Financial well-being March 16, 2023 By
Sometimes boring, but always growing.
We see the flashy business news headlines about the growth of tech companies and the "overnight billionaires" making money in Bitcoin and other fast-moving investments. It seems glamorous... until it's not. Right now, many tech investors are looking at their portfolios and wondering, "What happened?"
When the stock market is turbulent, where should we put our money to ensure safe and consistent growth? Well, the answer can be found on Main Street rather than Wall Street.
Your local community bank has some options that keep your money growing and also keep it protected with coverage from the FDIC. Many American consumers keep funds in accounts like Certificates of Deposit (CDs), Money Market Accounts (MMAs), and Savings Accounts, so you are probably already familiar with some of the options available. But a refresher on how each of these accounts operates can be helpful.
Tried and true, a Savings Account is often the first account young customers open. As a youngster you may have used a Savings Account to sock away your allowance or store the birthday money you received from your grandparents. As adults, many consumers keep a Savings balance for "rainy day" money to cover unexpected expenses, or as a place to build a balance for big ticket purchases like a car or a vacation. These accounts earn interest and are a nice place to keep money that you don't need for daily expenses, but may need to access.
Money Market Accounts (MMA)
A lot like a Savings Account, Money Market Accounts are a place to keep reserve funds. MMAs offer customers higher interest rates that help money grow faster than in a typical Savings Account. Along with the better interest earnings, MMAs also offer the same FDIC coverage that all bank products carry. These accounts usually require higher opening balances in order to earn the higher interest, but also offer easy access to funds by writing a check, transferring funds online, withdrawing cash at a bank location, using a debit card, etc. There are limits to the number of transactions that can be made in a statement cycle. In summary, "growth and access" are the main benefits that come with an MMA.
Certificates of Deposit (CD)
Many customers like Certificates of Deposit because they earn a guaranteed rate of return for the life of the CD. CDs often offer interest rates higher than standard Savings Accounts and are held for fixed terms. Terms that can be as short as a few months, or sometimes as long as many years. It is up to the customer to determine how long they want to lock up their cash. Because CDs offer fixed rates and fixed terms, there are penalties if an early withdrawal is made before the end of the term. For customers who are looking for a guaranteed rate but don't need immediate access to a cash reserve, a CD may be a good option.
When the financial world gets turbulent and the stock market can't find a direction, it's nice to have a place where your money can keep growing in accounts secured by coverage from the Federal Government.
If you want to learn more about these accounts, your local First United bankers can help you review your options. Visit our Locations page to find a nearby Community Bank.