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Savings

Savings?

Where Should You Put Your Savings?

There are many benefits to having savings. Saving up money can allow us to afford little luxuries without having to resort to borrowing. It can also help us to achieve important goals in our lives like buying a home or starting a business. On top of this, savings can be useful to have in an emergency.

When saving up money, you should carefully think about where to put this money. Different places could have different perks such as reduced access or higher interest rates. Below are just a few of the different places to put your savings and the advantages of each.

A piggy bank

Piggy banks are typically used to save up hard cash (in most cases, coins). You obviously won’t get any interest putting your money in a piggy bank. However, when it comes to putting aside spare change, it’s an easy and convenient way to save money.

You don’t have to use a traditional ‘piggy’ bank. Some people save money in jars or empty bottles. Ideally, you want a container that you can’t easily take cash out of. This will discourage you from dipping in and will help you to build savings. Opaque containers can be fun to use because you won’t know exactly how much money is in them until you break open the container.

Piggy banks are great for encouraging kids to save from a young age. Of course, adults can use them too. They are best suited for saving up small amounts of money. If you’re looking to save up a lot of money, you may be better off using a savings account of some kind as they are more secure and will gain interest. 

A brick-and-mortar savings account

The most traditional type of savings account is a brick-and-mortar saver. These accounts are set up with a physical bank. You can go into your local branch to set up this account, or you can set up an account online if you’re already a customer at that bank.

The advantage of setting up a savings accounts in a bank instead of collecting money in a piggy bank is that you get to earn interest on your savings. Interest rates are sadly quite low at the moment, but you’ll still earn more than letting cash sit in a piggy bank or a checking account. 

Different banks offer different types of savings accounts, each with different interest rates and other perks. The highest interest accounts often have certain conditions you must meet such as contributing a certain amount of money each month into the account or maintaining a minimum balance. You should take your time to compare these accounts and the rates they offer. There are lots of sites dedicated to comparing savings accounts and their rates

An online savings account

Online savings accounts are provided by online banks. These banks don’t have traditional physical outlets that you can walk into. In some cases, you won’t even get a card for your account, so you can’t easily withdraw hard cash from a cash machine, forcing you to rely on money transfers or requests to withdraw cash by post.

What is the benefit of using an online bank as opposed to a physical one. Well, in many cases, online banks will offer higher interest rates than brick-and-mortar banks. This is because these banks don’t have the same expensive overheads as physical banks, and so are able to reward their customers with more money. Of course, this doesn’t mean that all online savers are better than all brick-and-mortar savers – it’s still worth comparing both types to see exactly what deals are out there. 

A certificate of deposit (CD)

A certificate of deposit (CD) is a specialist savings account offered by some banks, which can earn more interest than a regular savings account. You have to leave your money in the account for a certain period of time until it reaches its maturity date – you cannot access your money until then. As a result, this type of account is generally only suitable for people that already have savings to deposit and that have no plans to touch these savings for a few years.

Generally speaking, the longer the maturity period, the better the interest rates. The shortest maturity period for CDs is generally 6 months, while the longest is usually about 5 years. Take the time to compare CDs online to find the best rates and best suited maturity period. 

A savings bond

Savings bonds are debt securities typically offered by the government or a large company for borrowing needs. Savings bonds can offer better interest rates than traditional savings accounts. Most savings bonds have a fixed interest rate, while others have varying interest rates. 

Like a CD, your money is locked away for a certain period in which you cannot access it. This is ideal if you have some money that you want to lock away for a certain period without the temptation of being able to access it. 

You can apply for government bonds online by setting up a TreasuryDirect account. Corporate bonds offered by companies are typically accessed via a brokerage firm – you can look up corporate bonds online. 

A crypto savings account

A growing number of people are investing in cryptocurrencies. Cryptocurrencies are digital currencies that are decentralized, making them not controlled by a government or bank. The most famous cryptocurrency is Bitcoin, but there are now thousands of others.

Over time, cryptocurrencies have proven to increase in value. By converting some of your savings to cryptocurrency, you could take advantage of these increasing rates (which is likely to be far greater than any bank savings account interest rate). 

You can buy cryptocurrencies via cryptocurrency exchanges. This involves setting up an account and creating a digital wallet. Another option is to set up a cryptocurrency savings account. This has similar protection to a bank account while allowing you to take advantage of the returns possible by investing in crypto.

You’ll find lots of guides online that can tell you how to earn interest on crypto and get the highest rates. It’s worth doing your research to make sure you’re happy with the risks (while cryptocurrency rates can go up, they can also go down – unlike traditional savings accounts, there’s no guarantee that you won’t make a loss). 

A stock brokerage account

You can also open up a stock brokerage account and put some of your savings into stocks. The stock market has long been popular among investors and you can make some big returns by investing in the right stocks. On top of making money via the rising price of stocks, you can make money through dividend payments. Of course, like investing in cryptocurrency, it does come with its risks, which you don’t get from a savings account or savings bond.

You can create a brokerage account with the help of an investment broker or you can simply download a stock trading app. Brokerage fees are something to factor in when investing in stocks. Some trading apps are free and are a good choice if you’re investing small amounts of savings into stocks. 

To maximize your returns while investing in stocks, you should do your research before investing in stocks. Some people hire the help of advisors, while others do their own research. It’s a good idea to diversify your portfolio and not just invest everything into a single stock. On many trading platforms, you can now invest as little as $1 into stocks. 

 

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