4 Places to Store Short-Term Savings

4 Places to Store Short-Term Savings

There are several options for short-term savings, but one of the best places to start saving up for a short-term financial goal is a savings account (of which there are several to choose from, all with different pros and cons).

Should You Invest Short-Term Savings?

Generally speaking, for short-term money, your goal is not necessarily to maximize returns. It is to control the risk—keep it safe—so that the money is available when needed. While everyone’s risk tolerance is different, the downside to investing in the market is that you might lose money in the short term.

1. Online Savings Account

Online-only savings accounts, also sometimes referred to as high-yield savings accounts, are an increasingly popular option for short-term savings. As their name implies, these banks or financial institutions only operate online.

2. Certificate of Deposit

A Certificate of Deposit (CD) is a savings account that holds a specific and fixed amount of money, and for a designated period of time, such as six months or three years. In exchange for the deposit, the bank pays a fixed rate of interest.

3. Money Market Account

A money market account (MMA) is like a mix between a savings and a checking account. These accounts, offered by banks and credit unions, can allow you to write checks and may also have a debit card. (Savings accounts, whether online or at a traditional bank, typically do not allow for check-writing.

4. Cash Management Accounts

A cash management account (CMA) is a cash account offered by a financial institution other than a bank or credit union. These accounts are designed to merge the services and features of checking, savings, and investment accounts all into one offering.

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