Figuring out the best methods of saving money towards retirement or life goals can easily seem like a maze of confusion; with money managers around every corner and so many different types of investment plans available. It doesn’t have to be so confusing though when you know what questions to ask, and the basics about savings accounts. Here are a few basics to get you started on your path to savings.
Types of Basic Savings and Retirement Accounts
When looking for a simple savings or a retirement investment account there are a few popular accounts that are safer than others. Some of these are:
- Certificate of Deposit Accounts – CD’s are one of the more heard of savings type accounts. These are a higher interested paying account than a traditional savings account and come in a variety of deposit requirements, maturity durations, and interest rates. Typically this type of account is for six months to a year, although some may be five or ten years to mature. The longer your money is tied up, the higher your interest return will be. Certificate of Deposits do not allow you access to your deposited funds. That is the reason they offer you a higher interest rate than standard savings accounts, and CD’s usually require a minimum opening deposit. You can make as many deposits as you like throughout the term of the CD to help increase your earnings.
- Money Market Accounts – This type of account is similar to a Certificate of Deposit; however with a Money Market account you have limited access to your funds for whatever reason you would like. Typically you are limited to between one and three withdrawals per month without being penalized. This account is good for those who want to save at a little higher interest, but still want access in case of an emergency.
- IRA Account – An IRA is an Individual Retirement Account that allows you to invest in your retirement tax free. These have stiff penalties for early withdrawal and are intended as a retirement investment.
Who to Ask
When looking for a CD, Money Market, or IRA there are several options to turn to. There are many financial planning organizations or brokerage houses who should know these accounts inside and out; as well as brick and mortar banks, local credit unions, online banks, AARP and even the AAA has a retirement planning division.
Questions to Ask
- How long will my money be tied up?
- How secure is this investment?
- What is the guaranteed interest or return rate?
- What is my initial deposit requirement?
- Are there any early withdrawal exceptions for term accounts?
- What’s the best option for my goals?
Choosing the right savings options for your future goals doesn’t have to be difficult as long as you know the basics, know which questions to ask, and know where to go for correct and accurate answers.