The No. 1 Mistake People Make With High-Yield Savings Accounts
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A high-yield savings account (HYSA) paying 4.00% APY sounds like a win. And for short-term cash, it is.
But if you're using it as your main wealth-building tool, you could be leaving hundreds of thousands on the table.
Let's say you've got $30,000 in savings. Over 30 years at 4%, that grows to around $97,000.
But if you invested that same amount and achieved a 10% average return, you'd end up with more than $500,000.
That's a $400,000 difference just from choosing the wrong place to store your cash.
Why overloading your HYSA is a rookie mistake
Personally, I love high-yield savings accounts. They're perfect for keeping emergency funds and short-term savings. And the best HYSAs right now still pay around 4.00% APY.
But, these accounts are built for safety, not growth.
To grow big wealth in life, money needs to be put away into long-term investments.
Historically, a basic stock market index fund like the S&P 500 has averaged around 10% annual returns. And while that might not seem like a huge amount, when you factor in compounding, growth starts to supercharge.
Here's how $30,000 could grow over time in a high-yield savings account versus being invested in the stock market.
| Years | Savings (4%) | Investing (10%) |
|---|---|---|
| 5 | $36,499 | $48,315 |
| 10 | $44,407 | $77,812 |
| 20 | $65,733 | $201,825 |
| 30 | $97,301 | $523,482 |
Yes, investing carries risk. The stock market can swing wildly, and it's scary thinking about losing your hard earned money.
But it's really only risky with a short time horizon. If you invest money and don't touch it for decades, the wins outnumber the losses and you'll benefit from average growth.
Basically, HYSAs are perfect for your short-term stash. But if you want your money to actually grow over time, you've gotta put it to work through investing.
Still need an HYSA for short-term money? The NexBank High-Yield Savings Account from Raisin has a 4.26% APY with a minimum of just $1 required to open. Read our full review here to see if it's right for you.
NexBank High-Yield Savings Account from Raisin
= Best
= Excellent
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= Best
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= Good
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= Poor- High APY
- No monthly service fee
- Unlimited ACH transfers
- FDIC insured
- Deposits and withdrawals can only be conducted via ACH transfer to/from an external bank account (limited to one linked external account)
- No checking account offered through Raisin
- No branch access; online only
With a 4.26% APY -- one of the highest rates on any account we recommend -- the NexBank High-Yield Savings Account from Raisin stands out for savers who want serious returns with minimal effort. You only need $1 to open, and FDIC insurance through NexBank keeps your money protected. Raisin's secure online platform gives you 24/7 access to funds, and there's even a cash bonus opportunity if you deposit at least $10,000 within 14 days -- with higher deposits earning bigger rewards, up to $1,000. It's a no-fuss, set-it-and-forget-it option for growing your savings at a top rate.
The smarter system: Money buckets
This is the system I personally use, and it works like a charm.
Instead of dumping all your cash into one account, try breaking it into three simple buckets.
Bucket 1: short-term cash (0–2 years)
This bucket is for money that you need access to anytime. Think for situations like:
- Emergency fund (three to six months of expenses)
- Travel and fun money
- Big upcoming bills (insurance, car repairs, etc.)
All this money should be kept in a high-yield savings account. It will be safe, accessible, and earn a top interest rate.
Bucket 2: mid-term money (2–5 years)
This is your "not now, but soon" money bucket. You don't need it this year or next, but you're also not waiting decades. Use it for things like:
- Saving for a house down payment
- Sabbatical savings
- Big move or life change that's coming up
A high-yield savings account works here, but you can also check out CDs or even conservative investments to squeeze out a bit more return.
Bucket 3: long-term wealth (5+ years)
This is where the magic happens. You're not touching this money anytime soon, so it's OK to invest a little more aggressively and let it grow. This bucket is saving for:
- Retirement
- College savings for kids
- General wealth-building goals
This is where brokerage accounts, IRAs, or 401(k)s come into play. Even if you're new to investing, there are plenty of beginner-friendly platforms that make it super easy.
Don't let your HYSA slow you down
The biggest mistake I see ambitious savers make is letting their savings account become a permanent parking lot.
If you've been stacking cash in one place because "it's safe" -- I totally get it. But please understand that comfort comes at a cost. Maybe a $400,000 cost if you're not careful.
Instead, treat your HYSA like a launch pad. Save just enough to feel secure and cover your short-term needs -- then let the rest go to work building your future.
Want to make your short-term cash work harder? Compare all the top high-yield accounts here to make sure you're getting a top APY.
Our Research Expert
Joel O’Leary is a full-time Personal Finance Writer at Motley Fool Money, covering credit cards, bank accounts, investing, mortgages, and other personal finance topics. Joel has been writing about personal finance since 2018, previously leading editorial content for the How To Money podcast and serving as a resident writer at Budgets Are Sexy. He bought his first rental property at age 18, funding the down payment with savings from his high school job at McDonald’s -- a testament to his lifelong passion for smart money decisions. His work aims to make personal finance accessible and actionable for everyday readers. When he’s not writing, Joel enjoys surfing and spending time with his family.