This is the number one question I get: “What should I do with the money in my savings account?”

With banks paying next to nothing in interest, it can be painful to keep thousands of dollars just sitting there. I always recommend having at least something in a bank account. Even though you won’t get a return, it’s there when needed. But I understand if someone wants to be opportunistic.

Three features of investment accounts

The first thing you should do is determine what’s important to you. Ideally, everyone wants three things:

  1. A decent return
  2. Access to the funds
  3. Safety

The problem is you can’t have all three (although wouldn’t it be nice?).

I find that you can, at best, have two out of the three. Ask yourself—what’s most important? If you are willing to forego the safety and comfort of a bank account, here are some options.

Options for extra savings

Investment Account

A brokerage account allows you to buy investments such as ETF’s (exchange traded funds), mutual funds, and stock. You can open a taxable account, meaning it’s not a tax-qualified account like an IRA.

The benefits of a brokerage account include:

  • Accessibility—you can sell investments and have the funds in your bank account within one to three business days.
  • Investment options—you can invest in all sorts of publicly-traded securities.
  • Automated investing—you can set up ongoing transfers if you want to continually add to your investment account.

As you can imagine, there are no guarantees with investing inside a brokerage account. Your return is dependent on the investments you choose and how they end up performing. For someone willing to take on investment risk, this can help your extra savings retain purchasing power over time.

Roth IRA

Say you are not currently utilizing a Roth IRA, but are within the income limits to do so. You could put that extra savings to work in a Roth (up to the $6,000 annual limit).

But retirement accounts penalize you for withdrawing funds early—what if this is money you want to keep liquid? No problem!

Unlike a Traditional IRA, a Roth IRA allows you to withdraw your contributions without taxes or penalties. Why? Because you don’t get a tax deduction for Roth contributions. If an emergency occurs, you can withdraw contributions without worrying about taxes. If no big emergency arises, you’ve ended up putting that extra money to good work!

Life Insurance

For someone who carries a lot of extra cash–$100k or more–a purposefully designed whole life insurance policy could be a good option. I find that people with this much in savings are already investing, so they might be looking for other avenues. Or they might be desiring something with less risk.

Whole life insurance provides a cash value that builds over time. Because the cash value is not invested in the market, whole life insurance can fit the bill for someone looking for safety.

How about the return? Historically, long-term internal rates of return have compared very favorably to other fixed income investments like bonds, so you know you can get a decent return on your money.

A life insurance policy isn’t for funds that you want access to right away. It can take a few years for the policy to provide cash value and liquidity. But after several years, you now have an alternate source of cash for emergency needs.

A bank account has its purposes

Banks serve a purpose—but growing your wealth is not one of them. Unfortunately, our historically low interest rate world means that you need to take on some investment risk or give up some liquidity to get a decent return.

Keep enough in bank accounts to cover some emergency expenses. But just because you are putting money to work elsewhere doesn’t mean you are locking up those funds. Look at these three options if you find yourself with excess savings.