A traditional savings account used to be so popular, but nowadays, it is being overshadowed by other investment schemes like bonds, real estate, and stocks. While these types of investments can yield better interest rates, they are also much more volatile. So if for some reason you need money right away, you may not have enough because the market is down.
Savings accounts, on the other hand, are more stable because their value will not fluctuate. So before dabbling with the stock market, it’s best that you have a savings account set up to fall back on in case of emergencies. You can have one set up online or through a physical bank in Connecticut. Here are more reasons to have a savings account:
A source of emergency fund
Things may be going smoothly now with your life. But you can never predict the future. You don’t know when an urgent situation may arise such as your car needing major repairs, your home catching fire, or getting hospitalized. While these examples may seem far-fetched to you, it always pays to be ready for any sort of emergency. Having a substantial amount in your savings account will be able to cover most (if not all) of your emergency expenses. This will save you from having to borrow money.
The money you deposit in a savings account is secured by FDIC insurance. This means that even if your bank suddenly goes under, the government will replace a certain amount of your money. This is better than keeping your money at home where it can be stolen or destroyed by fire or flood. Also, it doesn’t hurt that your money earns some interest while in a bank.
Enough capital for investment
Maybe you want to open an investment account and try your hands in the stock market, but you don’t have the funds—yet. Saving money little by little in a bank can help you achieve this goal. After you have enough for your emergency fund, which should be worth three to six months of your expenses, you may now start saving for your investment account.
These things might take some time, but something is still better than nothing.