High inflation has taught Americans smarter ways to save. As a result, many people are growing their wealth more quickly, even when the cost of living remains high. Doing so doesn’t require learning complex investing techniques or even having big chunks of money. It’s all about where you put your savings.
A recent JPMorganChase Institute analysis found that savvy consumers are thinking beyond the traditional savings account. Here’s what they’re doing to boost their net worth without requiring risky investments, and how you can too.
Find Out: Fidelity Says This Is a Surprising Risk of Holding Too Much Cash — Do You Have Too Much?
Read Next: Mark Cuban Tells Americans To Stock Up on Consumables as Trump’s Tariffs Hit — Here’s What To Buy
While getting into a savings mindset is great, if you’re only using traditional savings and checking accounts that have no or low annual percentage yields (APY) then you are literally leaving earnings behind.
Worse, you’re not keeping up with inflation, either, which can range between 2% and 4% in normal economic times (and during the early days of the COVID-19 pandemic, hit a high of around 8%).
Instead, take advantage of better growth with the following accounts.
On the surface, a money market account looks and acts like a checking account — you put money in, and you can take it out, via checks or debit cards. Where they’re different is that they often come with a higher APY than a regular checking account (many checking accounts don’t earn interest at all).
For example, an account with a 4% APY on a balance of, say, $10,000, is netting you an additional $450 per year.
These accounts may also have limits such as a restricted number of withdrawals, a minimum balance and minimum deposit amounts, but most likely you’ll be happy watching your money earn interest, so you won’t mind keeping more of it in there at a time.
These accounts are typically held by banks, which are FDIC insured.
Learn More: I’m a Financial Advisor: My Wealthiest Clients All Do These 3 Things
Next up are certificates of deposit (CDs). These financial products are especially good when interest rates are high and you don’t need immediate access to your money.
When you put money into a CD, you “lock in” that money for a set time period, often between a few months up to one to two years maximum. You really want to be sure that you don’t need that money before that time is up, however, because you’ll typically pay an early withdrawal penalty if you do take the money out, defeating the whole purpose of trying to grow it.
finance.yahoo.com
#Instantly #Grow #Net #Worth #Move #Money #Types #Accounts
