The world is currently going through some tough times and people are probably feeling its effects most on their finances.
Thus, now is the perfect time to make wise decisions regarding where you want your money to go. If you have a significant amount of it at the moment, you’re probably wondering which place is the best you can put it for the best returns or for short term safekeeping.
Here are the tips Eric Roberge, a certified financial planner, has to give about this dilemma.
High-yield Savings Accounts
Those who are sitting on a sizable sum of money that they want easy access to might find that a high-yield savings account is a great vehicle to keep their cash in. Since going this route means you can take out your money whenever you want to, you can put your emergency fund there.
Roberge says that choosing an online bank may be a wise choice as they tend to have better rates.
Certificates of Deposit
If you won’t be needing your cash anytime soon, using a certificate of deposit (CD) will keep your money safe and earning. This saving vehicle usually entails higher interest rates than most savings accounts you can open at traditional banks.
The caveat though is that you can’t access your money just anytime. Using CDs binds you to an agreement in which you leave your cash for a specified period of time. The length of the term may vary from just a couple of months to several years.
However, you can choose to pay the penalty should you suddenly need your deposit for an emergency.
Money Market Funds
Money market funds are a type of investment as opposed to a saving vehicle though it can still help in your saving efforts. The perk of investing your money on this fund is that it comes with relatively low risk with the promise of liquidity.
Be reminded though that money market funds can possibly lose value when the market is in a very volatile state. In this case, you’d probably benefit more using a high-yield savings account.
One Big No-No
Speaking of volatile markets, Roberge advises against investing your money in the stock market.
While owning stocks can translate to huge returns in the long run, you would be susceptible to the unpredictability of the market when you only invest short term. In worst-case scenarios, your savings might even be wiped out by sudden downturns.