Do you have extra money in savings? You can put your savings to work building passive income through interest. As you focus on creating long-term wealth with your savings, however, it’s important to keep your immediate financial needs in mind by staying current on all your bills, maintaining a flush emergency fund and paying off any outstanding high-interest debt.

Once those priorities are taken care of, here’s how you can put your cash savings to best use.

  1. High-Yield Savings Account

A high-yield savings account is an account that earns more interest than a traditional savings account while still keeping your cash liquid and accessible, rather than tied up in long-term investments. This makes them a suitable saving vehicle for your emergency fund and any other savings you may need to access quickly. How much better is a high-yield savings account than a standard account at growing your money? Rates vary, but in December 2021, annual percentage yields (APYs) for high-interest savings accounts was about 0.40%, while the national average APY for savings accounts was only 0.06%, according to the Federal Deposit Insurance Corporation (FDIC). This yield isn’t much, but it’s better than the practically negligible return you’d get with a standard account. High-yield savings accounts are insured by the FDIC.

  1. Tax-Advantaged Retirement Accounts

After bolstering your emergency fund to a comfortable number and paying down your debt, it’s a good idea to take a look at your retirement savings. A 401(k) or a traditional IRA allows you to make pretax investments towards retirement. If you don’t already have a retirement account through work, you can set up an IRA for yourself. Many employers match your contribution up to a certain percentage of your annual compensation. Before putting money elsewhere, plan to contribute at least enough to take full advantage of their match. If you’re already contributing that much, you can use your savings to contribute up to the maximum contribution limit toward other accounts.

  1. Certificate of Deposit

A certificate of deposit (CD) is a low-risk way to earn fixed interest on your savings. The issuing bank pays you interest on your investment in exchange for leaving your money in the account for a set amount of time. When you cash out your CD at the maturity date, you’ll receive your principal and accrued interest. Generally speaking, how much interest you earn on your CD depends on the size of the deposit and the length of the maturity term. In December 2021, the average rate for a CD with a one-year term was 0.13%, versus 0.28% for a five-year term CD. The major downside of a CD is that accessing your money early can lead to early withdrawal penalties, depending on the terms of the financial institution you’re working with. Like savings accounts, CDs are FDIC-insured.

  1. Money Market Account

A money market account is a type of savings account that typically earns higher interest than an ordinary savings account. Money market account returns are modest, with an average APY of 0.07% in December 2021. A major benefit of a money market account over some other similar savings vehicles is that money market accounts leave your money liquid, and some even offer bankers the ability to write checks. Some people use money market accounts to house money needed soon, such as for a holiday gift budget or a vacation fund. The FDIC insures money market accounts.

  1. Investments

After you’ve maxed out your retirement contributions, you might wish to explore other investments for growing your money. Investing in individual securities can require significant time and knowledge, which is why many investors choose to do so through a managed portfolio. If you’re new to investing or don’t have time to allocate to researching investment options, a broker, investment advisor or robo-advisor can help you manage your assets. Low-risk, steady growth assets like exchange-traded funds are one of the safer investments for building wealth slowly over time, but there are investment vehicles for all levels of risk tolerance with varying potential rewards:

Mutual Funds

Mutual funds are investment vehicles that combine the funds of many investors into a diverse pool of securities like stocks and bonds. Mutual funds can be a good choice for investors because they’re professionally managed and generally lower-risk due to their diversified nature. That said, mutual funds do carry some level of risk, especially those that consist of more volatile securities. Mutual funds can be traded once per day while the market is open.

Exchange-Traded Funds (ETFs)

ETFs are similar to mutual funds in that they enable investors to pool their money with that of other investors to receive returns on a number of securities in a diverse portfolio. Unlike mutual funds, ETF shares and slices of shares can be traded throughout the day like stocks, making them more liquid than mutual funds.

Index Funds

Index funds are a low-cost and accessible type of mutual fund or exchange-traded fund that tracks the performance of a basket of stocks and bonds in a specific segment of the financial market. Index funds shoot for long-term returns by investing passively in a given market index. Because of this passive investment strategy, index funds may not provide as much flexibility or ability to react to market trends as other funds.

Individual Stocks

Buying individual stocks allows investors to own shares of specific companies. Compared with other securities, stocks offer one of the greatest potentials for growth, meaning investing in them could lead to high returns over time. That said, a stock’s worth can always swing in the other direction, too, and this volatility makes them a risky and hard-to-manage asset. Putting too much of your investment portfolio into one company’s stock can mean devastating losses if the share price plummets and doesn’t recover. It’s important to balance this risk with more stable assets, and consider how far in the distance your savings goals are when determining whether to buy stocks. If you’re nearing retirement, it’s a safer move to put your savings in low-risk securities, like bonds. Younger investors may wish to allocate more of their savings to owning stocks since they have more time to ride out losses.


Bonds are low-risk securities issued by companies, states and governments. They’re useful for holding savings you’ll need for a predictable future expense, as well as for balancing out volatile investments. One downside of bonds is that if you need to access your money before the bond’s maturity, you could be penalized with a loss of earned interest.

Real Estate Investment Trusts

If you’re curious about investing in commercial real estate, such as rental properties, storage units, office buildings and retail stores, real estate investment trusts are a way to start investing in real estate without the need for large amounts of capital and without ever having to actually buy or manage real estate.


Cryptocurrency is a form of digital money that’s also become popular as a speculative asset used by investors. Cryptocurrency uses public ledger technology called blockchain to create secure virtual tokens of existing currency and track transactions. The most well-known cryptocurrency is Bitcoin, but there are many types available for purchase. Cryptocurrency’s value fluctuates widely and constantly—more so even than stocks—making it perhaps the riskiest investment vehicle out there. If you’re crypto-curious, do some research so that you understand what you’d be investing in. To minimize your risk, you may want to limit your investment to a small percentage of your portfolio and balance out your crypto investments with safer assets such as bonds.

  1. Treasury Savings Bonds

Treasury bills, notes and bonds are debt obligations issued by the U.S. Department of the Treasury, making them one of the safest places to invest your savings.

Like CDs, Treasury securities have different maturity lengths:

Put Your Money To Work For You

Investing your savings widely can help you build long-term wealth over time. As a part of your strategy for achieving and maintaining financial wellbeing, make it a habit to regularly monitor your credit report and credit score for free through Experian to see where you stand. Having good credit can help you save money by qualifying for better interest rates when you borrow, saving you money on payments. You can use these savings advantages to allocate even more funds to investments.

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