Besides a Savings Account, Where Is the Safest Place to Keep My Money? (2024)

Savings accounts are a safe place to keep your money because all deposits made by consumers are guaranteed by the Federal Deposit Insurance Corporation (FDIC) for bank accounts or the National Credit Union Administration (NCUA) for credit union accounts. Deposit insurance covers $250,000 per depositor, per institution, and per account ownership category. As a result, most people don't have to worry about losing their deposits if their bank or credit union becomes insolvent. If you've come into some extra money through an inheritance, a bonus at work, or made a profit selling your house, perhaps you are considering other safe options for stashing your cash, in addition to a savings account.

Safe Places to Save Your Money

Both certificates of deposit (CDs) and U.S. government securities are relatively safe places to invest your money. Both of these options will offer you some return on your money, but if your first priority is keeping your money safe, you'll likely want to prioritize a high degree of liquidity and relatively low fees above high returns.

Key Takeaways

  • Savings accounts are a safe place to keep your money because all deposits made by consumers are guaranteed by the FDIC for bank accounts or the NCUA for credit union accounts.
  • Deposit insurance for savings accounts covers $250,000 per depositor, per institution, and per account ownership category.
  • Certificates of deposit (CDs) issued by banks and credit unions also carry deposit insurance.
  • U.S. government securities–such as Treasury notes, bills, and bonds–have historically been considered extremely safe because the U.S. government has never defaulted on its debt.

Certificate of Deposit (CD)

Certificates of deposit (CDs) issued by banks and credit unions also carry deposit insurance. The main difference between a savings account and a CD is that a CD requires you to lock up your investment for a specified period of time, from several months to several years. CDs pay a slightly higher interest rate than savings accounts. Under typical market conditions, CDs with longer maturities pay interest at higher rates than CDs with shorter maturities. The catch is that if you want access to your money before the CD matures, you'll pay a penalty. The penalty varies depending on the issuing institution's policies but it is typically several months' worth of interest.

One strategy to further grow your earnings is called CD laddering. With CD laddering, a person may choose to open several CDs with different maturities. This strategy may offer you greater flexibility and less risk than opening one CD (with one maturity date). Having both short- and long-term CDs can also allow you to take advantage of higher interest rates without also taking on too much risk (while also having the flexibility of taking advantage of higher rates in the future).

U.S. Government Securities

The federal government offers three categories offixed-income securitiesto consumers and investors. U.S. government securities–such as Treasury notes, bills, and bonds–have historically been considered extremely safe because the U.S. government has never defaulted on its debt. Like CDs, Treasury securities typically pay interest at higher rates than savings accounts do, although it depends on the security's duration.

U.S. Treasury Bills

U.S. Treasury bills, also referred to as T-bills, are federal, short-term debt obligationswith a maturity of one year or less. The longer the maturity, the more interest the investor earns. Investors can purchase T-bills through the secondary market in a variety of different ways, such as through a broker or investment bank, or at auction on theTreasuryDirect website.

U.S. Treasury Bonds

U.S. Treasury bonds, also referred to as T-bonds, take the longest to mature ofthe three types of government-issued securities. They also pay the highest interest rates of the three types of government securities. They are offered to investors in a term of 20 or 30 years to maturity.

Investors can purchase T-bonds at monthly online auctions held directly by the U.S. Treasury; they are sold in multiples of $100. Purchasers of T-bondsreceive a fixed-interest paymentevery six months.

U.S. Treasury Notes

U.S. Treasury notes, also referred to as T-notes, are similar to T-bonds. The difference is that T-notes are offered in a wide range of terms (from two years to no longer than 10 years). While T-notes do not generate as high of a yield as T-bonds, they also generate a payment for investors twice a year (or every six months).

For all U.S. government securities, if you sell a security before it matures, you'll lose money, so it's important for investors to consider their investing timelines carefully before buying.

Besides a Savings Account, Where Is the Safest Place to Keep My Money? (1)

Advisor Insight

Mark Struthers, CFA, CFP®
Sona Financial, LLC, Minneapolis, MN

"Safe" is often a misused term. Most consider U.S. government treasuries as safe, because if held to maturity, they have a guaranteed return of principal. What is often missed is that inflation can erode the purchasing power of that income stream and/or principal. Also, if you buy open-end bond mutual funds, you cannot hold them to maturity and you cannot ensure the return of principal. Depending on your age and intention, if you have a low risk tolerance and are looking for low-cost, transparent options, then I-Bonds and Treasury Inflation-Protected Securities (TIPs) are great options. If you own them individually, they can be held to maturity and the government backs the return of principal. Plus, their values/payments are adjusted for inflation.

Besides a Savings Account, Where Is the Safest Place to Keep My Money? (2024)

FAQs

Besides a Savings Account, Where Is the Safest Place to Keep My Money? ›

Certificate of deposit (CD)

What is the most secure place to keep money? ›

Generally, the safest places to save money include a savings account, certificate of deposit (CD) or government securities like treasury bonds and bills. Understanding your savings and investment options can help you decide the best place to park your savings.

