The stock market is known for its fluctuations, which can be significant from year to year
In 2022, the S&P 500 experienced a 19.44% decline after a 26.89% increase in 2021. As of 2023, it has risen by approximately 14%
Many investors are turning to high-yield savings accounts and CDs due to their stability and potential to earn fixed rates of up to 7%
While "safe" accounts like savings accounts and CDs offer security, they may not yield the same long-term returns as diversified investments
Inflation can erode the real value of money kept in savings accounts or CDs, making it important to consider other investment options
In higher-interest rate environments, choosing savings accounts and CDs may lead to missed investment opportunities and financial setbacks
Keeping money locked in CDs for extended periods may result in lower returns compared to current market rates
Income earned from savings accounts and CDs is typically subject to income tax, while stock market gains may have more favorable tax treatment
Despite the risks, having cash savings, including high-yield accounts, is crucial for emergencies, short-term goals, and risk-free investments
A well-rounded investment portfolio often includes a mix of asset classes, including high-yield savings accounts and CDs, to balance risk and potential rewards