Losing money isn’t a good feeling for anyone, but stashing all your cash in a savings account to avoid the ups and downs of the stock market could actually guarantee a loss. Even high-yield savings accounts usually don’t offer annual percentage yields (APYs) that can beat inflation, so what you’re earning in interest probably won’t outpace the rise in cost-of-living expenses. Here are three better places to consider placing your savings if you hope to retire someday.
A retirement account is the best place for your savings because it offers tax breaks and you could potentially earn a lot more than you would with a savings account. You invest your retirement account funds just like money you place in a taxable brokerage account. This can lead to some volatility over the short term, but over the long term, you will likely see your investments increase in value. These investment earnings help grow your wealth without requiring you to set aside as much of your own money each month.