Where to Park Your Cash: Making Your Money Work for You

All of your money should be earning money. If your cash is sitting in a traditional bank savings account, it’s likely collecting little to no interest. One client recently described her checking account’s interest rate as “wild and disrespectful”—and she’s not wrong. With inflation still a factor and interest rates elevated, there are better ways to ensure your money is working for you.

For your day-to-day financial needs, a general checking account remains the best place to keep your cash. These accounts provide easy access to your funds for bills, expenses, and unexpected costs. But for cash above and beyond what you need for everyday spending, it’s time to consider better alternatives.

Keeping It Liquid: High-Yield Savings & Money Market Funds

If you want to keep your cash readily available but earning more, consider a high-yield savings account or a money market fund.

• High-Yield Savings Accounts – Right now, a competitive high-yield savings account should be offering 4% or more in interest. Many online banks provide these accounts with no fees and easy transfers, making them a great place to park your extra cash while keeping it accessible.

• Money Market Funds – Available through brokerage accounts, money market funds also offer attractive yields, often similar to or slightly higher than high-yield savings accounts. These funds invest in short-term, high-quality debt instruments and can be a great option for maintaining liquidity while earning a solid return.

Locking It Down: Certificates of Deposit (CDs)

If you’re willing to tie up your cash for a set period, Certificates of Deposit (CDs) can be an excellent option. Typically, CDs offer higher interest rates than standard savings accounts, with longer durations generally providing better returns. Right now, CD rates are only slightly higher than money market rates, but this is something we continue to monitor. Historically, locking in a longer-term CD has rewarded investors with superior yields, especially in a declining rate environment.

Final Thoughts

Your cash should never be sitting idle. Whether it’s in a high-yield savings account, a money market fund, or a CD, ensuring your money is earning interest is crucial in today’s financial landscape. Not sure what’s best for your situation? We’re here to help you navigate the options and maximize your returns while keeping your financial goals in focus.

Want to make sure your money is working as hard as you are? Contact your advisor at Investors Asset Management to explore the best cash solutions for your needs.