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High-yield savings accounts vs. stocks: Which do experts recommend now?
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Published in Stocks and Investing on Monday, August 25th 2025 at 22:15 GMT by CBS News🞛 This publication is a summary or evaluation of another publication 🞛 This publication contains editorial commentary or bias from the source
High‑Yield Savings Accounts vs. Stocks: Which Path Should You Take Right Now?
(A comprehensive synthesis of the Money & Personal Finance article on MSN, “High‑Yield Savings Accounts vs. Stocks: Which Do Experts Recommend Now”)
When the financial landscape is as volatile as it has been since 2022, the decision of whether to tuck your money into a high‑yield savings account (HYSA) or to let it grow in the stock market is more consequential than ever. The MSN piece (linked above) digs into the numbers, the risks, and the expert opinions that can help you decide where your hard‑earned dollars should sit in 2025.
1. What Are High‑Yield Savings Accounts and Stocks, and Why Do They Matter?
High‑Yield Savings Accounts
- Offered by online banks such as Ally, Marcus by Goldman Sachs, and Discover, HYSA’s provide annual percentage yields (APYs) that can range from 4% to 5% (or higher during brief windows of aggressive monetary policy).
- Deposits are FDIC‑insured up to $250,000 per account holder, providing virtually no risk of principal loss.
- They’re extremely liquid: you can withdraw or transfer funds instantly, making them ideal for an emergency fund, a down‑payment, or a short‑term savings goal.
Stocks
- Individual equities or broad index funds like the S&P 500 track the performance of publicly traded companies.
- Historically, the S&P 500 has averaged a 10% nominal return over the last 90 years, although that return can be highly volatile in any single year.
- Stocks carry the risk of loss: a recession can wipe out a sizable portion of an investor’s portfolio in a matter of months.
2. The Numbers on the Table
| Feature | High‑Yield Savings Account | Stock Market (S&P 500) |
|---|---|---|
| Annual Return | 4–5% (current APY) | 10–11% (historical) |
| Risk | Near‑zero | Moderate to high |
| Liquidity | Immediate | Immediate but subject to market closing hours |
| Tax Treatment | Interest taxed at ordinary income rates | Capital gains taxed at 0–15% (short‑term) or 15–20% (long‑term) |
| Insurance | FDIC insured | No insurance; market risk only |
| Inflation Protection | Often outpaces inflation (currently ~2%) | Generally outpaces inflation over the long run |
The MSN article cites the most recent data from the Federal Reserve (link to the Federal Reserve’s “Consumer Credit and Interest Rates” page) and from the S&P 500 historical returns (link to Yahoo Finance’s S&P 500 chart). Those figures underscore that while HYSA’s offer a safety net, stocks can deliver substantially higher long‑term gains – albeit with a higher probability of short‑term loss.
3. What the Experts Are Saying
3.1. Dave Ramsey: “Keep Your Emergency Fund in Cash”
Financial author Dave Ramsey (link to his Ask a Financial Advisor page) stresses that a “rainy‑day” stash should sit in a liquid, low‑risk vehicle. Ramsey’s mantra, “Pay yourself first by putting money into a 3‑6 month emergency fund in a high‑interest savings account,” echoes the consensus that an HYSA is the safe harbor for short‑term needs.
3.2. Suze Orman: “Let Your Money Grow for the Future”
Suze Orman (link to Suze Orman on CNBC) argues that for anyone beyond the 30‑year‑old “emergency‑fund‑only” phase, the stock market is the engine for wealth building. Orman points to the 2008 crash and the subsequent decade of growth as a reminder that “you can’t out‑grow a market downturn by putting all your money in a savings account.” Her take is that a diversified mix – 70–80% equities, 20–30% fixed‑income – balances growth and risk.
3.3. Bogleheads: “Index Funds, Not Picked Stocks”
The Bogleheads (link to the Bogleheads.org website) are famed for their “buy‑and‑hold” strategy using low‑cost index funds. They advise against trying to beat the market by picking individual stocks or timing entry/exit points. The MSN article highlights their viewpoint that a low‑expense index fund can match or beat the S&P 500’s return after fees, with significantly less volatility.
3.4. Morningstar Analysts: “Risk‑Adjusted Returns Matter”
Morningstar’s 2025 research (link to Morningstar’s “Risk vs. Reward” report) shows that when adjusting for risk, a portfolio of diversified equities still outperforms an HYSA over 10‑, 20‑, and 30‑year horizons. Morningstar’s consensus is that “the best way to manage risk is to spread your assets across asset classes and not just rely on one high‑yield savings account.”
4. Practical Decision‑Making: Where Should Your Money Go?
Emergency Fund
- Keep at least 3–6 months of living expenses in an HYSA.
- Choose an account with the highest APY (currently 4.5%–5.5%) and no hidden fees.
- Verify FDIC insurance coverage; use multiple banks if you exceed $250,000.Short‑Term Goals (1–3 Years)
- For goals like a vacation or a new appliance, an HYSA provides stable returns with zero risk.
- Avoid stocks if you need the money in the near future, as a market dip could hurt you.Long‑Term Growth (5+ Years)
- Direct a majority of your savings (often 70–80%) into low‑cost index funds.
- Consider a mix of domestic and international equities to reduce concentration risk.
- Rebalance annually to keep your risk profile in line with your age and financial goals.Tax‑Advantaged Accounts
- Don’t overlook retirement vehicles (401(k), IRA) where taxes are deferred or eliminated.
- Within these accounts, choose index funds or ETFs with the lowest expense ratios.
5. The Bottom Line: A Hybrid Strategy
The MSN article’s core recommendation is a hybrid approach:
- Use high‑yield savings accounts as the safety net for liquidity and security.
- Invest in a diversified equity portfolio for long‑term growth and to beat inflation.
By pairing these strategies, you preserve capital while still participating in the market’s upside potential. The synergy is especially useful in a climate where Fed rates are still high, and the yield spread between savings accounts and equities is widening. Even in a recession, the cushion provided by an HYSA can help you avoid selling stocks at a loss.
6. Where to Learn More
- HYSA Comparisons: The MSN piece links to Bankrate’s “Best High‑Yield Savings Accounts” list for the latest APY ratings and fee disclosures.
- Stock Market Basics: A referenced Investopedia article on “How Stocks Work” gives a primer on individual vs. index investing.
- FDIC Insurance: For those new to the concept, the FDIC website explains insurance limits and how to verify coverage.
- Expert Commentary: The article includes direct quotes from Ramsey, Orman, and Bogleheads, and links to their own websites for deeper reading.
In a financial environment that can shift as quickly as the market, the safest course is to stay informed. Use the data, heed the expert advice, and structure your savings and investments in a way that protects you today and builds wealth for tomorrow.
Read the Full CBS News Article at:
[ https://www.msn.com/en-us/money/personalfinance/high-yield-savings-accounts-vs-stocks-which-do-experts-recommend-now/ar-AA1LbiEb ]
