Most people are familiar with the savings account, it was likely the first bank account that you had. As we get older however most of us move on to more sophisticated investments and forget about the savings account. This is a mistake there are plenty of advantages to having one. Not all of your money should be in one of course but is a good place to keep your emergency cash.

A savings account is one of the simplest and safest investments that you can make, which is why everybody should have one. They are available from practically any bank and they work like most other bank accounts. You deposit your money and you can withdraw it any time that you want. While your money is in the bank it earns interest, at a much higher rate than you would get from your checking account.

The reason that a savings account is such a good idea is that they are insured by the FDIC. That means that even if the bank were to fail your money would still be safe. It really doesn't get any safer than that. The other big benefit that savings accounts offer is that you can get your money out at any time that you want. There are virtually no other forms of investment where you have immediate access to your money any time that you want it. This is why you want to keep at least a part of your investment portfolio in a savings account, it is money that you can access immediately in the event of an emergency.

While there are certainly good things about a savings account there are also some downsides, which is why you don't want to have all of your money there. The biggest issue is the return that you get on your investment. While the interest paid on savings accounts is a lot higher than you would get on your checking account it is nowhere near as good as you would get from other forms of investment. One of the other issues with a savings account is that since you do have such easy access to your money a lot of people will find that withdrawing money for day to day expenses is too tempting.

If you are thinking about opening a savings account, and really you should be, then the big thing that you will want to look at is the interest rate that they are offering. Since these accounts are all insured and they all operate in the same way you don't really have to evaluate them the way that you would other investments. Normally you would measure risk versus reward but since in this case there is no risk the only thing that you really have to pay attention to is the reward. In most cases you will find that you will get a better interest rate if you go with an online bank.