I’ve been hearing a lot lately on the woeful return for savings products which are safe, but offer low interest rates. It generates the question for many on whether it’s worth the effort to put money away in these types of accounts.

My take on it is we really do need to continue to put our money into savings. No matter what we’re getting on those accounts, whether savings accounts, CDs, money market accounts or Treasuries, we’re getting the market rate, and whatever that rate is, depending on doing a little research on who is offering the best rates, is all we’re going to get until the market changes.

The problem with some people raising these questions is it could influence someone to foolishly quit saving and waiting around for better interest rates to return.

Why that doesn’t work is the money you have for savings today needs to be put away while you have it. What’s the alternative? Spending it? That makes no sense at all. You don’t spend money you’ll never have returned to you just because interest rates aren’t what you think they should be. Yet that’s just what some people are advocating.

What needs to be put in perspective, is savings rates are never going to be high and will never be the key investment to build your wealth with. Savings is to build up a protective moat for you so when unexpected difficult economic times come, you have cash in place to tide you over while you make decisions and take steps concerning what to do about it.

It’s more about keeping your money safe than it is increasing it. This doesn’t mean we shouldn’t shop around for the best returns we can get, just that we have to understand what savings is. If we have high expectations that aren’t realistic, we could use that as an excuse to not put money away. That would be a huge mistake.

For a number of reasons the Federal Reserve isn’t going to raise interest rates any time soon, and so those waiting around to put money away for safe keeping and in case of emergency will find themselves unprepared if things continue on a difficult economic road (which is expected), with no money to tide them through.

Savings aren’t really to make you a lot of money, it’s to build up a protective money stash in order to give you a chance to work things out if you’re fired, laid off, or some other economic emergency happens which you would need money for in order to buy you time.

In the end, that’s the real purpose of savings, to buy you enough time to right the circumstances without devastating you’re entire life and causing you to lose everything. Interest rates are only secondary to the issue, while having some savings set aside for emergency is the primary reason for having an account.

Don’t let low interest rates keep you from continuing to save. It really has nothing to do with the overall purpose of having a savings account of some type, as I’ve shown you here.

Many people believe that searching endlessly for a small percentage increase in a savings account of some sort, or a bank CD, is the key to building up your wealth in a significant manner. This is unfortunately not true, and depending on your income bracket, isn’t worth the time doing so.

When I mention not being worth your time, by that I mean when people move their money in and out of accounts as soon as a better deal arises, making it a time-consuming effort to track all the changes, as well as making the new deposit and transaction.

By far the most important part of any savings strategy is to make a simple plan, work the plan, and make few adjustments along the way.

This breaks down to finding the best interest rate and looking at the fee structure which could eat into your capital if you don’t manage your account well.

Once you find a solid interest rate, then it’s a matter of working your plan over and over again on a monthly basis. That usually means putting money faithfully into an account to build up a financial safety net, and/or build up a nest egg for retirement.

Just like people who think they’re players in the stock market when they attempt to time the market and in fact, make it look like “they’re a player in the stock market.” In other words, they are trying to impress people, not really build their wealth.

The truth is the majority of savings and other investing strategies should be fairly boring, with nothing much happening over a period of time, other than general fluctuation which don’t mean that much one way or another.

As far as the time factor, if you’re not making some serious money when you spend time transferring funds to a new account because of a better interest rate or introductory offer, it’s just not worth the time. You would need many thousands of dollars to justify it, and even then it would have to be significant enough to pay you for the time you’re spending doing it. Only you can determine if it’s worth it or not.

I’m not saying there won’t be an occasional time to do this, but it should be a higer enough rate to make a difference in your savings, and of course there shouldn’t be any fees for early withdrawal or some other penalty if you’re hunting for the highest interest rates at all times.

When it comes right down to it, consistency concerning making your deposits over a long period of time will outperform those moving in and out of the market, no matter what the investment is.

An even stronger benefit is the mindset you’re developing which will be your strongest financial asset as you work the best ways to build your wealth within your risk tolerance. Sticking to a well thought out plan is by far the best and safest way to save and build up your capital.

A brokered CD is about as easy to understand as a regular, fixed certificate of deposit, as the difference between each on is just what the name implies: you buy it through a broker.

