Oftentimes, people think of stocks and bonds when they hear the word “investing”. However, bank savings products can also be a solid part of an overall investment strategy. Unlike stocks and bonds, they are FDIC-insured, and some banks, like Bank5 Connect, even offer additional deposit protection on them. With interest rates on high-yield deposit accounts still outpacing inflation, the right bank product could be a great low-risk addition to your investment portfolio.
Let’s take a closer look at some bank accounts worth considering:
- CDs
A CD, or certificate of deposit, is a bank account that provides a fixed interest rate for a specific period of time, or “term”. CD terms typically range from 3 months to 5 years. During the term, you commit to leaving your funds within the account. In most cases, withdrawing your funds before the term is over will subject you to an early withdrawal penalty fee. One of the advantages of a CD is that it allows you to lock in an attractive interest rate before rates start to fall. One potential downside of a CD is that in most cases, once you make your initial deposit, you cannot make additional deposits until the term is over. However, there is a special type of CD, called an add-on CD, that does allow for additional deposits throughout the CD term.
- High-Yield Savings Accounts
While most savings accounts in the United States have pretty dismal interest rates (the national average savings account interest rate was 0.42% as of December 19, 2024), there are higher-yield options out there. Offered by many online banks, a high-yield savings account offers a much higher interest rate than a traditional savings account. No matter what kind of investment strategy you have, everyone should have a basic savings account so they can quickly access money in the event of an emergency or unforeseen expense. Why not earn some decent interest on those funds?
- Money Market Accounts
Many Americans aren’t familiar with money market accounts, but they can be a great addition to your savings strategy. A money market is essentially a hybrid between a checking account and a savings account. In most cases, money markets come with a debit card, and some come with checks as well. Additionally, they typically offer a higher interest rate than a traditional savings account. Many money market accounts have a higher minimum balance requirement than savings accounts, but unlike a CD, there are no specific restrictions on how long you must leave your funds in a money market.
It’s important to remember that investing doesn’t have to only involve stocks and bonds. Supplementing your investment portfolio with low-risk savings products can be a great way to diversify your investments and provide some peace of mind as well. At Bank5 Connect, we’re happy to offer a wide variety of high-yield savings options, all of which are insured 100%, even past FDIC limits. Explore our high-interest savings accounts, CDs, and money markets today.