7 Best Places To Keep Your Money

If you’re looking for the safest place to keep your money, look no further than a savings account. Your money will be insured by the FDIC, and you’ll have access to it at any time via an online transfer or a debit/ATM card, depending on the policies of your bank. But beyond savings accounts, there are many places that you can keep your money safe — and still earn at least some type of return on it.

See: 3 Things You Must Do When Your Savings Reach $50,000

Places To Save and Grow Your Money

Where is the safest place to save money? Here are seven of the best to keep your money relatively safe and let it grow.

U.S. Government Securities

U.S. Government securities are backed by the “full faith and credit of the United States government.” Essentially, 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 continually issue new debt to pay off old debt, U.S. government securities are considered the safest in the world.

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As an added benefit, U.S. Treasury securities are exempt from state and local taxes.

Insured Municipal Bonds

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

But unlike corporate bonds, many municipal bonds are also insured. This means that in the typically unlikely event that a municipal bond were to default, an independent insurance agency would pay off the bond and make investors whole. This puts insured municipal bonds just a step below U.S. Government securities in terms of safety.

Certificates of Deposit

Certificates of deposit 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. Certificates of deposit carry the same FDIC insurance as savings accounts.

CDs often pay interest rates slightly above savings rates, but they come with the caveat that if you withdraw your money before they mature, you may get hit with an early withdrawal penalty.

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Money Market Account

Money market accounts aren’t quite as common as they used to be, but many banks still offer them. One of the main appeals of a money market account is that it’s something of a hybrid, combining the best features of a savings account and a checking account. Most money market accounts pay yields that equal or exceed that of a savings account, but they also offer check writing capabilities.

On top of that, money market accounts are also FDIC-insured, the same as savings accounts and CDs.

Dividend Aristocrats

If you’re willing to take the risk of owning individual stocks, starting with dividend aristocrats is a good option. Dividend aristocrats are companies that have not only paid but 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.

Although all stocks can be volatile, dividend aristocrats are generally more stable than the broader market, as customers tend to buy their well-known, name-brand products during any economic environment. The income component of their return — which by definition rises every year — provides a cushion for investors looking for a safe harbor investment.

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Your Workplace Retirement Plan

If you’re looking for a place to stash your money for the long run, one of your very best options is your workplace retirement plan.

When you contribute to a retirement plan like a 401(k), not only do you get to contribute pre-tax money, your assets grow tax-deferred until you withdraw them. And with a 10% early withdrawal penalty applying until you reach age 59 ½, 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.

Within the confines of a 401(k) plan, you can usually choose conservative investment options like short-term government bonds, if you would like. However, the best use of a 401(k) is generally for long-term growth, so you should speak with your financial advisor to make sure you are maximizing your retirement investments.

Real Estate

Real estate is one of the most illiquid of investments, and that’s important to understand before you stash your money there. It can take months or even years to sell a property, so you should never invest money you need in the short-term in real estate.

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

The Bottom Line

Investments inherently carry risk. This is the tradeoff for the potential reward that they offer. But risk is not spread equally across different investments. Where is the best place to hold money? For those that are particularly risk-averse, investments that have insurance or government guarantees, like CDs, insured municipal bonds, savings accounts and U.S. Treasuries are a good bet.

But for those willing to trade off some safety in exchange for the potential of higher return, investments like high-dividend stocks, S&P 500 index funds or even real estate may hold more interest. But before you take the plunge, be sure to consult with a financial advisor to chart out exactly where you stand on the risk/reward spectrum so you can devise an appropriate portfolio strategy.

FAQ

  • Where should I keep my money instead of a bank?
    • If your biggest concern is keeping your money safe, consider U.S. Government Securities they're considered some of the safest in the world.
    • If you have a little more risk tolerance, though, consider an investment in dividend aristocrats or real estate.
  • Where is the safest place to put your money in a depression?
    • Deposit accounts at banks – like savings accounts, checking accounts and certificates of deposit – are insured by the FDIC. You could also invest in assets like gold.
  • Where do millionaires keep their money?
    • Stocks, bonds, private equity funds and even cash are all ways millionaires will store their money. The wealthy keep their money in a variety of places – diversifying investments is an important part of smart investing.

Our in-house research team and on-site financial experts work together to create content that’s accurate, impartial, and up to date. We fact-check every single statistic, quote and fact using trusted primary resources to make sure the information we provide is correct. You can learn more about GOBankingRates’ processes and standards in our editorial policy.

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About the Author

After earning a B.A. in English with a Specialization in Business from UCLA, John Csiszar worked in the financial services industry as a registered representative for 18 years. Along the way, Csiszar earned both Certified Financial Planner and Registered Investment Adviser designations, in addition to being licensed as a life agent, while working for both a major Wall Street wirehouse and for his own investment advisory firm. During his time as an advisor, Csiszar managed over $100 million in client assets while providing individualized investment plans for hundreds of clients.
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