Why I’m Moving Money Out of My High-Yield Savings Account

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High-yield savings accounts (HYSAs) are the best place for your emergency fund. Your deposits are safe and FDIC insured, you can tap them whenever you need to, and they’ll grow over time.Alert: highest cash back card we’ve seen now has 0% intro APR into 2026
This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!
Click here to read our full review for free and apply in just 2 minutes. But once your savings balance is big enough, you may want to start putting cash elsewhere. Recently, I moved some money out of my HYSA and into my Roth IRA.Here are three reasons why.1. I reached my emergency savings goalExperts often recommend keeping three to six months’ worth of living expenses in an emergency fund. This money acts as a safety net in case you lose your job or face an unexpected expense, like a car repair or a medical emergency.I recently checked in on my bank accounts and realized I had more than enough saved to handle emergencies. So I decided to take some cash out and put it to better use with higher growth potential.Want to earn more than nine times the national average APY? Check out our list of the best high-yield savings accounts and start earning more today.2. My Roth IRA is the best place for long-term savingsAbout 15% of my salary goes into my 401(k), including my employer match. After that, I put my disposable income into a Roth IRA. That way, I can invest the money in the stock market and enjoy years of tax-free growth.A Roth IRA is a special type of account for retirement savings. Any investments held in the account are exempt from capital gains tax and dividend tax. And because income tax is paid on the money the year you earn it, once you reach age 59 1/2, you can start withdrawing the funds tax free. These tax breaks could save you tens of thousands of dollars in retirement. (There are some caveats, and not everyone is eligible to contribute to a Roth IRA. Read up on the Roth IRA rules to learn more.)Personally, I invest most of my Roth IRA in an S&P 500 index fund. It’s an exchange-traded fund that allows me to invest in 500 of the biggest U.S. companies at once. I get instant diversification and much higher returns than I could ever earn from a savings account.Over the past five years alone, the S&P 500 Index has gained 87%. That’s about four times the amount the best savings accounts could have earned me.3. Savings accounts can lose value to inflationEven the best HYSAs may have interest rates that are lower than the rate of inflation. In 2022, consumer prices in the U.S. rose by 8% — far more than the APY of any savings account. Even in years with much lower inflation, the best savings accounts may barely come out ahead.While an HYSA is great for short-term needs, I don’t want all my money sitting in an account where it could lose spending power. Investing in the stock market allows me to achieve the growth I need to save for a happy retirement.An HYSA is still a must-have for meI’ll never empty my HYSA completely (I hope!). Savings accounts are still the best place for money you’ll need in the near future. I consider HYSAs essential for:Emergency funds: Keep enough money in the account to cover at least three to six months of expenses.Short-term goals: Use an HYSA for goals like saving for a vacation, wedding, or home renovation happening within the next year or two.Beyond that, most people should invest in higher-growth investments like stocks — preferably in an IRA — and hold them for years. It’s one of the best ways to set yourself up for long-term financial security.Alert: highest cash back card we’ve seen now has 0% intro APR into 2026
This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!
Click here to read our full review for free and apply in just 2 minutes. We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
Motley Fool Money does not cover all offers on the market. Editorial content from Motley Fool Money is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.”}]] [[{“value”:”

High-yield savings accounts (HYSAs) are the best place for your emergency fund. Your deposits are safe and FDIC insured, you can tap them whenever you need to, and they’ll grow over time.

Alert: highest cash back card we’ve seen now has 0% intro APR into 2026

This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!

Click here to read our full review for free and apply in just 2 minutes.

But once your savings balance is big enough, you may want to start putting cash elsewhere. Recently, I moved some money out of my HYSA and into my Roth IRA.

Here are three reasons why.

1. I reached my emergency savings goal

Experts often recommend keeping three to six months’ worth of living expenses in an emergency fund. This money acts as a safety net in case you lose your job or face an unexpected expense, like a car repair or a medical emergency.

I recently checked in on my bank accounts and realized I had more than enough saved to handle emergencies. So I decided to take some cash out and put it to better use with higher growth potential.

Want to earn more than nine times the national average APY? Check out our list of the best high-yield savings accounts and start earning more today.

2. My Roth IRA is the best place for long-term savings

About 15% of my salary goes into my 401(k), including my employer match. After that, I put my disposable income into a Roth IRA. That way, I can invest the money in the stock market and enjoy years of tax-free growth.

A Roth IRA is a special type of account for retirement savings. Any investments held in the account are exempt from capital gains tax and dividend tax. And because income tax is paid on the money the year you earn it, once you reach age 59 1/2, you can start withdrawing the funds tax free. These tax breaks could save you tens of thousands of dollars in retirement. (There are some caveats, and not everyone is eligible to contribute to a Roth IRA. Read up on the Roth IRA rules to learn more.)

Personally, I invest most of my Roth IRA in an S&P 500 index fund. It’s an exchange-traded fund that allows me to invest in 500 of the biggest U.S. companies at once. I get instant diversification and much higher returns than I could ever earn from a savings account.

Over the past five years alone, the S&P 500 Index has gained 87%. That’s about four times the amount the best savings accounts could have earned me.

3. Savings accounts can lose value to inflation

Even the best HYSAs may have interest rates that are lower than the rate of inflation. In 2022, consumer prices in the U.S. rose by 8% — far more than the APY of any savings account. Even in years with much lower inflation, the best savings accounts may barely come out ahead.

While an HYSA is great for short-term needs, I don’t want all my money sitting in an account where it could lose spending power. Investing in the stock market allows me to achieve the growth I need to save for a happy retirement.

An HYSA is still a must-have for me

I’ll never empty my HYSA completely (I hope!). Savings accounts are still the best place for money you’ll need in the near future. I consider HYSAs essential for:

• Emergency funds: Keep enough money in the account to cover at least three to six months of expenses.
• Short-term goals: Use an HYSA for goals like saving for a vacation, wedding, or home renovation happening within the next year or two.

Beyond that, most people should invest in higher-growth investments like stocks — preferably in an IRA — and hold them for years. It’s one of the best ways to set yourself up for long-term financial security.

Alert: highest cash back card we’ve seen now has 0% intro APR into 2026

This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!

Click here to read our full review for free and apply in just 2 minutes.

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
Motley Fool Money does not cover all offers on the market. Editorial content from Motley Fool Money is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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