5 Best Places to Put Your Savings

There is only two things you can do with your money…save it or spend it.  After you develop a budget and stick to it, you will see that you will and should have some money left over…after all, you should always pay yourself first!  What does that mean?  Well personally, to me it means that I take a look at what I am making each month, before taxes, and then set aside at least 10% to stow away into savings… Well, actually, I put away a lot more than that but if you are putting away 10% you are doing well.  So…now you have set aside the money to save…now what?  Where do I stow this money?  Well, that depends on when you may need to have that money in the future.  2-3 years? 5-10 years?  Review what your goals and needs are and then look to put your savings in these 5 Best Places to Put Your Savings.

#1. Savings Account: Duh, no brainer here right?  This is where you want to park money that you may need in the short term such as an emergency fund, etc.  Money in a savings account earns modest interest, yet is easily accessible in an emergency.  Because of the low-interest yield, though you do not want to park all of your money here, only that which you will need for an emergency or right away.  Also, shop around banks as many offer different interest rates…

best places to put savings

Five Best Places to Put Your Savings

#2. Certificates of Deposit (CD): Ok, so now you have squirreled away some money for an emergency, now we have some goals that are 2-5 years away.  We can’t afford to lose the money, but we would also like to see our money earn a bit more interest than a traditional savings account.  The CD is perfect for this.  However, once you stow money in a CD there are often penalties for cashing it in early.  So, always make sure that you don’t need the money for a few years before you commit.  Again, shop around for the best rates and park your money there.

#3.  Treasury Bills and Notes: U.S. government bills or notes, often referred to as treasuries, are backed by the full faith and credit of the U.S. government, making them one of the safest investments in the world. Treasuries are exempt from state and local taxes and are available in different maturity lengths. Bills are sold at a discount; when the bill matures, it will be worth its full face value. The difference between the purchase price and the face value is the interest. For example, a $1,000 bill might be purchased for $990; at maturity, it will be worth the full $1000. Treasury notes, on the other hand, are issued with maturities of 2, 3, 5, 7 and 10 years, and earn a fixed-rate of interest every six months. In addition to interest, if purchased at a discount, T-notes can be cashed in for the face value at maturity. Both Treasury bills and notes are available at a minimum purchase of $100.  If you can afford to not have access to your money for 5-10 years, a treasury bill or note may be the way to go to earn some interest.

#4. Bonds: No, not James Bond! A bond is a low-risk debt investment, similar to an I.O.U., which is issued by companies, municipalities, states and governments to fund projects. When you purchase a bond, you are lending money to one of these entities (known as the issuer). In exchange for the “loan”, the bond issuer pays interest for the life of the bond and returns the face value of the bond at maturity. Bonds are issued for a specific period at a fixed interest rate. Each of these bond types involves varying degrees of risk, as well as returns and maturity periods. In addition, penalties may be assessed for early withdrawal, commissions may be required, and depending on the type of bond, may carry additional risk, as with corporate bonds where a company could go bankrupt. Bonds typically offer a higher payout than traditional treasury notes but are sometimes riskier.

#5. Mutual Funds:  Nervous about investing in the stock market…or are you like many and are completely clueless about where to even start?  Mutual funds are for you!  A mutual fund typically invests only in low-risk securities. As a result, mutual funds are considered one of the lowest risk types of money market funds. Mutual funds typically provide a return similar to short-term interest rates. Mutual funds are not FDIC insured and are regulated by the Securities and Exchange Commission’s (SEC) Investment Company Act of 1940. Brokerage firms and many banks offer mutual funds. Interest rates are not guaranteed so a bit of research can help find a mutual fund that has a history of good performance.  If you find a good fund and contribute to it regularly you stand to make a decent return on your investment…although there is a risk that you could money as well!

FINAL THOUGHTS: Savings allow individuals to squirrel away money while earning modest, low-risk returns. Due to the large variety of savings vehicles, a little research can go a long way in determining which will work hardest for you. And, since interest rates are constantly changing, it is important to do your homework before committing your money to a particular savings account, helping you make the most of your savings. No matter what you choose, saving is essential to financial readiness and utilizing the power of compounding interest can help you reach your financial goals more quickly!

