Investing your money in a high interest account may be one of the soundest financial decisions you ever make. Many people do not understand how to take advantage of these accounts, and they place their money in a regular bank account or, much worse, hide it away at home. Placing your money in the right kind of account puts it to work for you. Your savings will grow, without you having to do anything but go about your life.
The worst place to keep your nest egg money is at home. It will obviously not accrue any interest there and you may even lose it all. Natural disasters, fire, burglary can mean the loss of your entire nest egg if you choose to store it in your home, even if you store it in a safe.
Understanding FDIC Insured Deposits
One belief some people hold is that money placed in banks is not safe. This is not true. After the Great Depression, the American government created the Federal Deposit Insurance Corporation, otherwise known as the FDIC. Your money in your savings, checking or money market deposit account at a bank is insured by this agency, up to $250,000. CDs are also insured. If you have more money than this, you can place it in a separate bank and it, too, is insured up to $250,000.
Stocks, bonds, money market mutual funds, and similar accounts, however, are not insured.
High Interest Savings Accounts
One of the safest ways to invest your nest egg is by placing it in a high interest savings account. You can search online to compare high interest savings account and find the best bank to suit your needs. Besides collecting interest, a benefit to placing your money in a savings account is you have access to it if you need it for emergencies.
Bank interest rates are very competitive. Typically, online savings accounts, such as one provided by https://www.discover.com/
online-banking/savings.html, offer the best rates.
If you do not feel comfortable keeping all of your money in a savings account, place part of it there and invest the rest in other types of accounts.
Money Market Deposit Account
Money Market deposit accounts are another FDIC insured account you can invest in. These sometimes have a higher interest rate than savings accounts, and they can function as a checking account.
Certificates of Deposit
Certificates of deposit, otherwise known as CDs, are high interest accounts that in many instances yield a higher rate than a high interest savings account. One of the biggest differences is that, in most cases, you cannot cash in the CD without paying an early withdrawal penalty. The payoff is the higher interest rate. You will get a higher rate for a 5 year CD than a 1-year CD, for example.
Stocks, Bonds, and Mutual Funds
Stocks, Bonds, and Mutual Funds are riskier investments because they are not FDIC insured. However, if you do not mind risking some of your money, you may get a higher return on your money than by placing it in FDIC secured accounts