High-Yield Savings Accounts pay a higher interest rate compared to regular savings accounts providing an advantage of higher returns. In contrast, the downside is these accounts often come with more restrictions, such as minimum balance requirements or the frequency of withdrawals that you’re allowed. These are considered safe investments with limited return potential.
Certificates of Deposit (CDs) offer higher interest rates than savings accounts but require you to leave your money untouched for a fixed period, which may not suit those needing frequent access to their cash. You can withdraw early for a penalty but it will defeat the purpose of the account. A CD is also considered a safe investment with limited return.
Money Market Accounts marry the benefits of savings and checking accounts, providing higher interest rates while allowing limited transactions. However, these accounts also typically require higher minimum balances. It’s considered a safe investment while giving you pretty free access to your funds.
Brokerage Accounts offer investment in various securities for potentially higher returns but come with a higher risk of losing your investment. Retirement Accounts like 401(k)s and IRAs offer tax advantages for long-term savings but have restrictions regarding when funds can be accessed. Typical brokerage accounts can be accessed at any time, though. Any brokerage account offers the most flexibility in investment options.