It’s hard to believe, but a little more than a decade ago, savers could earn up to 5 percent annual interest from bank certificates of deposit and savings accounts.
That was before the financial crisis forced the Federal Reserve to lower short-term interest rates to nearly zero and keep them there for years.
Which savings vehicles are best depends on your goals and circumstances: How long can you afford to park your cash? Are you comfortable banking exclusively online? How do you plan to diversify? How much liquidity do you need in the short term?
To earn the best interest rates, you’ll have to commit to keeping your money in accounts for a specified time and diversify your funds to ensure they are appreciating above inflation, says Benjamin Sullivan, certified financial planner and enrolled agent with Palisades Hudson Financial Group in Austin, Texas.