Immediately you’ll think this is a colossal waste of money, as you’ll either be charged a flat fee from the broker, or possibly a percentage for each $1,000 invested, or something similar to that.

For those that are Web-savvy, this first reason for investing in a brokered CD may not sound that valuable, but for many people who use the Internet but aren’t familiar with how to navigate and do fast, accurate searches it is, and that is the availability of a large number of CD options from banks around the country, which your broker should easily be able to access and help you find. Many people in this situation also aren’t familiar with the variety of CDs and their terms (the reason I’ve been writing exhaustively about it recently), so a broker makes sense to them.

The temptation of using a broker to buy you the best available CD on the market is to get one with much higher interest rates than other CDs, without knowing what kind of protection you’re getting. Be sure to ask the broker if the CD is insured by the FDIC. Not all of them are, so that’s a must to know if FDIC insurance is an important part of your financial decision-making process. If an interest rate sounds real high, you’ve got to understand that you’ve assumed more risk.

I’m not talking about small differences in interest rates here, I’m talking about something that may be far higher then the best known regular CD interest rates. So don’t go getting paranoid if you’ve found a good interest rate. Be wary if it’s way above the highest one you could find. In that case be sure your broker knows your risk tolerance so he stays within those parameters for you.

So other than someone that doesn’t understand the Web or a certificate of deposit, what would be the reason for using a broker to acquire a CD?

I’ll use the example of shopping at Wal-Mart. If work 10 hours a day and make $50 an hour, would it be worth your time to go to Wal-Mart for an hour of shopping to save $15. The obvious answer would be know, and many people that make a nice amount of money in a day understand this.

Many of those in business who assess a certain amount of money per hour to their time have this down, and so while knowing they could save money, the cost in time would make that savings not worth it to enjoy. On the other hand, people who don’t make that much an hour or who don’t put a price on their time, will go to Wal-Mart, knowing that overall they’ll save money by shopping there. So if they make $10-an-hour and save $25 while shopping, it’s definitely worth it to spend the time.

That’s the same with a brokered CD. Even if you understand how all the process works, it could be more costly to do the search and take the time to set up and account and place your money than it’s worth. You could very easily save money by focusing on what brings in your $50-an-hour than on a few dollars extra in fees. That’s what the value of a brokered CD is for the most part.

There are some other things that can get a little complicated like being able to sell it on the secondary market, but that’s an entirely different story, and probably doesn’t offer much to the seller unless a buyer is available willing to pay the full value of the CD. Buyers on the secondary CD market are also few and far between, and even if you could find one if you wanted to sell your brokered CD early, it could possibly cost as much as just taking the penalty and getting your money.

In the end, a brokered CD is a good way to buy one if you’re clueless as to finances and want a good interest rate on your CD, or time is a major factor and an extra fee is well worth the savings in time and money you get from doing what is the most profitable with your valuable time.

An Add-on CD is a certificate of deposit with a fixed or variable rate where you can continue to make deposits over the term of the CD.

A little later we’ll get into the purpose for investing in an Add-on CD, but for now let’s look at some of the differences in order to understand what you’re investing in.

While there are no basic differences between a fixed or variable CD or an Add-on fixed or variable CD in and of themselves, the obvious difference is the adding of money to the certificate during its term, otherwise it functions as a normal CD with all its usual functions and protections.

The difference you’re looking for is like any other CD, where there are minimum opening deposits, and also in some cases, minimum additional deposits. There are also some Add-on CDs which require a minimum amount on a monthly basis. For example, you may be required to add $50 a month for the duration of the certificate. This isn’t bad if it falls within the parameters of your investment strategy.

As with any CD, you must be aware of the automatic renewal window, which allows only a certain amount of days to close the CD or allow it to renew.

So why bother with a CD like this at all? In our existing economic conditions, cash is the ultimate contrary asset to hold in the world right now, and so is a good time to hold some, as many people in America are starting to do.

To that end, all of us should have a stash of cash socked away for emergencies, possibly even a little higher than the usually suggested three to six months worth in normal economic times in case of unexpected circumstances. If you’re able to, I would even put away as much as nine months to a years’ worth of cash to protect yourself against the poor economy.

With that in mind, why an Add-on CD works so great is it gives you the option of putting away and building up cash in a way that forces some discipline on you. If you attempt to take it out, you’re hit with a stiff penalty, which is good in my estimation, as it keeps you from spending it on whims and not on truly unexpected things as the consequence of hard times.

