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Safest Places to Save Your Money

When you receive a substantial sum of money, such as an inheritance or a work bonus, or if you are nearing retirement or saving for a short-term goal, finding a safe place to stash your cash becomes a priority. While you want your money to work for you, sometimes the focus is on protecting it from potential losses by keeping it in a safe place. At O1ne Mortgage, we understand the importance of financial security and are here to help you make informed decisions. Call us at 213-732-3074 for any mortgage service needs.

1. Savings Account

A savings account is a deposit account held at a financial institution, such as a bank or credit union, that accrues interest and is protected by federal insurance. You can usually open a traditional savings account with a low initial deposit and withdraw your money at any time, although there may be a limit on the number of withdrawals per month.

Savings accounts are ideal for keeping your savings separate from your everyday spending cash, making them a solid option for your emergency fund or short-term savings goals like a wedding, vacation, or home renovation.

Types of Savings Accounts

• Traditional Savings Accounts: Offered by brick-and-mortar banks or credit unions, these accounts typically pay lower interest rates, sometimes as low as 0.01%.
• High-Yield Savings Accounts (HYSAs): These accounts offer significantly higher interest rates than traditional savings accounts, allowing your money to grow faster. They are often available at online banks, which can afford to offer higher rates due to lower overhead costs. However, HYSAs may have more restrictions, such as higher minimum balance requirements or transaction limits.

Your savings account is likely your best option to keep your money safe for the following reasons:

• Liquidity: Unlike other savings options, such as CDs and government bonds, you can usually withdraw your money from a savings account anytime, although some accounts may restrict the number of monthly withdrawals.
• Interest Rates: Many online banks and financial institutions currently offer interest rates for high-yield savings accounts at or above 4%. While these numbers pale compared to some higher-risk investment options, they offer growth with minimal risk.
• Low or No Fees: You should be able to find a financial institution offering low or even no monthly fees that would otherwise cut into your interest gains.

2. CD Account

A traditional CD account is another low-risk financial product offered by banks and credit unions that pays you a fixed interest rate for a specific term, such as six months, five years, or even longer. In exchange for committing to keep your money in your account, the bank typically pays a higher interest rate than a standard savings account. When your term ends, or “matures,” you’ll receive your initial deposit plus the earned interest. However, if you withdraw funds before the account’s maturity date, you’ll typically incur penalties.

Types of CDs

• Bump-up CD: Allows you to “bump up” your rate if a higher one is available during your term. Generally, you can only increase the interest rate once per term.
• Liquid CD: Also known as no-penalty CDs, these allow you to make early withdrawals from your account without paying a penalty. No-penalty CD rates vary, but you may find rates around 4% or higher with a term of one year or longer.
• Jumbo CD: Requires a higher minimum deposit, usually $100,000 or more, and offers higher interest rates while protecting your principal amount. Deposit insurance covers savings up to $250,000 per institution and per account holder.

3. U.S. Government-Backed Bonds, Bills, and Notes

The United States government offers three classes of fixed-income securities to investors: Treasury bonds (T-bonds), Treasury bills (T-bills), and Treasury notes (T-notes). These investments are attractive to investors looking for safety because the U.S. government backs them.

Types of Government-Backed Securities

• Treasury Bonds: The longest-term government debt security, with maturity periods of 20 or 30 years. These bonds pay interest every six months at a fixed rate, providing a solid mix of liquidity and stability.
• Treasury Bills: Short-term investments ranging from as few as four weeks up to one year. T-bills are bought at a discount rate, and you take earnings when you receive the face value of the bill once it matures.
• Treasury Notes: Offer short- and intermediate-term maturities of two, three, five, seven, and ten years. Like T-bonds, Treasury notes pay interest on a semiannual basis.

You can purchase Treasury bonds, bills, and notes through the TreasuryDirect portal, or alternatively, you can buy or sell these securities through your bank or brokerage.

How to Keep Your Money Safe

Keeping your money safe begins with choosing the safest vehicles to park your money, but don’t forget to protect your accounts from scams, identity theft, and other forms of fraud. Follow these best practices to help safeguard your money:

• Don’t share account info with others: Sharing a password with a friend or family member can unintentionally compromise your account.
• Create strong passwords for your accounts: Using the same password for all your accounts puts them all at risk if an intruder discovers your password. Consider using a password manager to create and store strong, unique passwords for each of your accounts.
• Use multifactor authentication: This security measure helps protect your account by requiring two or more types of identification to access it.
• Be wary of public Wi-Fi: Exercise caution when using public Wi-Fi, as its security is often weak. Consider using a virtual private network (VPN) to encrypt your connection.
• Update your computer and devices regularly: Software updates often include patches to fix known security issues. Hackers often exploit security holes in outdated systems.

The Bottom Line

Choosing a safe place to save money can help you protect your savings so it will be there when you need it. As part of your efforts to strengthen your financial well-being, don’t forget about your credit. Regularly review your credit report and credit score to see where you stand. Free credit monitoring can also alert you to potential identity fraud sooner.

For expert mortgage services and advice on how to best manage your finances, contact O1ne Mortgage at 213-732-3074. Our team is here to help you achieve your financial goals with confidence.

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