4 Places to Store Short-Term Savings

4 Places to Store Short-Term Savings

If you have a large but not immediate savings—goal such as the downpayment on a home, a kitchen reno, or an emergency fund you may want to consider some good short-term savings options. Savings accounts typically have the key features people are looking for when saving for the short-term safety, liquidity and growth.

Should You Invest Short-Term Savings?

To invest in the short-term would require complete flexibility if the market takes a steep nosedive, it would likely be best to wait it out and avoid realizing losses. Suddenly, you’re on the market’s timeline not your own. Shorter periods tend to be volatile and unpredictable especially in the stock market.

1. Online Savings Account

A potentially higher rate of interest isn’t the only reason to use online-only savings accounts. The websites and mobile apps for online accounts essentially serve as storefronts, so online financial institutions often devote lots of resources to make sure they’re optimized and easy to navigate.

2. Certificate of Deposit

Generally, CDs with longer maturities offer higher interest rates. If you’re interested in locking in a certain rate, you may want to consider a CD. CDs can be a good option for people who don’t need to touch their short-term savings for a certain period of time.

3. Money Market Account

MMAs sometimes require higher minimum balances than other types of savings accounts. So, this might be a better option for those with more money to save. MMAs are considered a safe choice since, like other savings accounts, they are typically covered by FDIC if held by a bank.

4. Cash Management Accounts

CMAs are typically offered by financial service providers that are not technically classified as banks, they are usually covered by FDIC deposit insurance like regular bank deposits, often through a partner bank. For people interested in streamlining their accounts and saving for a short-term goal, a CMA can be a good option.

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