Maximizing Your Savings: How Banks Can Help You Build Wealth

Hero Images / Getty Images/Hero Images

Commitment to Our Readers

GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.

20 Years
Helping You Live Richer

Reviewed
by Experts

Trusted by
Millions of Readers

Banks provide a wide range of accounts and financial services that allow Americans to conduct everyday transactions, get necessary loans like home mortgages and invest their money to generate long-term prosperity.

While not every bank is a match for every customer — and some charge fees that can drag down your returns — when properly used, banks can be an excellent vehicle for building wealth. Here are some of the ways that they can help.

High-Yield Savings Accounts

Banks have always been a place where customers can deposit their money and keep it safe in a savings account insured by the Federal Deposit Insurance Corporation.

However, with the rise of online banking, high-yield savings accounts have been dominating the banking landscape, offering yields many multiples higher than what traditional savings accounts pay. And while online banks are still the primary place to find high-yield savings accounts, which can pay yields of 5% or more in the current environment, traditional banks have taken notice, and many now offer their own. 

Investment Options

While high-yield savings accounts can be a great place to park short-term money, like emergency funds or the down payment for a new home, they’re not meant to build long-term wealth. This is especially true in a falling-rate environment, which we appear to be heading into in 2025. In these environments, the yields these accounts pay will actually decrease. Fortunately, most banks offer long-term investment options that are specifically designed to build lifelong wealth.

Banks vary in the types of investment options they offer, so you’ll have to shop around to find the one that best suits your needs. Some may simply offer certificates of deposit (CDs) or short-term bonds, while others may provide full-fledged investment services with a licensed financial representative.

These types of banks provide access to investments ranging from stocks and mutual funds to more exotic asset classes, such as commodities, options, cryptocurrencies and more. More and more banks are offering robo-advisory services these days, which charge very low fees and use algorithms to build portfolios of funds and/or exchange-traded funds (ETFs) that match an investor’s objectives and risk tolerance.

All of these investment options carry their own risk-reward profiles, and you’ll have to choose carefully to make the best choices in your portfolio. But even a simple S&P 500 index fund, for example, has historically returned about 10% per year, enough to double your money every seven years on average.

Home Mortgages

Wealth-building options at banks aren’t limited to deposit accounts and investments. Prudent investors can use certain types of loans to generate long-term wealth as well — specifically, home mortgages. 

Most larger banks, and even most credit unions, offer home mortgages to their customers. While a loan is a liability and may not seem like a way to build wealth, the truth is that owning a home has been a key generator of prosperity in American households since the end of World War II, Chris Herbert, managing director of the Joint Center for Housing Studies at Harvard University, told NPR. In fact, the Pew Research Center notes that the most valuable asset in most American households is an owned home.

As a result, having access to a home mortgage via a bank is one of the best ways for most Americans to build long-term wealth. 

Retirement Accounts

In addition to regular investment accounts, most banks offer retirement accounts in the form of both traditional and Roth IRAs. For investors who don’t have access to a corporate 401(k) plan, IRAs can be among the very best options for tax-advantaged retirement investing. This is due to their numerous tax breaks.

With a traditional IRA, most investors can deduct the amount of their contributions from their taxes. Investments grow tax-deferred until withdrawal, at which point they are subject to ordinary income tax.

With a Roth IRA, contributions are made on an after-tax basis, meaning investors cannot deduct them on their tax returns. However, money within the account grows tax-free, and qualified withdrawals — generally those made after age 59 1/2 — are also tax-free.

Both of these accounts offer investors a way to grow their portfolios over time without being dragged down by taxes along the way. 

Share This Article: