out a loan before that date, and how comfortable you are utilizing technology.
1. Basic Savings Account
These accounts, also referred to as passbook savings accounts, are an excellent way to start saving money and earning interest. A simple savings account’s transactions are updated on a statement that is sent out on a regular basis (usually monthly) or in a passbook when the customer visits their financial institution. The Federal Deposit Insurance Corporation (FDIC) insures deposits up to $250,000, which makes basic savings accounts an excellent option for those looking for a low-risk, convenient savings account.
2. Online Savings Accounts
An online savings account can be the best option for you if you enjoy the concept of online banking. Depending on the sort of online savings account you open, these accounts may allow you to see, deposit, and transfer money online around-the-clock as well as withdraw cash from an ATM at any time. Any mobile device, such a tablet or smartphone, may be able to access them. These accounts may also offer FDIC or NCUA insurance on deposits.
3. Money Market Savings Accounts
Money market accounts (MMAs) are a type of specialized savings account offered by banks and credit unions. They might also be referred to as deposit or money market accounts. These are not the same as the uninsured money market mutual funds that investing companies offer. The FDIC insures deposits made into a bank money market account up to a $250,000 maximum. The NCUA insures funds kept in a credit union MMA. If a particular amount is maintained in these accounts each month, there may be fee waivers and/or tiered interest rates available.
4. Certificate of Deposit Account
For those setting aside money for a specific purpose and having a specific deadline in mind, certificate of deposit (CD) accounts are a smart alternative for a savings account. Because a set portion of your money is invested with the financial institution for a predetermined period of time, certificates of deposit (CDs), which are available via most brokers and financial institutions, typically pay greater rates of interest than traditional and online accounts.
This could last anywhere from a few months to several years. The interest rate paid on a CD is typically higher the longer its term. The FDIC or NCUA insures three CDs with maximum sums of $250,000 to shield investors in the event that the issuer runs into financial difficulties.
The Bottom Line
Investors can choose from a variety of savings account kinds. For first-time savers, a basic savings account is a low-risk, user-friendly account with a lower rate of return. For those who feel at ease with internet banking, an online account offers a greater interest rate in a convenient package. Benefits from money market savings accounts could include better rates for larger holdings. Additionally, certificate of deposit accounts offer a premium rate in exchange for locking in a set amount of funds for a predetermined period of time, which can be anything from a few months to five years. 4 Up to $250,000 in deposit insurance is provided by the FDIC or NCUA for these savings accounts.
