Money Smarts Blog

It doesn’t matter if retirement is years away or just around the corner, it’s important to know that stocks and bonds shouldn’t be your sole saving strategy for retirement. Saving accounts, money market accounts and CDs are great investments that keep your money liquid.

What does it mean to keep your money liquid? Liquid assets are those that can easily and quickly be converted to cash through sale or withdrawal. Keeping some of your money liquid ensures it’s accessible when you need it.

Savings and money market accounts Savings accounts are the tried-and-true way to store your retirement funds in with easy access when you need it. Similarly, money market accounts (MMAs) are savings accounts that require a higher minimum balance to earn higher interest.

CDs CDs allow you to invest large amounts of money to accrue interest for a set amount of time – anywhere from a couple months to five years. While CDs typically make more money in the long run, early withdrawal of assets in CDs may result in penalty fees, so investors will often put money into a CD and forget about it until it matures.

Shop around Life is unpredictable and plans change, so don’t be afraid of penalty fees – depending on the terms they can be as little as $4 on a $10,000 CD. It all depends on your plan and the last quarter earnings of the institution. Often, penalties for withdrawal from a 401(k) or stock purchase plan can be much higher than CD withdrawals.

Be sure to do the calculations for what your early withdrawal fees may be—it might be worth it to jump ship for a better deal on CDs or to place your assets in a high-interest MMA.

You can set up savings accounts, money market accounts and CDs through IHMVCU to put you in the right place financially for your retirement.