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A new year means a fresh look at where you can maximize savings, while also paying close attention to how the current landscape has shifted.
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The Federal Reserve cut interest rates three times to close out 2024, with the latest rate cut at 25 basis points. This is great news if you need to finance a purchase or pay down debt. For savers, the Fed’s rates cuts mean more challenges as savings and CD rates took a slight dip.
On top of this, we have a new president taking office on January 20. His proposed tariffs could result in high interest rates and increased inflation, according to many economic experts.
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With all these changes in the financial environment, now is a great opportunity to take stock of your finances and find the best places to store cash for the upcoming year.
Start with a fresh budgeting perspective
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Let’s start with the basics: In order to have cash to save, you need to not spend all your money. Budgeting apps can be useful tools to help make sense of how you’re spending money and if you’re reaching your savings goals.
Here are a few of Kiplinger’s favorites:
- Quicken’s Simplifi: Creates a personalized spending plan to monitor where your money goes. If behaviors change, such as holiday spending or travel increases costs, it allows you to tweak your budget to ensure you’re meeting savings goals. Quicken also released LifeHub, a digital document storage platform that allows you to secure your most important documents digitally.
- Empower: A helpful app that tracks spending alongside investments. It also allows you to see college savings accounts, mortgages and health savings accounts, giving a fuller view of your finances in one place.
For more options, see our roundup of the best budgeting apps.
Build wealth with a high-yield savings account
A high-yield savings account is an effortless way to save money. I use one and receive a significant higher interest rate relative to what brick-and-mortar banks offer.
Even with the Fed cutting interest rates, there are plenty of savings accounts where you can earn over 4%. Use our tools from Bankrate to find the best fit for you:
For more options, see Kiplinger’s roundup of the best high-yield savings accounts.
Along with higher rates, high-yield savings accounts come with other benefits. You’ll receive financial protection by way of FDIC for banks and NCUA for credit unions, offering up to $250,000 to cover assets in case the financial institution fails. And you have easy access to your money whenever you need it.
On the other hand, high-yield savings accounts could require a minimum balance, and falling short on the minimum may result in higher monthly fees, negating any interest earned on the account. Rates on these savings accounts are also variable, meaning if the Fed decides to cut rates more this year, you won’t earn as much on them.
Set savings goals with CDs
To get around that variable rate concern of high-yield savings accounts, look at another savings option: A certificate of deposit.
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This form of investment allows you to deposit a fixed amount of money for a term. Terms can range from three months to five-year CDs. Similar to high-yield savings accounts, CD rates took a slight hit when the Fed cut interest rates.
However, as you can see with this Bankrate tool, we can still receive a good rate of return:
CDs are great if you want to set savings goals for the future. I use short-term ones to save money for medium-sized purchases like a vacation. For example, if you’re planning a summer vacation, you can put money into a three-month CD to earn interest that you can then use on that trip.
What makes CDs an enticing choice is when you sign up, the rate you earn doesn’t change throughout the term, unlike high-yield savings accounts — which can fluctuate based on market conditions. CDs also come with FDIC or NCUA protection and are great places to park money and forget about it.
For more options, see Kiplinger’s best CD rates.
That said, CDs won’t always be the wisest fit for financial flexibility. CDs lock in a certain amount of cash for a certain amount of time, so if you need to withdraw the money, you would need to close the CD, and penalty rates for doing so usually offset the interest earned. You also won’t be able to add money to the CD over time, unlike with a savings accounts. And even with the higher rates, you can potentially stay more ahead of inflation with other strategies, like investing in the stock market.
Reach retirement goals with a reputable broker
A record-breaking 162 million Americans invested money last year, according to a Gallup survey. As such, there are at least 18 brokerages competing to earn your business. The best online brokers and trading platforms allow you to trade stocks, mutual funds and exchange-traded funds commission-free.
Since the services vary wildly by provider, Kiplinger chose some of the best platforms for you to consider. We surveyed nine providers and four smaller brokerage houses, and included the best overall option and the one with the best investment opportunities. Here are two of our top choices:
- Fidelity: Kiplinger ranked Fidelity the best overall online broker, thanks to its tool Fidelity Go. With it, investors with less than $25,000 receive free advice. For investors with larger portfolios, Fidelity Go offers access to human advisors with an annual fee of 0.35% of the total assets. Fidelity also earned high marks for investment choices, tools, fees and an easy-to-use mobile app.
- Interactive Brokers: Kiplinger ranked them as the top investment broker with the best investment options. Interactive is a leader in municipal and corporate bonds, and fractional share trading. Along with Fidelity, they lead the pack in allowing us to set up automatic stock purchases.
Bottom line on where to store your cash in 2025
2025 promises to be an eventful year. Knowing the market conditions and planning ahead can help you maximize savings opportunities by ensuring your budgets are in line, you have the right savings vehicles to meet goals and you receive sound investment strategies that build wealth.
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