To start building your nest egg the right way, opening a savings account is a good option. Unlike investing in the stock market immediately after you’ve decided to save for the future that may result to losses without warnings, a savings account houses your money safely until you need access to it. Housing your funds in a bank account also lets you take advantage of the savings account rates.
If you are someone who prefers to see your saved money under your mattress though you always end up spending it little-by-little, when you set aside your money in a bank or other financial institutions, you will find it more difficult to splurge your extra cash. These financial investing vehicles offer a safe place to store your money for whatever reason. In return for trusting them to look after your money, you receive monetary gain in connection to the type of account you chose to invest your funds into.
Generally, the savings account rates are lower than what can be obtained in other types of investment platforms since there are lesser possibilities for losses because bank deposits are most of the time insured.
Guarantee
In May 2009 in the US, savings accounts are insured and protected by the Federal Deposit Insurance Corporation (FDIC) up to the amount of $250,000 per savings account. But unless the term is lengthened, this insurance amount will significantly drop down to $100,000 by the 1st of January 2014.
To be able to take advantage of the FDIC protection, it’s very important to check if your bank is FDIC protected. The great news is that you are allowed to set up multiple savings plans if your money exceeds the guarantee. Due to this protection, a savings account is considered as an asset that has high level of security.
Financial Institutions
To acquire the highest possible savings account or IRA rates of return, you can check the offerings of mutual savings banks, commercial savings banks, credit unions, and savings and loans companies in your area.