To make the most of your finances, it’s important to understand all the tools that are available to you. From managing your current finances, to setting yourself up to reach future financial goals, here are some popular financial products and why they may be good for you.
Why use an IRA?
An IRA is an Individual Retirement Account and there are many different types to choose from. Depending on the IRA you choose, you can invest in various stocks or funds which could allow your account to grow in addition to your contributions. An IRA can also offer tax benefits. Talk with a financial advisor to learn more about IRA opportunities and to determine which type is best for you.
What is an HSA?
An HSA, or a Heath Savings Account, is similar to a savings account, except the money only goes toward qualified medical expenses. Many people use an HSA to cover additional bills or medications that aren’t covered by insurance. There are many benefits of having an HSA, with the biggest being the potential to earn extra money through investment opportunities. Even though you own the account, your employer may also contribute to your HSA, which can be another way to increase savings.
Savings Account vs Money Market Account
Both a savings account and a money market account are secure ways to deposit and save money. Most people already know what a savings account is. A money market account typically requires a higher minimum balance, but can be a little more flexible in the sense that many allow you to withdraw from an ATM or write checks. It’s always best to compare savings products to see which one would be a good fit for you.
Benefits of a CD
A CD, or a certificate of deposit, is another popular savings product that allows you to earn interest on the money in your account. While they usually offer better interest rates than most savings products, you have to commit to a specific term length in order to receive that rate. Typically, the longer the term, the higher the interest rate. A CD is good for someone who isn’t looking to access their savings on a regular basis because there can be a fee attached if you want to withdraw before the term is up. A CD can be used to save for a specific purpose, such as purchasing a house or college tuition.
When it comes to understanding which financial products are available and which might be the best fit for you, a financial advisor will be able to explain the pros and cons of each one specific to your needs. Once you understand the ways you can invest, save, and grow your finances, you’ll be one step closer to reaching your financial goals.
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