high yield savings account

[Paloma Villarreal]

Anyone have good recommendations for a high yields savings account? any pros and cons you would like to share about this topic? I'm looking to get one soon but looking into my choices at the moment 

[Joseph Neri]

Before you pick a high yield savings account, ask yourself what that money is actually for.

If it is your emergency fund or capital you are keeping on the sidelines for deals, a HYSA gives you maybe 3.5-4 percent. That is fine. But it is taxable income, so after taxes you are closer to 3 percent. And the money is doing exactly one job -- sitting there.

There is a vehicle where that same money grows tax-deferred, can be borrowed against in 3-5 days with no penalty, keeps growing even when you borrow against it, and includes a death benefit for your family. That is what a properly structured whole life insurance policy does.

It is not for everyone. It makes the most sense if you have stable income, a long time horizon, and you want your reserves to work harder than a savings account. But if you are going to park cash somewhere anyway, it is worth understanding your options beyond just picking the highest APY.