Where to put savings for short-term goals.
When you’re saving for retirement, it’s all about the long-term view. That usually means investing in a diversified portfolio and leaving your money in the market for many years. However, retirement isn’t the only thing you’re saving for. You may be saving for college, a down payment on a house, or an emergency fund.
So the question is: Where can you put your cash to earn you as much as possible these for savers. Here are a few ideas for your money if you’re saving for short-term or intermediate-term goals.
Short-Term Savings Goals
Let’s say you’re saving for a purchase in the next three years, like a house, car, or new computer. You might be tempted to put your money into a riskier investment vehicle to boost your savings. But what if that investment loses money. Suddenly, your goal of buying a new car is delayed or ended altogether.
If you need money in the short term, it should be in a cash savings account. But you don’t need to pick any old savings account. Shop around for the best interest rate possible. Consider credit unions as they often have higher rates of return on cash savings accounts.
Intermediate-Term Savings Goals
If you’re saving for a goal three-to-five years down the line, you generally want to have your money in a mix of a high-yield savings account, share certificates, or certificates of deposit. This allows you to maximize gains with minimal risk.
When you’re saving for an intermediate goal, you still want to have the mindset of protecting — not growing — your money. If you go with bonds, look for shorter-duration bonds that are less affected by fluctuating interest rates. Take your time and make a plan that works for you. The right savings mix will put you on track to meet your goal.
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