Best Place To Save Money: Safe Options for Every Goal

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In today’s uncertain economy, finding the best place to save money is more important than ever. Whether you’re saving for a short-term goal or protecting your emergency fund, these options offer safety and steady growth.

Quick Take

• Best for short-term goals: High-yield savings accounts and money market accounts 
• Best for 1 to 3 years: Certificate of deposits (CDs) and Treasury securities
• Best for long-term growth: Stocks and real estate 

Best Places To Save Money by Goal and Risk Level

The best place to save money depends on how soon you’ll need access to your funds and how much risk you’re willing to take.

Best Short-Term Places To Save Money

Short-term savings should prioritize safety, liquidity and easy access to your cash.

High-Yield Savings Accounts

A high-yield savings account is an ideal option if you’re looking for immediate liquidity, a high annual percentage yield (APY) and an insured investment.

While traditional banks still pay mostly very low yields, online savings accounts have no fees and pay 10x as much interest, or even more. Yet they remain insured by the FDIC up to $250,000, and you can typically access your funds at any time via an ATM and a debit card.

Money Market Accounts

Money market accounts aren’t quite as common as they used to be, but many banks still offer them. The main appeal of this account is that it’s a hybrid savings and checking account.

Most money market accounts pay yields that equal or exceed those of a savings account, but they also offer check-writing capabilities.

High-Yield Checking Accounts

A high-yield checking account can be a strong option if you want everyday access to your money while still earning interest. Unlike traditional checking accounts that often pay little to no interest, high-yield checking accounts — typically offered by online banks and credit unions — provide higher APYs, often with no monthly fees.

CDs

CDs are another type of safe investment favored by conservative investors. CDs are issued by banks and generally come with fixed interest rates and maturity dates, although in some cases, those may be flexible. CDs carry the same FDIC insurance as savings accounts.

Safe Medium-Term Options

For goals a few years away, balancing modest growth with lower risk becomes more important.

U.S. Treasury Securities

U.S. Treasury securities are backed by the full faith and credit of the U.S government. This means that the government will never default on interest or principal payments of these securities.

As the government has cash reserves, taxing authority and the ability to issue new debt to pay off old debt continually, U.S. government securities are considered the safest in the world.

Insured Municipal Bonds

Municipal bonds are issued by cities, states and localities, typically to raise money for public works like infrastructure or schools. Most municipal bonds are assigned ratings by third-party and independent agencies.

Short-Term Bond Funds

A short-term bond fund is a fixed-income security that has a quick maturity date. The returns are generally better than a savings account, and this investment is safe with very little volatility. Maturity dates can be from one to five years. 

Higher-Risk, Longer-Term Growth Options

Long-term investing allows for more risk in exchange for higher potential returns over time.

Dividend Aristocrats

Dividend aristocrats are companies that have not only paid but have also raised their dividends for at least 25 consecutive years. This is only possible if a company has a relatively mature business with a consistent cash flow, meaning dividend aristocrats generally represent the most famous companies in the world.

Index Funds or ETFs

With an index fund, you don’t invest in individual companies, but instead you buy several stocks and bonds at once. With an exchange-traded fund (ETF), you hold a collection of stocks, bonds and other commodities, and the trades are structured like the stock market.

Workplace Retirement Plans

When you contribute to a retirement plan like a 401(k), not only do you get to contribute pre-tax money, but your assets also grow tax-deferred until you withdraw them. And with a 10% early withdrawal penalty that applies until you reach age 59½, you’ll be more inclined to keep your money invested, which is one of the keys to long-term investment success.

In most cases, your employer will match a portion of your contributions, which essentially amounts to free money for your retirement.

Real Estate

Unlike many other investments, real estate is a tangible asset. Unlike stocks or even government bonds, real estate is something you can touch and see. Combined with the inherent need of people to have someplace to live, real estate — when located in an attractive area — can offer good, long-term value.

However, real estate is riskier than many of the other options on this list due to its illiquidity, the long-term holding periods usually required, and the lack of insurance or guarantees. 

How To Choose the Right Place for Your Money

Deciding the right place for your money means gauging when you need your funds. Here’s a table that will give you some guidance: 

When To Talk to a Financial Advisor

A financial advisor may be helpful if your financial situation feels complicated or hard to manage alone.

• You started saving late
• You’re juggling multiple accounts
• You’ve had a major life change — wedding, divorce, children
• You need structured estate planning
• You feel overwhelmed 

Final Take: How To Start Saving in 3 Simple Steps

• To start saving, you should establish a financial baseline. How much do you need for expenses every month?
• Create a budget and then try to tackle high-interest debt. From there, build a safety net emergency savings account.
• Lastly, start investing for growth by setting up an individual retirement account (IRA), investing in stocks and ETFs, and contributing to your 401(k). 

John Csiszar contributed to the reporting for this article.

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