Moneydesks

How it works

• Open online in ~10 minutes, link your checking account, transfer money in and out any time.
• Rates are quoted as APY (annual percentage yield), already including compounding — compare APY to APY.
• Savings rates follow the Federal Reserve within weeks: when the Fed cuts, your rate drops; a CD or Treasury locks a rate in.

✓ Good for

• Emergency fund (3–6 months of essentials)
• Money you will need within a year
• Overflow while you decide what to do with it

✕ Not for

• Money you won't touch for 5+ years — inflation slowly wins
• Locking in a rate (use a CD or Treasury)

How it works

• Account (bank): insured, often a higher minimum, sometimes a debit card; rates like high-yield savings.
• Fund (brokerage): where uninvested cash sits at Fidelity, Schwab, Vanguard; aims to hold $1.00 per share; yield follows T-bills; part of the income is state-tax-free.

✓ Good for

• Cash you keep at a brokerage between investments (fund)
• Savings you want a debit card on (account)

✕ Not for

• Anyone who wants the simplest insured option — a high-yield savings account does the same job with less to understand

How it works

• Choose a term; the rate is locked until it ends ("matures").
• Early withdrawal usually costs 3–12 months of interest, so only commit money you are sure you won't need.
• A ladder — five CDs maturing 1, 2, 3, 4, 5 years out — gives long-term rates with money freeing up every year. Build one on the Rates page.

✓ Good for

• Money with a known date: a car in 2 years, tuition in 3
• Protecting today's rate if you think rates will fall

✕ Not for

• Emergency funds (you may need them tomorrow)
• Long-term growth (stocks and bonds, over decades)

How it works

• A bill is sold below face value and pays the full amount at the end — the difference is your interest.
• Notes and bonds pay interest every six months and return the principal at maturity.
• Buy at TreasuryDirect (non-competitive bid, you get the auction rate) or through any brokerage.
• Sell before maturity through a broker at the market price — easier than breaking a CD.

✓ Good for

• The same jobs as a CD, with state-tax savings and easier exit
• Cash you want at the very safest place

✕ Not for

• Anyone who needs the money on a specific day before maturity and can't stomach a price dip

How it works

• Buy any amount from $25 at TreasuryDirect; limit $10,000 per person per calendar year (the extra $5,000 via tax refund ended in 2025).
• No withdrawals in the first 12 months. Cash out before 5 years and you lose the last 3 months of interest; after 5 years, no penalty.
• Interest is federal-taxable only when you cash out and always exempt from state tax.
• EE bonds pay a low fixed rate but are guaranteed to double in 20 years (≈3.5%/yr) if held that long.

✓ Good for

• Emergency-fund overflow that should keep up with inflation
• Gifts to children (EE for far-off goals)

✕ Not for

• Money you might need within a year
• Amounts above $10,000 a year (see TIPS)

How it works

• 5-, 10- and 30-year terms at auction or on the secondary market.
• You are guaranteed at least the original principal at maturity even if prices fall.
• The quoted "real yield" is your return above inflation if held to maturity.

✓ Good for

• Retirement money that must keep pace with prices
• Amounts too large for I bonds

✕ Not for

• Taxable accounts if you dislike paying tax on inflation adjustments you haven't received in cash

How it works

• Municipal bonds: from states and cities; interest usually free of federal tax (and state tax if it is your state).
• Corporate bonds: "investment grade" (solid companies) or "high yield / junk" (shaky ones paying much more).
• Bond funds & ETFs: hundreds of bonds in one share, no maturity date, value floats, income monthly.
• The rule everyone trips on: rates up → existing bond prices down, and vice versa. Hold to maturity and it doesn't matter; hold a fund and you feel it.

✓ Good for

• The steady half of a long-term portfolio
• Tax-free income for high earners (munis)

✕ Not for

• Picking individual corporate bonds yourself — a professional's job
• Chasing "high yield" without accepting that it is high risk

How it works

• You earn from price growth and from dividends (a share of profits paid to owners).
• Buy through any brokerage; a broad index fund holds hundreds or thousands of companies in one purchase.
• Inside a 401(k) or IRA, growth isn't taxed every year (see Retirement accounts).

✓ Good for

• Money you won't need for 10+ years
• Retirement savings

✕ Not for

• Emergency funds or anything needed within 5 years
• Anyone who will sell in a panic after a 30% drop

How it works

• Instant diversification: one share owns a slice of every company in the index.
• Over 15 years about 90% of actively managed funds trail their index after fees — fees are the one thing you fully control.
• ETFs: no minimum, trade all day, slightly more tax-efficient. Mutual funds: sometimes $1,000–$3,000 minimums, automatic investing is easier.

✓ Good for

• Nearly everyone's long-term money
• The default inside a 401(k) (pick the target-date fund for your retirement year)

✕ Not for

• Money needed within 5 years

How it works

• 401(k): through your employer, from your paycheck. Contribute at least enough to get the full match.
• Traditional IRA/401(k): tax break now, taxed when withdrawn. Roth: no break now, no tax later.
• What you buy inside is up to you — a target-date fund is a fine one-line answer.
• Order most planners agree on: match → high-interest debt → emergency fund → Roth IRA → rest of 401(k) → taxable brokerage.

✓ Good for

• Every long-term saver
• Anyone whose employer offers a match

✕ Not for

• Money you need before ~59½ (penalties apply, with exceptions)

How it works

• Real estate: your home is a place to live that may appreciate; a rental is a part-time business with tenants and leverage.
• REITs: companies that own buildings and pay out most profits as dividends — real-estate exposure for one share; hold in an IRA (dividends taxed as ordinary income).
• Gold & commodities: no interest, no earnings; price is what the next buyer pays. A rough inflation hedge over decades, a wild ride in between.
• Crypto: extremely volatile, not insured, exchanges have failed (FTX 2022). Only money you can afford to lose entirely.
• Annuities: simple immediate annuities can make sense in retirement; complex variable/indexed ones often carry high fees and surrender charges.

✓ Good for

• REIT index fund: a 5–10% slice for diversification
• A simple income annuity for part of retirement spending

✕ Not for

• Your emergency fund or any money with a date
• "Guaranteed" high returns from anyone, anywhere