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15 thoughts on “5 Best Places to Put Your Savings”

  1. I believe it’s best to put resources into what you know. A great many people think the share trading system is the main spot to contribute, yet that is a long way from reality. A lot of individuals have constructed riches by putting resources into Estate, company shares etc

  2. I am in full agreement of every piece of advice that is listed here. Saving is very important. Many people invest in different items such as bonds and treasury notes, but there is one item left out here that I must bring up. Many people do not consider it. First I must tell a short story.

    I was an avid coin collector and would “wheel and deal” at auctions and on eBay. In 2007, I could have bought 1 ounce gold coins in nice shape at $400 apiece. I just skipped it. Long story/short, today gold is $1273 an ounce. Hmmm, I missed out.

    Precious metals can be a great investment. Look into gold, silver, platinum, palladium, and rhodium. It can be worthwhile.

    1. I love coins, jewelry and silver myself.

      Paper assets are just one form of investing, yet that’s the only method that most people use.

      I like owning something that I can touch and that is very liquid.

  3. An easy way to start, if this whole budget/saving money thing is daunting, is to do the weekly save….week 1, save 1 dollar, week 2, save 2 dollars, and so on, until the 52nd week, you save 52 dollars. That is the most you will have to set aside, and you\’ll have over a thousand dollars by the end of the year! That\’s a pretty easy way to start saving, and then move on to other ways that are more serious.

  4. The bottom line is that you need to save. There are a million ways to skin a cat. Stick with what you know, come up with a plan and stay disciplined. Save money every month.

  5. I think it’s best to invest in what you know. Most people think the stock market is the only place to invest, but that is far from the truth. Plenty of people have built wealth by investing in businesses, real estate, antiques, gold and much more.

  6. Ahhhhh…saving! Such an important endeavor, yet illusive for many, for it is so easy for our income to trickle through our fingers before we realize it is gone. I find that having goals, in writing, is a great catalyst to actually putting the money away. I also recommend devising a realistic budget, and STICKING TO IT! The amount allotted for saving should be for emergencies, always, but also consider long-term goals as well. If budgets allow, a short-term goal is certainly allowable. There is nothing wrong with wanting that new big-screen or a vacation, just be realistic. If you are unfamiliar with some of the options Justin describes in his article, do some research or make an appointment with a financial planner. The military provides some excellent resources, so take advantage of them.

    1. Making a written goal to save money is a great idea, Amy. And your point about making a budget and sticking to it is just as important. Saving will not by happen by accident. It requires vision and discipline, something most people do not have.

      Thanks for the comment.

      Chuck

  7. Make deposits into your savings account early and often! There a half a billion things that will come up in the future and financial savings will literally manifest itself as freedom. If you have money saved up you can easily take care of an otherwise devastating expense. Every time I think about my savings account it motivates me to reassess my monthly bills. What do I want and what can I live without? Trimming your budget of excess fat can be extremely rewarding.

    1. What do I want and what can I live without? Those are two questions that every American Soldier and citizen should ask themselves on a daily basis. In reality, we don’t NEED much. But most people want everything. If you have everything you want right now, you probably won’t have everything you need when you get older. Please make a note of that.

  8. All of your ideas of where to put money for savings Justin are great. I’d like to chime in a few more ideas. Obviously, the method you choose will be based upon your comfort zone and expertise. In addition to the traditional route, you could also choose stocks, antiques, artwork, old coins, businesses, real estate, etc. While I do believe in having an emergency fund, it can be a good idea to diversify outside of paper assets too.

    Just my thoughts.
    Chuck

    1. Good alternatives, Chuck. Annuities can also be a good investment for long term planning; however, that can be an expensive option for some types, so careful research beforehand is advised. It never hurts to talk to a financial planner.

      The military offers some wonderful resources, such as the Military Officers Association of America (MOAA) and Military OneSource, in partnership with the National Foundation for Credit Counseling (NFCC). The Joint Services has a website that can connect members of the military with other resources as well. Visit http://www.jointservicessupport.org/communityforces.

      1. Good points, Amy.

        The bottom line is that everyone needs to save money for the future. Pay yourself first. There are a million ways and places to save. Find a method that works for you and stick with it. As Nike says, “Just do it!”

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