A savings or money market account is always the safest way to keep cash amounts (large and small) available to you for anything ranging from a health emergency to the purchase of a lake house. Any other investment or so-called vehicle involves more risk to principal and less liquidity.
Even if your focus is to invest for the long term in other asset classes (such as equity, bonds, commodities or real estate), you should also have a significant allocation to cash in the form of a savings or money market account.
While just about everything has outperformed cash since the 2008-9 financial crisis, there is no certainty that cash will continue to underperform.
However, the challenge that has faced investors for most of the last two decades is that a standard savings or money market account with one of the largest and most well-recognized banks is going to earn such a scant amount of interest that you will significantly lose the purchasing power or your savings over time.
Fortunately, there is competition for your savings dollars and there are banks offering higher rates. Especially when you take account of the value of compounded interest over time, these higher rates enable you to hold purchasing power better than standard accounts.
Opening higher earning bank accounts does not involve much time, but they offer the same FDIC coverage (or NCUA coverage) as conventional banking. It remains important with accounts with all banks and credit unions to stay within applicable insurance limits. Learn more about FDIC and NCUA insurance here.
Online accounts are very easy to open and can be done from the comfort and convenience of your own home. RatesAndInfo.com lists these accounts here. However, we have also found that some local banks and credit unions will offer competitive rates, depending on where you live. For your convenience, we have a table that include these rates here.