The Smartest (and Riskiest) Ways to Save in 2023

If saving money is hard for you these days, you aren’t alone. The personal savings rate—a measure of the percentage of disposable income Americans save—was just 3.9% in August 202 3, according to the Bureau of Economic Analysis.

Inflation and high household debt (including credit card debt) are two common barriers to saving for many. But saving even a small amount can have meaningful benefits, like helping you potentially earn more interest. The smartest ways to save money involve growing your cash reserves at a faster rate without putting your savings at risk. Here are three solid options to cons ider.

High-Yield Savings Accounts

high rise building
high rise building



Traditional savings accounts are a popular place to store cash. However, these types of deposit accounts aren’t always the best places to earn interest on your savings. According to the Federal Deposit Insurance Corporation (FDIC), the average annual percentage yield (APY) on a savings account was 0.46% as of October 2023. Meanwhile, it’s not uncommon to earn 4.00% or more with a high-yield savings account (HYSA).

The best high-yield savings accounts not only offer higher interest rates to customers, they often feature other benefits as well. You may be able to find a HYSA from a bank or credit union that charges no monthly fees and has no minimum balance requirements. Other financial institutions may offer new bank bonuses you can earn when you open a new HYSA .

Money Market Accounts

stock market
stock market


Money market accounts are another type of deposit account with the potential to help your savings grow faster. The average APY on a money market account was 0.65% as of October 2023, per the FDIC. Yet the best money market accounts feature interest rates well above this level—potentially 4.00% or higher.

On top of higher potential interest rates, the best online banks provide other valuable perks. No monthly maintenance fees (or the ability to avoid them), no minimum balance requirements and daily compounding interest are a few benefits you might want to look for if you’re shopping for a new money market account.

Additionally, money market accounts are like a hybrid between a savings account and a checking account. As a result, you may be able to write checks and use debit cards for more convenient access to your funds when you need them. Depending on your wants and needs, these details could help you decide between a money market vs. a savings account if you can’t decide which type of account to op en.

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Certificates of Deposit

roll of money
roll of money


Certificates of deposit, better known as CDs, often offer some of the highest returns on savings at many financial institutions. At present, some of the best CD rates feature APYs over 4.50%.

That said, CDs do come with a trade-off in exchange for generous interest rates. When you invest your savings in CDs, you agree to lock away your cash for a set period of time. It’s not impossible to access your money early, but if you decide to do so before your CD reaches maturity, you could face expensive early withdrawal penalties that chip away at your returns.

It’s also important to note that the amount of money you can earn on a CD may vary based on several factors. The financial institution you choose plays an important role in your financial returns. The type of CD you open also matters since each option below could have an impact on your earni ngs.

Risky Ways to Invest Your Savings

Bitcoin on a computer
Bitcoin on a computer


The three options above represent low-risk ways to grow your cash reserves. Yet, it’s understandable that you might want to seek higher returns as well.

In an effort to earn more, many people invest in stocks, bonds or mutual funds. Over the long term, a diversified investment portfolio in the stock market has provided historical annual returns of around 10% according to the U.S. Securities and Exchange Commission (SEC). That said, not every investor will experience average returns, and not every period in the market is average either. As a result, there’s a measure of risk when you invest your money in the stock market.

Some investments, however, are considered high risk. Such opportunities have the potential to help you earn big returns if all goes well. But there’s a higher chance you could lose money too—perhaps every dollar you invest.

Below are two common high-risk investments. Unless you have a high tolerance for unpredictability and potential loss of savings, you may want to steer clear of these riskier investment opportunities.

1. Cryptocurrency

Cryptocurrency enthusiasts believe digital currency, like Bitcoin and Ethereum , is the way of the future. Yet at present, investing in crypto assets can be tricky and unpredictable.

Consider Bitcoin as an example. The price of the popular cryptocurrency increased to over $68,000 in November 2021. By the following November, Bitcoin had lost around 75% of its value and was worth less than $18,0 00.

In addition to the frequent fluctuation in cryptocurrency value, the investment vehicle is largely unregulated compared with other types of securities. This lack of regulation leaves the door open for bad actors to take advantage of unsuspecting investors.

If you decide to invest in cryptocurrency, it’s important to understand the risks involved.

2. Individual Stocks

As mentioned above, a diversified investment in the stock market has provided investors with historical annual returns that average around 10%. There’s no guarantee you’ll experience the same type of return in your investment portfolio (or even that you won’t lose money). But the SEC does note that diversification can improve the chances you won’t lose money if the market drops or at least reduce your losses compared to what you might have experienced if your investments weren’t diversified.

On the other hand, putting your savings toward the purchase of individual stocks can be a lot more dangerous. There’s a much higher chance you could lose a large amount of savings (or even all of the money you invest) in this scenario. Trying to predict which stocks will win and outperform others is a gamble, and you should only consider putting money that you wouldn’t mind possibly losing toward this st rate gy.

100 dollar bill
100 dollar bill

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Bottom Line

Financial pressures are mounting for many American families and the majority of households found the past year to be economically difficult. One potential way to reduce this financial pressure is to find ways to grow your savings in 2023. Yet it’s important to understand the risks and rewards involved with savings and investing strategies and to choose the options that make the most sense for you.

Whether you’re working to build a recession-proof emergency fund or you’re saving cash for something else, consider whether CDs, high-yield savings accounts or money market accounts could benefit you. Depending on your situation, a combination of these options might make more se nse.