The Best Places to Store Your Business’ Savings
As a business owner, you likely have a short-term and long-term savings plan in place. If you run your own business, you likely want these savings to multiply as quickly as possible. One mistake business owners make is storing their savings in the California bank that they work with in a normal savings account. However, there are many different types of accounts that will offer a higher return on your investment.
Savings Accounts
Although savings accounts are federally insured by the FDIC and usually require a minimum investment, they are a beneficial tool to save money short-term. If you ever need access to your savings, keep them in a regular savings account will give you the ability to use this money quickly.
Money Market Deposit Accounts
Like a regular savings account, money market deposit accounts also require you to invest a minimum amount. Unlike savings accounts, a money market account only allows you to make anywhere between three to six transactions on a monthly basis. Even though transactions are limited, these accounts are also insured by the FDIC because they are offered through normal banks and individuals can access funds in these accounts fairly easily. However, because money market deposit accounts are easily accessible, their interest rate is slightly lower than alternative accounts for business banking.
High-Yield Bank Accounts
Do you have a regular bank account where money for your business’ regular expenses regularly is withdrawn? If so, you should consider investing in a high-yield bank account. Like traditional savings and checking accounts, you have easy access to your funds but they are stored at a much higher rate than a regular savings account. The downfall of high-yield accounts is that depending on which bank you go with, they may limit your ATM card usage or check writing privileges.
Certificates of Deposit
Certificates of deposit, also known as CDs, are typically offered through banks. When you invest in a CD, you agree to keep your money in the account for a specified amount of time; this can be anywhere from six to 60 months depending on the type of account. The advantages associated with CDs are that they are a low-risk investment and usually offer investors a high interest rate as opposed to other similar savings accounts. If you are attracted to the idea of a high interest rate, keep in mind that you cannot touch any money that you invest in the CD until the length of the agreed upon account expires. For example, if you invest $1,000 in a CD and it doesn’t mature for five years, than you cannot access this money until the five years is over.
Money Market Funds
You can go other places besides your bank for savings accounts options. Money market funds are offered by both brokerages and mutual fund suppliers. When you invest in a money market fund, you will find that your money is put in safe accounts such as government securities, bonds, and other low-risk investment types. Although your money will be invested in low-risk accounts, money market accounts are typically not FDIC insured.
If you want to multiply your business’ savings funds in a beneficial manner, consider investing in an account that is different from a traditional savings account.
Related Reading:
