High-interest savings accounts are becoming less prevalent, below are the 5 Best Alternatives to Savings Accounts.
Because of the low interest environment we are currently in , banks are struggling to make money. It is unlikely that the Federal Reserve will abruptly start to significantly increase interest rates, as they are usually cautious with changes in the interest rate they set. Considering this, saving money in traditional savings accounts may not be worth it. However, there are other ways to save your money.
5 Best Alternatives to Savings Accounts
Online Bank Accounts
I recently set up an online bank account with an online bank, as an alternatives to savings accounts.
I was looking for a bank that offered good rates of interest on deposits, had an easy application process, and for whom I could open an account without having to have a residence in the state of the bank. I found that this particular bank not only meets all of these criteria, but it also offers different options for accessing my account.
With the online banking service, I have access to my funds at any time. I can transfer money to other banks without having to go to a branch, schedule depositing or withdrawing funds, or monitor my account balances. I don’t have to worry about forgetting to make a transfer, or waiting when I want to make a transfer.
Money Market Accounts
In today’s economy, it can be tough to decide how to go about saving funds you may not need at the more moment but possibly in the near future you may need access these funds.
More so, when you have questions about retirement, what should you do to ensure a stable life after retirement? In order to get a better grasp of the possible investing approaches, the best place to start is understanding the financial instrument.
One such instrument is called a money market account. A money market account is a type of deposit account that pays a nominal interest rate. This type of account is a safe place for a person’s money because it’s insured up to a certain amount through the FDIC. As a result, it does not yield a high rate of return. But, this is not what makes it valuable.
A money market account is a type of savings account that offers better interest rates and features than a typical savings account.
For example, while the average interest rate for a savings account is around 0.07%, a money market account can offer an average interest rate of 0.9%. These higher rates and the ability to write checks up to six times per month make it easier for you to get your money when you need it. Money markets are a solid alternatives to saving accounts and are widely available at different financial institutions.
US Treasury Securities
US Treasury Securities represent a government debt obligation used to finance the US’s debt. The securities consist of many types of securities, such as Treasury bills, Treasury notes, Treasury bonds, and Treasury Inflation-Protected Securities, but the most common securities are Treasury bills.
The US government sells Treasury securities to finance its budget deficit when government receipts from taxation and other sources of revenue are not enough to cover the budget deficit.
The US is still the strongest country in the world, with one of the biggest economies.
The UST 10 year notes are yielding about 2%. The US Treasury is guaranteed by the US government, which is the strongest entity in the world. The US also has a lot of power because they can print money.
Although the US dollar has recently lost some of its value, it is still one of the most valuable currencies in the world.
Corporate bonds are used by companies to generate funds for their businesses. They are sold to investors such as banks and other companies who make a return on the interest payments.
This interest is paid at a predetermined interval and the bonds provide the company with a predictable and regular income stream to use for day-to-day operating expenses.
Interest rates on corporate bonds vary and they can be set at a fixed rate or determined by the current market conditions. Investors can purchase either a standard bond or a convertible bond. The standard bond has a fixed interest rate, while the convertible bond’s interest rate is connected to the performance of the company issuing the bond.
The interest rates of a corporate bond will reflect the risk of the company. A lower interest rate will come from a more stable company or country. The higher the interest rate, the riskier the company.
Dividend Aristocrats are stocks in the S&P 500 index that have increased their dividends for 25 years or more.
These stocks, which survive and thrive due to their ability to pay and increase dividends in a down and volatile market, represent a positive and productive investment strategy.
A well-diversified portfolio made up of Dividend Aristocrats, such as Johnson & Johnson (JNJ) and United Technologies (UTX), will provide investors with a strong sense of security in their investments. The long-term stability of stocks like these will help you sleep well at night
The above options are solid alternatives to savings accounts and should be considered in the current interest environment.