This Savings Account Pays Up to 9% Per Year

I'm not a big fan of certificates of deposit (CDs) because I don't see the appeal of locking up my money. If you're going to commit your money to an account, you should be rewarded for that commitment -- but the best 1-year CDs are only offering about 5.30% APY (as of March 26, 2024). That doesn't feel worth it to me to give up the convenience and liquidity of a savings account. What if there was a better way to get higher yields on your savings that was worth committing your cash for a year?

Now there is: It's called Save® (joinsave.com). This fintech company offers an innovative Market Savings Account that combines some of the best upsides of savings accounts, CDs, and the stock market -- with no risk of loss. Save's Market Savings Account is delivering average annual returns of 9.07% variable APY for a one-year term. That's about 1.7x the return of the best 1-year CDs!

Let's take a closer look at how the Market Savings Account works and whether it might be a good fit for your cash savings.

Save's Market Savings Account: How it works

Save® is not a bank -- it's a financial advisor. When you join Save and get a Market Savings Account, your money will be deposited into an online savings account with Save's bank partner, Webster Bank. Your cash is FDIC-insured like any other typical bank account. But instead of just earning the interest on that savings account, Save serves as your advisor to invest the interest on your savings in a diversified portfolio of investments.

For example, you can choose from investment portfolios such as:

• S&P 500 Risk-Controlled Portfolio
• Save Global Multi-Strategy Portfolio
• Save U.S. Macro Portfolio
• Save ESG Portfolio

With Save and its partner bank, your deposits are never at risk. Even if the stock market goes down, you'll still have your original money, safe and sound in your FDIC-insured bank account. But Save uses advanced investment management strategies to actively manage the interest on your savings to (hopefully) generate larger returns.

To get the returns of a Market Savings Account, you must make a minimum deposit of $1,000, and you must commit your deposits to Save's investment program for a term of at least one year. This makes Save's Market Savings Account most comparable to a 1-year CD, as far as the time commitment. Save also offers a five-year term.

You can withdraw your cash from Save at any time, but you may forfeit any investment returns if you withdraw money before your term is up -- it's not technically an early withdrawal penalty like a CD would have, but it's a similar effect.

Does Save charge fees for the Market Savings Account?

Save is not a bank and it doesn't charge banking fees. There are no account maintenance fees for your Market Savings Account. Save (as your financial advisor) only charges an advisory fee of 0.20% for the Market Savings Account. For example, a Market Savings Account with $10,000 in it would pay an advisory fee of $20.

And Save only charges its advisory fee if your account's investment returns are greater than the fee. This gives Save an extra incentive to make money for you.

Save® Market Savings Account: Pros and cons

The Market Savings Account is an intriguing, creative new way for people to earn more money on their savings. But it's not the right fit for every investor. Let's look at a few possible advantages and drawbacks of the Market Savings Account.

Market Savings Account: Pros

• Turn your cash savings into professionally managed investments: If you're frustrated by low-yield bank accounts but don't want to commit to a CD, the Market Savings Account gives you some intriguing upside potential without any risk of losing your deposits. If your Save® investment portfolio performs well, you can earn a significantly higher yield on your savings than even the best CDs and savings accounts can promise.
• Low fees: Save's 0.20% advisory fee for the Market Savings Account is lower than major robo-advisors like Betterment ($4 per month or 0.25%) and Wealthfront (0.25%).
• Tax advantages: Because of how the Save investments are set up, your Market Savings Account returns can be taxed as long-term capital gains, not as ordinary income like typical bank savings account interest. This can have tax advantages, especially for people in higher tax brackets.

Market Savings Account: Cons

• One-year commitment: The Market Savings Account is like signing up for a 1-year CD -- you won't earn yield if you take your money out before the end of the term. Don't commit your money to Save® unless you're confident that you can leave that cash alone for the whole year.
• Returns are not guaranteed: The Market Savings Account yield will go up and down depending on your choice of investments and overall market performance. Past performance does not guarantee future results. Your yield could be 9.07% or higher, or it could be lower. If you want a fixed return on your savings, opening a CD could be a better choice.
• $1,000 minimum deposit: Some stock trading apps let people get started with $1. Save® requires you to commit at least $1,000 to open your Market Savings Account.

Bottom line

The Save ® Market Savings Account gives you FDIC insurance like a bank account, a limited time commitment like a CD, and the growth potential of buying stocks. Before you open a 1-year CD with 5% APY (or less), consider joining Save.

Disclosure: I used to do some freelance writing projects for Save® in 2021.