There’s a greater focus on investing as a means of growing wealth, but you should still be diverting some of your disposable income into an account that pays
high-yield savings rates. Many people don’t realize that there are benefits to maintaining and growing a savings account alongside an investment or retirement account. Here are a few ways that keeping a separate savings account will benefit you.
Invest Without Risk
A savings account that pays out a high rate of interest is a great way to grow your wealth safely. While your money will earn less than it would in a high risk/high growth investment portfolio, there’s no risk of loss in a savings account. This means you can earn interest safely over a longer period of time.
Keep Your Money Accessible
The primary reason to maintain a savings account is to keep your money accessible for an emergency. When your home’s water heater breaks or your car is totaled in an accident, you won’t want to withdraw from your retirement investment account. Instead, you can withdraw from your savings without having to worry about paying extra taxes and penalties.
Reduce Your Spending
When you have a percentage of your income deposited directly into an account that bears high-yield savings rates, you won’t miss that money. You’ll be forced to stick to your budget with the money that goes into your checking account, which will be deposited after contributions to your retirement and savings accounts have been made. This makes it easier for most people to save.
