If you have money in the stock market, then you probably already know that you haven’t been doing very well. This year, the S&P 500 is down about 8-10% and about 15% in the past few weeks. Historically, it gave returns of about 10% annually over the past several decades. Whether it’s your 401k or other retirement funds, or simply a more conservative mutual fund accounts, when the market goes down, you will lose money, especially in the volatile economic times. Currently, I have the bulk of my savings in an online savings account and transferred all my 401k funds into money market accounts. When things return to normalcy, then I will invest normally as well. Until then, I believe cash is king. Although the government promised rock bottom interest rates through 2013, there are still few savings accounts available today that offer at least 1% interest. That way, you’re at least guaranteed profit as opposed to today’s increased risk factor generated in the market.
Discover Bank gives out 0.85% through their online savings account, which is over 5x the national average of 0.16%. You need at least $500 to open the account and maintain that amount to receive full 1.10%. If your account falls below this amount, you will not receive the full rate. There is no fee associated with this account.
Everbank offers 0.91% through their Yield Pledge Money Market Account. Minimum of $1500 is required to open a new account. There is no fee associated with this account.
Ally’s online savings account offers 0.84% return on the money. You can open a brand new account with $0, but then you wouldn’t earn any interest on it. There are no hidden fees associated with the account.
ING’s Orange Savings account gives you 0.80% interest. There are no fees and no minimums associated with this account.
All these online savings accounts are FDIC insured so you can be confident that your money is well protected. You don’t have to lose money in the times of volatility.