Where To Put Your Money When You’re Not Saving for Anything Specific, According to Experts

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Should you find yourself in the enviable position of having the ability to save money that doesn’t have an intended purpose, such as saving for a house, a car, retirement or a college fund, you may wonder what the best thing to do with your additional funds is. Financial experts offer 7 options that can make the most of your money.

Invest in the Stock Market Long Term

If you aren’t saving for anything specific, it may be a good idea to invest in the stock market for the long term, according to Mike Darkowski, a long-time investor and founder of Scrab.com, a stock market decision making tool.

“Contrary to what some laymen say, dealing with the stock market is not a stroke of luck, but actually relying on in-depth analysis,” he said. “For newbies to the stock market, the recommended option is to invest in ETFs, broad market, index investing — that is, passive investing, where the risk is lower, but so is the reward in terms of profits.”

On the other hand, he said, “for those with more time and knowledge, and who want to earn more than the index and the rest of the market, I strongly recommend stock picking backed by decent data examination.”

It is worth noting that we live in an era when stock investment is no longer reserved for a few lucky professionals — there are special tools on the market that democratize access to stock investment, automate the entire process and make investments free of cognitive errors.

Make Your Money Work for You

Open a Brokerage Account

Saving money in a brokerage account provides a vehicle to save for short, mid and long term goals, according to Jennifer Aube, a financial advisor and vice president of Wironen Aube Wealth Management.

“Using this type of account, you can save money using short term vehicles — money markets, CDs, bonds — for goals that may be one to three years out,” she said. For goals or unknown situations out a longer term, a diversified portfolio of stocks to bonds and other investments can be used in this type of account.

One of the benefits of a brokerage account is that it does not have the same restrictions regarding penalties for withdrawals before age 59.5 as many other account types have, she said, making it a great choice for unknown spending throughout the lifetime.

Build an Emergency Fund

Aviva Pinto, a financial advisor with Wealthspire Advisors, counsels her clients to have an emergency fund in case you lose your job and need funds to pay for rent/mortgage, food or utilities.

“I typically recommend keeping between three to six months’ worth of cash reserves on hand in an easily accessible place,” she explained, such as a checking account — if you can trust yourself not to spend it down — a high-yield savings account or in a money market mutual fund. “In the event of unforeseen home emergency expenses, you will have enough cash available to cover the basics (food, shelter, transportation).”

Invest in Certificates of Deposit (CDs)

Depending on your short- and long-term financial plans, plus whether you need to have liquid funds, Lori Gravitt, an assistant vice president and branch manager at Addition Financial Credit Union, suggested putting funds into a CD.

Make Your Money Work for You

Gravitt said, “Normally, Share CDs will be paying the best rate. Plus, in this environment, many credit unions and banks are offering great promotional rates for short-term CDs. The only downside is if the member or customer needs to access the funds, they will see a penalty if they access the CD before the end of the term. If they don’t want their funds locked up, I would recommend a savings/money market share.”

She also recommended meeting with a financial advisor.

Start a Freedom Fund

If you have surplus funds that you do not need immediately but want to ensure financial flexibility, consider creating a freedom fund, said Alec Kellzi, a licensed CPA with IRS Extension Online. “This is a separate savings account designed for unplanned opportunities or unexpected expenses,” he said. “It’s essentially a pool of money set aside for life’s surprises, such as career changes, investments or even a spontaneous adventure.”

Having a freedom fund ensures you’re prepared for unforeseen opportunities while safeguarding your financial stability. “This dedicated fund offers both growth potential and the freedom to use the money as needed down the road, providing a versatile solution for your savings.”

Open a Savings Account With a High Return

Regular savings accounts will help you save money, but not grow it. A high-yield savings account offers a rate that is significantly higher than typical savings accounts. According to Dave Ramsey, the average savings account offers a return of about 0.35%. High-yield savings accounts can offer 3% or higher. With interest rates currently high, it’s a great time to open one.

Take Advantage of an Employer-Funded Retirement Plan

If your company matches your retirement contributions, take advantage of the chance to effectively expand your retirement funds, Jenson urged. This is essentially free money being offered by your employer that you don’t want to miss out on — if you’re not doing anything with your money anyway, put it away for retirement and double it with that match.

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