Want Higher Yields? Here’s Where to Stash Your Cash

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These options will not make you rich, but they will protect your money.  

If you’re a little nervous about parting with cash, it’s natural. After all, the last few years have been tough, and we’re all a little more aware of what can go wrong. However comforting it may feel to leave a chunk of cash in your bank account, chances are it’s not earning interest. And if it’s not earning interest, it’s not keeping up with inflation — or even helping to dampen inflation.

The trick is finding someplace safe where you can stash your money while still earning interest. Here are five ideas.

Treasury bills

Treasury bills (T-bills) won’t make you rich. In fact, the interest paid may not even keep up with inflation. However, they will allow you access to your money while also paying some interest. A T-bill is a short-term loan you make to the U.S. government that is backed by the Treasury Department.

You can buy a T-bill with a minimum purchase of $100. And you can choose from the following maturity dates: 4, 8, 13, 17, 26, or 52 weeks. While T-bills don’t precisely pay interest, they are designed to help you earn money on your investment.

Each T-bill has a face value. When you make the purchase, you pay less than face value. However, you get back the total face value when it reaches maturity. Your profit is the difference between what you paid for the T-bill and the face value.

While the FDIC and NCUA do not insure T-bills, they are backed by the full faith and credit of the U.S. government.

Certifications of deposit (CDs)

A certificate of deposit (CD) is like a savings account. The difference is, you promise to leave your deposit with a financial institution for a set period of time. For example, you may open a CD with a 6-month, 1-year, or 5-year maturity date. You are paid interest in exchange for allowing the financial institution to hold your money. The longer the term you choose, the higher the rate of interest you are paid.

CDs are fully insured against loss.

Money market fund

A money market fund is a type of mutual fund. Like a traditional mutual fund, the cash you invest is pooled with money from other people to invest in high-quality, low-risk investments. The fund is managed by professionals who invest in a range of holdings.

Not to be confused with a money market account, a money market fund is not federally insured.

Money market accounts (MMAs)

Banks and credit unions also offer traditional money market accounts (MMAs). If a savings and check account married and had a child, it would be an MMA. Like a savings account, your money earns interest. Like a checking account, you can use an MMA to make payments or withdraw cash up to six times a month.

People are drawn to MMAs because they typically pay a higher interest rate than a standard savings account. Funds deposited into an MMA are federally insured.

High-yield savings account

The primary difference between a traditional savings account and a high-yield savings account is that the high-yield savings account offers a higher interest rate. The rate you’ll earn is variable, meaning it will rise and fall depending on the Federal Reserve’s benchmark interest rate. Your money is fully insured.

Part of managing money means determining how much risk you’re willing to take. It also involves determining how much cash you want to keep on hand for emergencies. Each of these five suggestions offers a place to store that cash until it is needed.

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