When it comes to long-term investment and retirement strategies I have starting paying attention more to what I need to expect from myself and I’m actively taking steps towards my goal. I use Personal Capital to track my net worth, investments, and portfolio. This is also great for all the cheap people like me because this is absolutely free or at least the free option will due. It’s a gamble when it comes to short term savings. Interest rates are needed to be taken into consideration as lower rates mean you’re at a lower rate of return on your short term investment. Short term savings can have different meanings than to others, so my short term savings will probably be accessed within two years.

With the money needed to be needed relatively soon, I wouldn’t recommend being invested in the stock market because that is more for long term investments. So i’m going to go over what’s best short term savings here.

Checking account

I personally keep just enough in this account to pay all of my bills and daily expenses, then move the rest of the money into other accounts.

Pros

  • Money is easy to access with debit card availability
  • Low risk
  • You can have a set amount to keep in this account

Cons

  • Low-interest rate

Saving account

This is where I keep my emergency funds. It takes a couple of clicks to transfer the money into an account to be spent, but even those little steps make you think it through before making the transfer.

Pros

  • Low risk
  • Higher interest rate than a checking account
  • No debit card attached so harder to spend

Cons

  • There is a limit on transactions monthly
  • Transfers don’t always clear instantly and can have you waiting for a couple of days.

Certificate of deposit

It’s similar to a savings account, but there is usually a minimum investment amount and your money isn’t obtainable for a set amount of time. Penalties occur if you try to retrieve the money before those dates. With those stipulations being required your returns are higher than a savings account.

Pros

  • Low risk
  • Slightly higher interest rate

Cons

  • Minimum required investment
  • Penalties will occur if money is withdrawn before date
  • No easy access here

Savings bond

This is the safest return because you’re backing the U.S. government and are basically lending them money with minimum investments as low as $25.

Pros

  • Can be cashed in after twelve months, but there’s a three month penalty if done before the fifth year.
  • Low risk
  • Minimum investment of $25

Cons

  • 3-month penalty if cashed before 5 years.
  • Low return rate
  • Confusing to the average person

Money market account

It is basically a checking and savings account together and we can be hip and call it a hybrid. You have access to three to six checks monthly

Pros

  • Low risk
  • Ability to write a very few checks a month

Cons

  • Getting the lowest interest rate at times now
  • Limited transactions

When considering the best option when investing for your future, I would start with opening a free Personal Capital account so you can start tracking your spending, figure out your net worth, and build a tailored plan.