There’s a reason why savings account interest rates are so low these days. With the rising cost of operating a bank, other financial institutions have started offering more competitive interest rates to attract savers. The good news is that there are still several high-yield savings accounts available. These types of deposit accounts give you a fixed amount of money each month, which you can use for saving or investing. If you’re new to investing and don’t know where to start, this article is for you. We will discuss the best savings account to invest in, as well as some great reasons why you should do so instead of keeping your money locked up in a traditional savings account.
What is a Savings Account?
As the name suggests, a savings account is a type of deposit account that allows you to make regular deposits and earn interest. If you have $1,000 sitting in a savings account, you’ll receive a $15 monthly interest rate on that money. However, if you put that money into a high-yield savings account, you can earn anywhere between $25 and $100 per month. These types of accounts can be found at most banks and online savings accounts. Some high-yield savings account also allow you to make small deposits of less than $100 and receive a higher interest rate. Otherwise, you can lock your money up and only earn 0% interest on it. While there are many benefits to having a high-yield savings account, keep in mind that it’s better to keep your money in a savings account than in a high-yield savings account.
Types of Savings Accounts
There are many types of savings accounts. To help you choose the best one for your needs, we’ve outlined below the main types of savings account available to Canadians. – Regular savings account: Regular savings accounts are ideal for those who want to keep their money safely in a bank account. You can make regular, small deposits and withdraw that money whenever you need it.
- High-interest savings account: High-interest savings accounts are meant for those who want to earn higher interest rates on their money. You can make larger deposits with these accounts, and they often offer higher interest rates than regular savings accounts.
- Money market account: A money market account is a type of savings account that’s meant for someone who can bear risk. These accounts offer higher interest rates than high-interest savings accounts, but they’re higher-risk.
- Savings account: A normal savings account is a low-risk option with average interest rates.
- Bond Mutual Fund: A bond mutual fund is a higher-risk investment option with higher interest rates. But they’re also a higher-return investment option with a higher risk of losing money.
Best Savings Account for Investing
A savings account is great for making monthly deposits and earning interest. But when it comes to investing, there are a few high-yield savings account that stand out. We’ll discuss the best savings account for investing in this article. Since you can’t open a tax-free savings account at a bank, this option is only available at an online broker. The best savings account for investors is Tangerine’s Rate Saver account. Unlike regular savings accounts, this account offers a flat rate of 1.05% interest. This is a great rate to earn on your money, especially if you’re investing it in a high-yield savings account. Another reason why this is the best savings account for investing is because of their 2% Holiday Club account. This gives you $5 for every $1 you deposit for 12 months. This is a great way to get started off with minimal effort.
Registered Retirement and Trust Account (RRTA)
Another high-yield savings account that’s worth looking into is a RRTA . You can’t open a RRTA directly at a bank or credit union, but they’re available at online brokers. When you open a RRTA online, you get access to a limited menu of high-yield savings account. RRTA are similar to RRIFs. With these types of accounts, you can lock up your money in a tax-free account and receive a guaranteed minimum rate of return of 6%. Unlike regular savings accounts, RRTA let you make whole-life insurance (WLLI) premiums as a deposit. A WLLI is the money paid by your employer when you first start working.
Registered Education Saving Fund (RESF)
A RRF is another high-yield savings account that’s worth looking into. Like a RRTA, these accounts are only available at online brokers. The main difference between a RRTA and a RESF is that a RRTA lets you lock up your money in a tax-deferred retirement savings plan. You can then withdraw that money after you retire and pay lower taxes. The main advantage of a RRF is that it has a guaranteed minimum rate of return of 6%. Another advantage of a RRF is that you can make income tax withdrawals from it. With a RRTA, you can’t withdraw money from it until you’re 59.5 years old. With a RESF, you can withdraw money as soon as you become 59.5 years old.
Conclusion
A savings account is meant to help you save money and earn interest. But with low interest rates, you’re better off keeping your money in a regular savings account. If you’re looking for a high-yield savings account, you should consider the best savings account for investing. A high-interest savings account gives you the highest interest rates, but you have to take more risk with your money. A high-interest savings account is also worth considering. These accounts offer higher interest rates, but they’re more risky because they’re volatile. A final option is to open a RRTA. These accounts offer a guaranteed minimum rate of 6% interest, which is excellent for those who expect to live a long time.