Choosing a high yield savings account as a place to invest money doesn’t seem very glamorous. The stock market, certificates of deposit, and other high yield investments have traditionally offered much higher returns than a simple savings account. With interest rates well below 2%, it is no surprise that high yield savings accounts are not the most popular type of investment.
Just because interest rates for these types of accounts are normally low, it doesn’t mean that they are necessarily bad investment options. There are plenty of reasons why a high yield savings account makes an excellent investment choice. With almost zero risk, stashing your cash in one of these investments can be a excellent way to earn passive income during this recession.
5 Reasons to Invest Your Money in a High Yield Savings Account
Even though interest rates tend to be lower than other investments, there are several reasons why investors should consider a high yield savings account.
- Simple Investments – Opening up a high yield savings account is a very simple process. Many accounts can be opened directly online in very little time. Purchasing stocks, certificates of deposit, government bonds, etc. tend to take much more time to setup an account. People who don’t want the hassle of spending a lot of time opening an account may find this a good investment option.
- Liquidity – Any investor who thinks they may need their money in the near term are much better off investing in a savings account. Certificates of deposit (CD) normally carry a penalty for any early withdrawal and putting your money in the stock market is not the most liquid of investments. Most savings accounts require a minimum balance be kept, with few other distractions.
- Less Maintenance – A high yield savings account requires very little ongoing maintenance, unlike a CD or stocks. Provided the interest rate in the account remains fixed, an investor does not need to worry about moving their money around. A CD on the other hand will require periodic maintenance once the account expires and the money needs to be reinvested. Stocks and other securities require countless hours of tracking and monitoring each investment.
- Low Minimum Deposit – Most high yield savings accounts require a much lower minimum deposit than a CD. In many cases, an account can be opened for well under $100 whereas a CD typically requires a couple hundred dollars to open an account. It is also difficult building a diversified investment portfolio of stocks with just a few hundred dollars. The low minimum deposit requirements make savings accounts a better choice for people with not a lot of money to initially invest.
- Frequent Deposits – Once a CD has been opened, the account holder must either wait for it to expire or open up a new account to add any new money. A high yield savings account, on the other hand can have frequent deposits made. This fact alone gives savings accounts an advantage, at least until the investor has enough capital raised to open another certificate of deposit.
Investing in a Recession
Earning 1% to 2% from a high yield savings account may not seem like a great investment for most people. As the global economy tries to recover from a recession and interest rates remain low, it is hard to find a good place to invest money. With the major stock markets trading with high volatility, a high yield investment like a savings account can be a safe haven for the cautious investor.
An important step in the process of becoming financially independent is building a solid set of diversified income streams. With its low risk and easy maintenance, a high yield savings account is a way to make your money work for you with a guaranteed return.
Related posts:
- 5 Tips for Investing in a High Yield CD
- Take Control of Your High Yield Investments
- Tips on How to Open a Small Business Checking Account
- 10 Reasons to Open a HubPages Account
- Earn Certificate of Deposit Interest Using Your Tax Return
Related posts brought to you by Yet Another Related Posts Plugin.
{ 9 trackbacks }