Where is the safest place to keep cash besides bank? ›

U.S. government securities–such as Treasury notes, bills, and bonds–have historically been considered extremely safe because the U.S. government has never defaulted on its debt. Like CDs, Treasury securities typically pay interest at higher rates than savings accounts do, although it depends on the security's duration.

Where is the safest place to put your money right now? ›

What are the safest types of investments? U.S. Treasury securities, money market mutual funds and high-yield savings accounts are considered by most experts to be the safest types of investments available.

What is the best alternative to a savings account? ›

  1. Higher-Yield Money Market Accounts. One of the simplest alternatives to depositing money in a traditional passbook savings account is to obtain a money market account. ...
  2. Certificates of Deposit. ...
  3. Credit Unions and Online Banks. ...
  4. High-Yield Checking Accounts. ...
  5. Peer-to-Peer (P2P) Lending Services.

Where do millionaires keep their money safe? ›

Cash equivalents are financial instruments that are almost as liquid as cash and are popular investments for millionaires. Examples of cash equivalents are money market mutual funds, certificates of deposit, commercial paper and Treasury bills. Some millionaires keep their cash in Treasury bills.

Where do millionaires keep their money in banks? ›

Millionaires also have zero-balance accounts with private banks. They leave their money in cash and cash equivalents and they write checks on their zero-balance account. At the end of the business day, the private bank, as custodian of their various accounts, sells off enough liquid assets to settle up for that day.

Where is a better place to put your money than the bank? ›

Let's look at 10 better places to put your money than a checking account.
  • Paying off debt. ...
  • High-yield savings account. ...
  • 401(k) contributions. ...
  • Traditional IRA. ...
  • Roth IRA. ...
  • Brokerage account. ...
  • Certificate of deposit (CD) ...
  • Money market account.
Mar 18, 2024

Where is the best place to put your money besides a bank? ›

Money market account

A money market account can be a safe place to park extra cash and earn a higher yield than from a traditional savings account. Money market accounts are like savings accounts, but they often pay more interest and may offer a limited number of checks and debit card transactions per month.

What is the best way to keep cash at home? ›

That being said, the following detailed tips are worthwhile considerations for those who want to best protect their at-home cash stash:
  1. Select a Secure Location. ...
  2. Use Tamper-Evident Bags. ...
  3. Be Discreet with Your Storage. ...
  4. Place Cash in a Liberty Cool Pocket. ...
  5. Use a Dehumidifier. ...
  6. Place Cash in a Waterproof Container.
Sep 19, 2023

What banks are least likely to fail? ›

Summary: Safest Banks In The U.S. Of May 2024
BankForbes Advisor RatingLearn More
Chase Bank5.0Learn More Read Our Full Review
Bank of America4.2
Wells Fargo Bank4.0Learn More Read Our Full Review
Citi®4.0
1 more row
5 days ago

How to protect your money from economic collapse? ›

Growing your savings, investing strategically, and managing your debts can help you stay prepared for unexpected events.
  1. Reassess your budget every month. ...
  2. Contribute more toward your emergency fund. ...
  3. Focus on paying off high-interest debt accounts. ...
  4. Keep up with your usual contributions. ...
  5. Evaluate your investment choices.
Feb 22, 2024

How to protect your money from a bank collapse? ›

Ensure Your Bank Is Insured

If a bank or credit union collapses, each depositor is covered for up to $250,000. If your bank or credit union isn't FDIC- or NCUA-insured, however, you won't have that guarantee, so make sure your funds are at an institution covered by deposit insurance.

What are 3 cons to using a savings account? ›

There are also a few potential downsides to savings accounts.
  • Interest Rates Can Vary. ...
  • May Have Minimum Balance Requirements. ...
  • May Charge Fees. ...
  • Interest Is Taxable.
Sep 11, 2023

What is the biggest disadvantage to savings accounts? ›

Among the disadvantages of savings accounts:
  • Interest rates are variable, not fixed.
  • Inflation might erode the value of your savings.
  • Some financial institutions require a minimum balance to earn the highest interest rate.
  • Some accounts might charge fees.
Jun 27, 2023

What is a downside of using a savings account instead of a checking account? ›

With savings accounts, funds are less accessible, since these accounts are made to store money for financial goals. Checks can't be written against them, and you're generally limited to six free withdrawals or transfers a month from the account.

Where is the safest place to put $100,000? ›

Government bonds (aka "Treasurys") are generally considered the safest investments because they're backed by the full faith and credit of the U.S. government. Other types of bonds include corporate bonds and municipal bonds (earnings on the latter are exempt from federal taxes).

Where is the smartest place to keep your money? ›

Savings, money market, CD and rewards checking accounts are among the safest places for your money, as long as your bank or credit union is insured by the Federal Deposit Insurance Corp. or the National Credit Union Administration.

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