Banking Products That Can Grow Your Money
Updated August 30, 2024 | Published August 12, 2024
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Categories:
- Banking
- Saving & Budgeting
Are you looking for ways to make your money work harder for you? While traditional savings accounts offer little to grow your money, several banking products can help you increase your wealth over time. Let’s explore some popular options:
Grow your money in these accounts
1. Money Market Accounts
Money market accounts offer a balance between savings and checking accounts. They typically provide higher interest rates than savings accounts, and you may be able to write checks or use a debit card at certain institutions. However, there might be limits on the number of transactions per month. At Webster First, there are no limits of withdrawals or deposits in-branch, which means you can enjoy flexibility while earning more on your savings.
2. Share Certificates or Certificates of Deposit (CDs)
You may have heard of CDs, but have you heard of credit unions’ comparable product, a Share Certificate? They function almost essentially the same way (learn the differences here). They are time deposits that offer a fixed rate for a specific term. The longer the term, generally the higher the interest rate. Share Certificates like those at Webster First are NCUA-insured, making them a relatively safe option for growing your money. However, you’ll face penalties for early withdrawal.
3. Individual Retirement Accounts (IRAs)
IRAs are investment accounts that offer tax advantages for retirement savings. There are two main types: Traditional IRAs and Roth IRAs. With a Traditional IRA, you contribute pre-tax dollars and pay taxes on withdrawals in retirement. With a Roth IRA, you contribute after-tax dollars and qualified withdrawals are tax-free.
Things to consider
- Risk Tolerance: Different products carry different levels of risk. Certificates are generally low-risk, while stocks and bonds involve more risk.
- Time Horizon: How long do you plan to keep your money invested? Short-term goals might suit high-yield savings accounts or money market accounts, while long-term goals could benefit from IRAs or investment accounts.
- Fees: Be aware of fees associated with different accounts, as these can eat into your returns. All Webster First accounts have $0 monthly maintenance fees.
- Diversification: Spreading your money across different investment types can help manage risk. If you open a Share Certificate or CD but need to keep some money flexible, you might consider having a Money Market too. There are also strategies to earn the highest yields while maintaining flexibility like certificate laddering.