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August 28, 2023

Turbulent economic seas can leave you searching for the best port for your savings. Ensuring that your hard-earned money is sheltered from storms is more crucial now than ever. But finding a safe harbor can be daunting when experts disagree on whether slow financial growth or recovery is in the forecast. Fortunately, there are low-risk, guaranteed reward accounts to help you wait out the storm.

  1. Share Certificates – Similar to bank-issued certificates of deposit (CDs), share certificates are a type of savings account that provides a way to earn more on deposits. In exchange for leaving funds untouched for a set period, members receive a guaranteed rate of return linked to the deposit amount and term length. The account is insured by the National Credit Union Administration (NCUA) for up to $250,000.
  2. Money Market Accounts – Also federally insured by the NCUA, money market accounts provide greater flexibility for members needing access to their deposits several times a month. The account pays higher dividends than standard checking or savings accounts but often requires depositors to meet eligibility requirements to receive rates associated with the account.
  3. Christmas Club Accounts – Holiday savings accounts encourage members to plan for seasonal expenses while earning a competitive interest rate on deposits. With no minimum opening amount or monthly service fee, it’s possible to make the most of every dollar. Funds are automatically transferred to a regular checking or savings account in early fall, just in time for holiday spending. 
  4. Government Bonds – Backed by the U.S. government and state and local municipalities, these savings vehicles offer a fixed rate of return that varies by term length. Government-issued bonds may offer longer terms than other savings options. Details vary by the issuing party but they are considered a safe, low-risk way to grow your savings. 

Earning a guaranteed return on your deposits requires commitment. Each option requires individuals to refrain from withdrawing funds for a set period or risk penalty fees. Accounts that offer the highest returns typically require higher minimum deposits. The potential benefits could help you achieve your financial goals despite these restrictions.

Which Savings Option Is Right for Me?

It depends on your short- and long-term financial goals. Ask yourself at least three questions to help you discover which option best matches your needs.

  • When will I need to access the money? Gauging how soon you’ll need the money before opening the account could help you select the best term available.
  • Do I have an emergency fund I can access to cover unexpected expenses? Without one, you might need to access your savings and reduce the expected returns. 
  • How does this account fit in with my other investment goals? A balanced investment portfolio can help reduce losses. Focusing on low-risk savings options and ignoring higher-risk greater-reward investments could make it difficult to achieve long-term financial goals, such as saving for retirement.

Savers should be aware that dividend rates might be lower than the inflation rate. While such accounts might still pay more than traditional accounts, selecting one that’s at the same rate or higher than the inflation rate could ensure your money doesn’t lose its purchasing power. 

Let your financial goals help inform where you place your funds now and in years to come. Explore HawaiiUSA’s savings account options today!