One other nice thing about an Add-on CD is it allows you have a shorter waiting period for your money as the CD matures. In other words, if you pay some into it every month, that means it’ll be less time you have to wait for your money as it continues to bear interest for you and build up your personal cash reserves.

If you have a safer investment that could provide better and more flexible returns, you could then put your cash in that to continue to build it up without having to wait long periods of time with all your money. So money you put in over the last several months of an Add-on CD is only tied up for that period of time until the CD matures, and then you can decide from there what your next step will be in reference to building up your cash reserves.

The point is an Add-on CD is a great place to build up your cash on a monthly basis without tapping into it like you easily could with a money market fund or money market account. That’s a good discipline to have when it’s imperative to have some cash on hand during these difficult economic times.

Other than a different name, a liquid CD is really not much different than a regular Cd, with the obvious exception of having access to you capital at any time.

You may also ask, if that’s the case, wouldn’t it be the same as a money market account and savings account? The answer would be: absolutely yes – but with an exception we’ll get into in a moment.

So you don’t get confused, a liquid CD is still a CD. You buy it in the same way you would a regular CD, only now you have access to your cash when you want it.

Similar to a regular CD, a liquid CD will also be insured by the FDIC, but your allowed withdrawals will be penalty-free, in contrast to a regular CD.

One thing to keep in mind when looking at investing in a liquid CD is the terms offered by the various institutions. In some cases a bank will cap the amount you can withdraw, so the liquidity offered is limited. In these cases there should be a trade-off of a higher interest rate in comparison to other liquid CDs offered by other banks, otherwise there would be no incentive to buy one.

Other limitiations some banks include are how many withdrawals you can make within a specified time period, or some banks leave the entire withdrawal situation alone and allow you to withdraw however much you want when you want. Again, if there are restrictions, look for higher interest rates or don’t bother with them, as there’s no reason in the world to get a limited product that is offered by someone else with the same or higher interest rates with no limitations. If there’s no added incentive to buy a CD with limits on withdrawals, simply pass on it and buy one that allows unlimited withdrawals with similar interest rates.

Now the interesting thing about a liquid CD, is it might be marketed by a bank as a great alternative to a regular CD, and it is as far as liquidity goes. But the problem is there are already savings products available like a money market account and a regular savings account where you have liquidity already.

So why would you even want to consider a liquid CD if there’s no real obvious advantage to buying one? The answer is it has to do with interest rates.

If we’re in a time of interest rates falling, then acquiring a liquid CD instead of using a savings account or money market account makes sense, as it will protect you from lowered returns during that period, while having immediate access to your money.

But if interest rates are bottomed out, like they are as of this writing, a liquid CD really offers no value at all, and performs exactly the same a a money market or savings account. It won’t hurt you, but it won’t help you either. The only thing it could do is lock you in to lower interest rates, keeping you from enjoying better returns.

Consequently, in a low interest rate environment like we are in today, there is no value in a liquid CD, and if you think interest rates will rise sometime soon, you could miss out if you’re locked into a liquid CD rate.

On the other hand, if interest rates start to move up and look like they’ll start declining again, a liquid CD makes sense, and it is the only real time it adds any value to your savings strategy.

With the names sounding so similar, a money market account and a money market fund can be confusing at times to many people, and considered a different name for the same investment vehicle, when in reality they’re very different in spite of similar sounding names.

For a money market account, this is a savings account banks or credit unions will offer to their customers, where the difference is it’ll have a higher interest rate based on higher minimum balance requirements than a passbook savings account would, which usually has no minimum balance requirements.

A money market account’s funds will also be backed up by the Federal Deposit Insurance Corporation (FDIC), for up to $250,000 at this time, which could be brought back down to the normal $100,000, once the temporary higher protection may be lifted.

Another element of the money market account is you can only make up to six withdrawals a month, and in some cases also have check writing privileges of three a month for the account. Fees can be applied if you go beyond the limitations of the terms of agreement, so they should be read and understood so you aren’t charged unnecessary fees.

If you belong to a credit union, your capital in a money market account would be protected by the National Credit Union Administration, which is also a federal agency.

