When it comes to personal bank accounts, you probably think of basic checking and savings options. But there are different kinds of accounts you should consider at certain points in your life. Yahoo! Finance banking experts share their favorite accounts for various goals you may have along the way:
Emergency Fund: Savings Account
“A savings account with a market-leading rate is a great place to keep your emergency savings,” said Ben McLaughlin, a banking expert and president of Raisin, an online savings platform. “Your money will be working hard for you while remaining easily accessible, should you need it.”
If you want to maximize your earnings, you should look into high-yield savings accounts, as they’ll pay you even more, with rates around 5%. Since the recommendation is to set aside anywhere from three to six months’ worth of living expenses in your emergency fund, you’ll want this decent chunk of change to earn you some interest instead of sitting around.
Building Extra Savings: Certificate of Deposit
“For those who have a more difficult time not touching their funds and want to save money for their future, they can open a certificate of deposit (CD), which puts the members’ funds into a share that they cannot touch until their maturity date comes,” said Zachery Calkins, a relationship advisor and former head bank teller at Addition Financial Credit Union. “These typically pay out higher dividend rates as well as a bonus perk for leaving the funds there.”
“CDs are great for building your savings with extra funds that you don’t need access to for the duration of the term,” McLaughlin said. “You can use CDs to help build your retirement savings or nest egg or to supplement savings for a big life event or purchase.”
Large Savings Goals With Liquid Funds: Money Market Account
“Money market accounts are also a great way to tuck money and earn dividends on those funds just by leaving the money in the account,” Calkins said. “You can even use these savings accounts as another set of overdraft protection to make sure you’re always covered in the event that something unexpected happens.”
You can look into money market accounts if you want access to your money as your funds grow. While a CD typically offers higher rates, the funds are more liquid with a money market account. As always, you should consult a banking professional to determine what account type is right for you and your financial situation.
Planning For Retirement: 401(k)
When it comes to planning for retirement and making sure you’re ready when the time is right, Calkins recommended having a 401(k). “The reason for this is these funds automatically come out of your paycheck every pay period to put aside some money for your retirement plan. Not to mention, a lot of companies will match up to a certain percentage of what you put in to help you further build your retirement funds,” he said.
It’s not a secret that many banking experts will recommend that you open up a 401(k) account and take advantage of any plans you have access to. This account will help you grow your retirement nest egg so that you’re prepared to exit the workforce someday.
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No matter where you are in your life, First Federal Bank has an account for you. Contact us today to find out how we can help you meet your financial goals.