“High yield savings account” is a specific product you can ask for at your credit union (or bank, if you’re a sucker).
A high yield savings account carries rules about how often you can move money in and out of it, but is still FDIC insured (in the US).
FDIC insurance means that if the market completely crashes and your credit union shuts down, the Federal Reserve prints new money to replace your deposits, your money is returned to you out of previously paid insurance deposits up to like $250,000.00.
It is widely believed to carry much lower risk, and so pays much lower interest, than average stock market performance of an index fund.
But if giving up 3% means sleeping well at night, it can be the best call. Everyone’s situation is different.
Edit: and high yield savings accounts historically perform much better than the average confused/frightened active investor who only buys during high markets and always sells during low markets.
FDIC insurance means that if the market completely crashes and your credit union shuts down, the Federal Reserve prints new money to replace your deposits, up to like $250,000.00.
This is not correct. The FDIC is self-funded through risk-based insurance premiums paid by the banks.
“High yield savings account” is a specific product you can ask for at your credit union (or bank, if you’re a sucker).
A high yield savings account carries rules about how often you can move money in and out of it, but is still FDIC insured (in the US).
FDIC insurance means that if the market completely crashes and your credit union shuts down,
the Federal Reserve prints new money to replace your deposits, your money is returned to you out of previously paid insurance deposits up to like $250,000.00.It is widely believed to carry much lower risk, and so pays much lower interest, than average stock market performance of an index fund.
But if giving up 3% means sleeping well at night, it can be the best call. Everyone’s situation is different.
Edit: and high yield savings accounts historically perform much better than the average confused/frightened active investor who only buys during high markets and always sells during low markets.
This is not correct. The FDIC is self-funded through risk-based insurance premiums paid by the banks.
https://www.fdic.gov/resources/deposit-insurance/deposit-insurance-fund
Good correction. Thanks.