Low-risk Savings Vehicles May Help You Build Wealth

In the years following the Great Recession, many people pulled their money out of the stock market and began focusing on safer, less risky investments. If you’ve been seeking out ways to shield your wealth from market volatility, while still growing your assets, there are a number of bank products that may be in your best interest. Many people rely on these products not only to build sustainable wealth, but also to save for big-ticket purchases, such as a down payment on a home or their children’s education.

There are three primary savings vehicles on which you can rely to accrue more wealth.

Traditional savings accounts are beneficial for general savings, especially if you frequently make withdrawals or your balances fluctuate. However, if you’re trying to build up and maintain large balances, a high-yield account may work for your goals. These accounts carry higher interest rates than traditional accounts and may vary from bank to bank. In order to take advantage of these rates, however, you typically must maintain a minimum balance to avoid penalties. Similar to the interest rate, the minimum threshold may vary, ranging from several hundred dollars to a few thousand, depending on the institution.

If you have a lump sum you would like to deposit, and don’t plan on making withdrawals from your account for a certain number of years, a certificate of deposit can provide a low-risk savings vehicle for your needs. CDs require you to contribute a lump sum amount that is locked in for a pre-determined period of time. During this time – which can range from months to years – you will earn interest on the amount you deposited. There are several different types of accounts, ranging from traditional CDs to variable accounts. Generally, the longer a CD is held with a bank the higher the interest rate will be.

A  money market fund is related to a high interest earning fund that works similarly to a mutual funds. The amounts deposited are invested in low-risk vehicles, such as government t-bills, savings bonds, certificates of deposit, and other conservative financial instruments. This type of account can be beneficial to those seeking more liquidity than a CD offers, but who still want to take advantage of higher interest rates and more varied investments.

Compare the CD and money market options available at Zions Bank. If you’re not sure which type of account is right for you, consider speaking with a bank representative to discuss your options.