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Places to keep your cash: Balancing security & liquidity for your money

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The ups and downs of the market are enough to make anyone feel concerned about the safety of their cash. As you plan and save for your future, you're likely wondering where the best place is to keep your money now. Here are some factors to consider for reliability and stability, as well as some prudent places to store it.

What does safety mean when it comes to your cash?

When it comes to keeping your cash safe, protecting the value of your cash and the ability to earn interest are likely two top priorities. But these additional considerations often play a crucial role in helping build that sense of security.


How quickly might you need to access your money? The cash in your wallet is extremely liquid: You could spend it right now. But certain deposit accounts and retirement products are less liquid. They're meant to be held for a while and may have limits or penalties for withdrawals. Some securities investments and real estate are even less liquid since they may rely on selling them before you can get the cash value.

Investment risk

The value of your deposit or investment could change from day to day—it may go up or down. And if you have a conservative risk tolerance, you're looking for a steady pattern over time that you can more confidently rely on. But maybe the potential to earn higher returns outweighs your desire for that steadiness.

As you explore options on where to store your money, ask yourself: How much market volatility are you comfortable with?

The impact of inflation

Because the worth of a dollar changes over time, inflation can erode the value of your money. While something like a no-interest checking account is both liquid and stable, your money in it could lose value just because of the rate of inflation. An account that bears interest could help offset money's value lost to inflation.

Tax implications

Many times, the more conservative places to keep your cash don't often come with fantastic tax advantages. Liquid accounts like savings and certificates of deposit (CDs) tend to incur taxes now rather than having the tax-deferral benefits of less liquid options, such as retirement accounts, annuities and life insurance. However, some semi-liquid and stable assets like government bonds, government bond funds (including municipal bond funds) and money market funds pay interest that's tax-exempt at the federal and/or state levels.

Associated fees

Maintenance fees, early withdrawal penalties and expense ratios can lower your net returns and even reduce your principal. If you're looking for a place where your slowly-but-steadily-growing money won't decrease, you may want to steer clear of fees that could eat away at it over time.

Is it safe to keep money at a bank or financial institution?

Choosing a trustworthy institution is another important measure you can take when it comes to the safety of your cash. Find out if the institution is insured. In this sense, "insurance" doesn't mean that you're assured a profit or payout—the investments you choose will likely be subject to market risk. Rather, it's a guarantee by an outside agency that your money is protected up to a certain amount if something happens to the organization, such as failure or liquidation.

In addition, there are other types of protection that is standard for different accounts:

  • Securities Investor Protection Corporation (SIPC): Covers member brokerage firms. The SIPC coverage limit is $500,000, including up to $250,000 in cash. If you have more than one account, coverage is applied to each account type.

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What's the difference?
If banks or other financial institutions fail, what happens to your money? FDIC and SIPC insurance offer different types of protection for your money if, and when, these rare events happen.

Find out how

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Which types of accounts are generally safest for cash?

Regardless of market conditions, some of the most popular account and asset types for holding your cash tend to stay the same. As you explore your options, keep the above markers in mind and weigh the pros and cons against your financial plan.

Savings accounts

Savings accounts and high-yield savings accounts are available from brick-and-mortar banks and credit unions and online-only banks, with the latter usually paying higher interest rates that are competitive with deposit certificates and money market rates.

  • Pros: Deposits are highly liquid and protected by FDIC or NCUA insurance. Interest rates increase if market rates increase.
  • Cons: Interest rates decrease if market rates decrease. Interest on deposits is taxed as ordinary income. You'll pay tax on this interest at your marginal tax rate.

Certificates of deposit (CDs) & share certificates

CDs are issued by banks or sold by brokerage firms, while share certificates are issued by credit unions. Both offer guaranteed fixed interest rates for varying terms, which generally range from 1 month to 10 years.

  • Pros: Deposits are protected by FDIC, NCUA and SIPC insurance. CDs and share certificates may pay higher interest rates than savings accounts, and you may be able to secure a higher rate if rates increase when it's time to renew.
  • Cons: Any interest earned on these certificates is taxed as ordinary income at your usual income tax rate. Also, the interest rate of the CD or share certificate is typically locked in at the time of purchase, which can be a plus if market rates decline but a minus if they increase. If you withdraw your principal before the certificate matures, you may forfeit some of the interest and have to pay fees.

Money market funds & money market deposit accounts

A money market fund is a type of mutual fund involving a mix of stocks and bonds, while a money market deposit account is a type of liquid banking account. These products both aim to provide you with returns by investing in super-short-term securities issued by the U.S. government and related organizations. Examples include U.S. Treasury bills and notes, U.S. government agency debt and similar funds.

  • Pros: They aim to maintain stability so that the value of one share is always $1. They typically earn a return that's comparable to a high-yield savings account—still below inflation, but closer to it. Money market deposit accounts offer instant withdrawals, but money market funds aren't as liquid. Both can be protected by the FDIC, NCUA or SIPC.
  • Cons: As with any investment fund, money market funds have annual operating expenses that may reduce your net returns. And neither returns nor the stability of share values are guaranteed. They may also have monthly transaction limits, and you may be restricted to buying and selling money market fund holdings only on days when the stock market is open. Tax-wise, you'll have to pay income tax on money market dividends, although a percentage of a fund's ordinary dividends may be exempt from state and local taxes.

Inflation-protected government bonds

The federal government issues two types of inflation-protected bonds: Treasury Inflation-Protected Securities (TIPS) and I bonds.

  • Pros: Both pay enough interest to prevent your bond principal from losing value to inflation, and the interest isn't taxable at the state or local levels. The full faith and credit of the U.S. government protects your money. Also, taxes on the interest earned by I bonds can be deferred for up to 30 years.
  • Cons: I bonds have annual purchase limits, they can't be redeemed for 12 months and they have early withdrawal penalties for five years. TIPS aren't tax-deferred and can be more volatile and hard to manage effectively.

So, where should you keep your cash?

Your risk tolerance, life stages and values will all inform where you feel most comfortable putting your cash—just as they inform your approaches to saving and investing for retirement and other goals. You may even want to consider dividing your cash across a few different options to further dilute your risk.

If you want to talk through these decisions, a Thrivent financial advisor can help you navigate your options and see how they fit into a bigger financial strategy, That starts with creating a secure foundation for you and your family.

Investing involves risk, including the possible loss of principal. The product prospectus, portfolios' prospectuses and summary prospectuses contain more complete information on investment objectives, risks, charges and expenses along with other information, which investors should read carefully and consider before investing. Available at

CDs offer a fixed rate of return. The value of a CD is guaranteed up to $250,000 per depositor, per insured institution, per insured institution, by the Federal Deposit Insurance Corp. (FDIC). An investment in a money market fund is not insured or guaranteed by the FDIC or any other government agency. A money market fund seeks to maintain the value of $1.00 per share although you could lose money. The FDIC is an independent agency of the US government that protect the funds depositors place in banks and savings associations. FDIC insurance is backed by the full faith and credit of the United States government.

Thrivent and its financial advisors and professionals do not provide legal, accounting or tax advice. Consult your attorney or tax professional.