The Basics of Savings
It’s never too early to start thinking about a long-term savings plan. In fact, the younger you are when you start, the better off you’ll be when you retire. But retirement isn’t the only life event you should be saving for. It’s good to have a cushion in the event you lose your job or have to take care of unexpected home repairs or medical problems. If you have children, there’s college savings to consider as well. Basically, it’s just an all-around good idea to be putting money away for a rainy day.
At Popular Bank, savings is what we do. Understanding account basics is an important first step on the path to savings. We’re giving you the information you need to know to get started.
Ways to Save
At Popular Bank, our entry-level savings account is called Relationship Savings. Basic savings accounts generally have a minimum opening amount requirement, as well as a monthly balance requirement. If you don’t maintain the required monthly balance, you will probably have to pay a small monthly fee. While these accounts come with withdrawal limits, they do provide easy access to your money, while earning a small amount of interest.
Money Market Accounts
Not to be confused with Money Market Funds, Money Market accounts help you earn interest on your money at higher rates than basic savings. These accounts often come with additional features such as check writing and debit cards, but require higher minimum and opening balances. Money Market accounts, like basic savings, come with transaction limits. To get information about the Money Market accounts Popular Bank offers, please contact our Customer Care Center to assist you at 1-800-377-0800, or visit your nearest branch.
Certificates of Deposit (CDs)
If you’re saving money that’s not for immediate use, you may want to look at a Certificate of Deposit. These accounts offer fixed interest rates that are higher than basic savings or money market accounts—you just can’t withdraw the money for a pre-determined period of time or you’ll face a penalty. Many banks offer several CD lengths, ranging from a few months to a few years. Generally, the longer the term you select, the higher the interest rate will be.
Individual Retirement Accounts (IRAs)
If you’re ready to start saving for retirement, you’ll want to consider an IRA. Even if you have access to a 401(k) or pension through work, funding an IRA may still make sense, depending on your financial situation. There are two types of IRAs: Traditional and Roth. Both accounts carry different tax benefits but these benefits phase out at certain income levels. If you withdraw money before the age of 59½, you will have to pay a 10-percent penalty. There are some penalty-free exceptions, which include college, medical, or first-home bills.
How Much to Save
While not everyone agrees on how much you should keep in an emergency account, the minimum should be between three to six months worth of income. If you were to lose your job, that would give you three to six months to find something else, while still being able to cover your expenses. This is money that should be easily accessible (i.e., don’t have your emergency fund tied up in long-term savings accounts like an IRA).
Just like the varying opinions on how much you should have in your savings account, there are a lot of ways to look at retirement. Essentially, you want to save as much as you can. Blanket advice says 10 to 15 percent of your income starting in your 20s. However, if you really want to have a solid plan, you’ll want to sit down with one of our bankers to create a tailored plan that suits your life and your goals. A banker will also take into account savings you already have, your current age, and when you plan on retiring.
Have questions on how to get started saving, or augment your current savings? Visit our branch locator to find a Popular Bank near you. Our bankers are waiting to speak with you now.
The information mentioned in this article is for informational purposes only, is intended to provide general guidance and does not constitute legal or tax advice. Each person’s situation is unique and may materially differ from the information provided herein. You should seek the advice of a financial professional, tax consultant and/or legal counsel to address your specific needs before any financial or other commitments regarding the issues related to your situation are made. Banco Popular North America does not make any representations or warranties as to the content contained herein and disclaims any and all liability resulting from any use of or reliance on such content. Certain products are not guaranteed by Banco Popular North America or any of its affiliates, not FDIC insured, not a Deposit, not insured by any Federal Government Agency, and may lose value including loss of principal.