New Year, Same Savings Goals

A new year has begun, and many people share a common goal: to save more money! Even if you've successfully achieved your savings goal last year, it is an objective worth pursuing annually. Assuming you've read our previous post on building better savings habits and have accumulated some funds, the next question is: where should you invest your newfound wealth? Below are a few options that offer safe and beneficial ways to store your cash:

1. U.S. Savings Bonds: Savings bonds, issued by the U.S. government, provide a low-risk alternative to traditional bonds. They offer access to fixed interest rates over a set period without the market exposure typical of traditional bonds. A significant benefit of these savings instruments is their exemption from state and local taxes. However, it's important to note that these bonds cannot be traded in the secondary market and must be redeemed by the person named on the bond.

2. High-Yield Savings Accounts (HYSA): These accounts offer interest rates often significantly higher than traditional savings accounts. Typically provided by online and mobile banking platforms, they aim to attract users with competitive yields, sometimes as high as 5%, along with FDIC insurance and seamless online banking integration. However, be aware of potential hidden fees and fluctuating interest rates.

3. Money Market Funds (MMF): MMFs are investment vehicles primarily used by brokerage firms to hold uninvested cash. While not entirely risk-free, MMFs have very low volatility and offer interest rates comparable to HYSAs. They are ideal for temporarily holding cash intended for near-future investments, as MMFs are treated like cash and allow for immediate securities purchases without waiting for fund transfers.

While numerous savings instruments exist, these three are popular and widely utilized. It's important to conduct your research, read the fine print, and compare rates to find the best option for your needs.

This is not investment advice.