Want Easy Access to Your Cash? Suze Orman Says This Is Your Only Option

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  • Keeping money in a savings account could mean limiting its growth.
  • In spite of that, the bank is still the best place for your near-term savings.

It's advice worth taking.

There's a reason people are often encouraged to open a brokerage account and invest their money. If you keep all of your money tucked away in a savings account, you'll earn whatever interest your bank is paying. At times, that interest may be more generous than others. But ultimately, you can grow your money a lot more by investing it in assets like stocks and even bonds. 

But while it's okay to invest a portion of your money, it's also important to leave yourself with easy access to some of your cash. And so when it comes to your emergency savings -- money you might need without warning -- financial guru Suze Orman insists the bank is the only option to consider.

Make sure your money is available

Investing money carries risk -- that the value of your portfolio could sink during a market downturn. Or, you might just happen to choose to invest in a company that doesn't perform well, so that a $5,000 investment is only worth $3,500 one year later. 

Investment values can fluctuate frequently. And that's not necessarily something to stress about on a daily basis, especially if you're investing for a far-off milestone, like retirement. 

At the same time, the money you have earmarked for emergencies needs to be more secure. You don’t want a situation where you need $4,000 to fix your car, but your $5,000 investment is now only worth $3,500 so you're short the amount you need.

That's why your emergency fund should remain safe, sound, and liquid. And that means sticking to a savings account, where deposits are FDIC-insured for up to $250,000 per account holder. 

As Orman recently said on a podcast, "You just want to know that there for you and that you can do whatever you want with it when you want to do something with it. And therefore your only option is a savings account."

How to choose the right savings account

By keeping your emergency fund in savings, you may be limiting its growth. But that's okay, because the money you have earmarked for unplanned expenses isn't money you should be counting on to accumulate long-term wealth. 

That said, there's no need to accept a lower interest rate on your money if there's a bank out there paying more interest than your current one. So rather than settle, look around and see what different banks are paying. 

You'll often find that when it comes to snagging the highest interest rate on your savings, online banking is the way to go. Online banks don't have the same operating costs as physical banks. As such, they're often able to pass savings on to consumers in the form of higher interest rates. 

Investing money you don't have allocated to emergencies is definitely a good idea. But when it comes to your emergency stash, play it safe and stick to a savings account, even if that means earning minimal interest for what could be years on end. 

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