When considering short-term investments, it's vital to assess yield, guarantees, liquidity, and personal financial needs. High-yield options typically carry risk and might restrict access to funds. An FDIC-insured investment provides safety, such as CDs and online savings accounts, which balance decent yields with liquidity. While CDs offer higher yields, they often require large minimum deposits and impose penalties for early withdrawals. Online savings accounts provide a blend of daily access and competitive yields. Money market mutual funds offer liquidity but generally lower returns compared to online savings accounts.
As you sift among the various options for your short-term investments, keep these key items on your dashboard: yield, guarantees, liquidity and your individual situation.
CDs will typically offer the most compelling yields of all cash instruments, and they're also FDIC-insured. Yet there are a couple of caveats.
Online savings accounts offer daily liquidity, a decent yield, and FDIC protection, making them a suitable choice for those valuing accessibility.
Money market mutual funds offer daily liquidity but generally yield less than online savings accounts, though they provide convenience alongside long-term investments.
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