A money market fund on the other hand is a mutual fund which invests in short-term securities like U.S.Treasuries, commercial paper and CDs, among a number of others.

Although a money market fund has no guarantees for you capital, they rarely fall below their net asset value, although a recent case happened when it did, when Lehman Brothers collapsed last year and people lost money in their money market fund accounts. This is extremely rare, but it can happen.

Of course the slightly higher risk comes from slightly better returns.

Either one of these accounts should be used to place your backup capital for emergencies, where you can get almost immediate access to your money.

The trade-off between the two is a little less interest with absolute guarantee for your money in a money market bank account, while the money market fund will normally give you a better return with a little more risk, and no guarantee of your money.

While many people will say that it is very important to have a savings account, not all will be able to answer the question as to why. A savings account, in some ways, seems to promote some sense of financial security. But while people continue to strive to put money away, few have a clear understanding of what the money in the savings account truly represents.

One of the important parts of dealing with your finances is to set goals for yourself and your money. Stating a savings account with specific goals can help you not only reach your intended financial goals by motivating your for all of the right reasons, it will also help you manage your money better. There are several goals you can set in conjunction with your savings account and here we will discuss some of those goals.

Emergency Funds
Collecting money towards any unexpected emergencies is a great idea to prevent having to use credit cards or suffer unneeded stress to take care of the emergency. Unexpected expenses can sometimes break you financially and having an emergency fund from which to draw needed funds is important to financial stability. This money should remain untouched and gather interest until needed. This money can add up nicely over time if no such emergencies arise and will provide comfort in the event something does spring up.

Short Term Savings
If your family is planning a vacation or a major purchase, you can add money into your savings account to save for these plans. You can save for one or more goals at the same time by dividing available funds and tracking the amounts on paper if you only have one account. By proper pre-planning and consistent deposits into your savings account, no financial goal is unattainable and will prevent you from having to bring in debt worries or credit card concerns to get what you want.

Long Term Savings
Many people are saving with bigger goals. If you want a down payment for a home or a car, you can plan to save more long term in order to reach your goals. This too takes pre-planning and consistency to accomplish but having the cash outright to make your dreams a reality is a sign of financial success.

Annual Expenses
There are several expenses that families will incur on an annual basis that can really cause havoc to your budget. For instance, car insurance and homeowner’s insurance premiums can be cheaper if you pay in one lump sum. Start saving some smaller amounts each month to tackle these bills in full and benefit from the added savings. Take the amount of your bills and divide them by the 12 months of the year. This total will likely be small and much easier to put away than one large amount at a time.

A popular choice for today’s savings plan include using an online savings account. If you are looking for a flexible online savings account that allows access to your account and your money at any time,  you may be interested in the services of DollarSavingsDirect.com. The Dollar Savings Account is an FDIC insured, online baking option that offers a high annual percentage rate, currently at 2.25%. The APR is flexible and may change at anytime due to the conditions of the market.

Account Advantage
One of the advantages of the Dollar Savings Account is the fact that there are no charges or service fees incurred by account holders. For every penny you deposit into your Dollar Savings Account, you get to keep instead of paying back in fees. One of the account requirements is accounts must maintain a $1,000 minimum balance.

How to Apply
To open a Dollar Savings Account, you visit the website and click on the Open Now! Tab. Account holders must be at least 18 years of age, be able to provide a social security number, possess a legal address in the United States, and have a personal checking account in a US bank. Once the account has been opened and approved, you can either make your initial deposit by transferring funds from your checking account or by mailing in a paper check. Checks can only be used for initial deposit and all other transactions must be made electronically. Transferring of funds generally takes 2-4 business days to be complete. Transfers can be completed on a one-time basis or can be set up to happen on a reoccurring basis. Direct deposits are also accepted.

Account Convenience
The Dollar Savings Account is convenient and available online 24/7 so you can monitor your account whenever you want to. You can easily make deposits by automatically linking a checking account to your Dollar Savings Account. This also allows you to withdraw funds from the online account and have then deposited right into your checking account. Each account can be linked to a total of two checking accounts. Your account statement is available at any time online and are available for a period of up to 24 months. All account statements are issued every month.

If you are looking for a reliable online savings account with flexibility and no fees, check out and apply for an account at DollarSavingsDirect.com where you can earn higher than average interest rates on all of your deposits.