Where's the safest place to keep cash these days?

No financial advisor worth their salt would ever suggest keeping your money under your mattress. For starters, it's not safe under there. And besides the fact that mattresses aren't FDIC-insured, you're not keeping up with inflation.

This is especially true when inflation is high. "Inflation is like a negative interest rate," says Robert Steen, USAA Advice Director for Retirement and Complex Planning and CFP® professional. "That's why the question of where you should keep your savings is so important."

So, where's the safest place to keep your cash? First, let's talk about your goals and your time horizon.

What do you want, and when?

It's a basic truth that if you start with a goal in mind, you're way more likely to get there.

Typical goals include planning for retirement, starting an emergency fund, saving to buy a home, or putting money away to pay for your children's college. Once you've defined your goal, you can decide where you should keep your savings.

Your time horizon is just as important. If you don't need to use your money for a while, at least five or 10 years, you can usually get a higher rate of return. But if need your money sooner, you'll probably trade earning power for something more stable.

Other things to think about

Once you know your savings goal and how long it'll take, there are some other things you should consider about money, banks and accounts that'll further help you decide where to put your money.

Liquidity

This is the availability of your assets. Ask yourself, how easily can I get to my savings? Will I have to pay a fee for taking it out if I need it sooner than I expect?

Protection of principal

Your money is generally safe in a bank insured by the FDIC, and you can estimate how much protection you may have by using the FDIC provided EDIE tool.^{See note1} Insurance based products like multi-year guaranteed annuities, or MYGAs, are designed to protect principal, but are dependent on the financial strength of the insurer and are not covered by the FDIC.

Price volatility

This describes how rapidly the price changes for any asset. Stocks or mutual funds are just one example of assets whose price can move up and down during the day or over time. Assets like bank deposits and fixed rate annuities are not generally subject to price volatility. Price volatility isn't a bad thing, but you should understand if it's something you can live with.

Minimum deposit and balance

Some banks, financial institutions, and insurance companies may require you to deposit at least a certain amount of money when you open an account or purchase an annuity contract and may require a minimum balance to keep the account open. This may be expected since the institution holding your money usually has upfront costs to set up and maintain an account. Similar to the issue of liquidity, minimums may not be an issue, but you should always be aware of them just in case you think your balance may fall short.

Fees

Fees vary among all financial institutions and by account or contract type. It can pay to read the fine print. Obviously, you want to be careful about putting money in an account where you pay more in fees than you gain in interest. Also, make sure you won't be charged a fee if you don't keep a minimum balance.

Rate of return

This is the profit you make from an account, such as interest or dividends. It too will vary from one financial institution or account type to another, making it difficult to make an apples-to-apples comparison. You've probably heard about "risk-return" tradeoff and in order to earn a higher rate of return you have to be willing to accept some risk. Also, in general and all else being equal, the longer you commit to an investment such as bank deposits, fixed annuities, or other fixed investments, the higher the rate of return. We can't cover every type of asset or investment's potential rate of return in this article. But the point is for you to understand some of the factors that contribute to what you may earn, and for you to decide if you can accept these when making your own decisions about where to put your "safe" money.

Low-risk accounts, pros and cons

You've done your homework and you're ready to start searching for a specific account. Again, what's best for you usually comes down to how much risk you want to take and when you'll need to access your money. Here are some low-risk options.

1. Checking accounts

If you put your savings in a checking account, you'll be able to get to it easily. This is a great perk if you need money right away. But if you have a long-term savings goal, a checking account generally won't keep up with inflation.

2. Savings accounts

Like a checking account, a savings account generally won't beat inflation over the long run. But if you're working toward a short-term goal like an emergency fund, savings accounts can be a good option since they generally yield slightly more than checking accounts.

3. Money market accounts

These include high-yield accounts, savings accounts and mutual funds. They usually yield slightly more than savings accounts but often have restrictions on how much money you can withdraw and how many withdrawals you can make.

4. Certificates of deposit

Like checking, savings and money market accounts, CDs are a good option if you have don't want to take on much risk and have a short time horizon. Typically, the rate of return for CDs is higher than saving accounts.

Keep in mind that CDs are held for an average of about three years. They're best for savings goals that have a defined time-period, like saving for home renovations or education expenses. That's because early withdrawals often come with fees.

5. Fixed rate annuities

MYGAs, are also known as deferred fixed annuities. They have a rate of return just above savings accounts and CDs. They're considered a safe option because the consumer doesn't bear the price risk. Plus, they usually have low fees.

In the "cons" column, annuities may not be liquid and they have higher minimum requirements. They also aren't FDIC-insured. So before you buy one, make sure you're buying from a reputable company.

6. Series I and EE savings bonds

They're known for their stability because they're backed by the government, and they can earn interest for 30 years. They often have tax advantages, too. The different types offer different advantages. Series I savings bonds protect you from inflation, while EE savings bonds earn interest based on current market rates.

Assuming there's a good fit for your goals, and time your horizon is longer than three years, savings bonds may be a good option.

7. Treasury securities

These include bills, notes, bonds and Treasury Inflation-Protected Securities, or TIPS. They usually have a higher rate of return and if you buy bonds directly from the U.S. Treasury, you won't have to pay fees. But unlike savings bonds, which can usually be bought with an investment as low as $25, the minimum purchase amount for treasury securities is $100.

For people who won't need their savings for five years and want it to keep pace with inflation, TIPS may be worth considering.

8. Municipal bonds

They're often issued by states, cities or counties, so they're considered safe. That's because, even in bad times, governments can increase taxes to cover them. Also, if you have a state income tax and you buy a bond issued by the state, you can get double tax benefits.

Because municipal bonds are considered less risky and have a tax advantage, they typically have a lower stated interest rate than other bonds.

9. Corporate bonds

These bonds make up the largest bond market in the world, dwarfing the stock market and cryptocurrency. They aren't backed by stable government entities, so they generally have a higher rate of return. They're also different because they're taxable.

Higher credit quality corporate bonds may be considered a safer bet than common since a bond owner is generally ahead of stock owners in the repayment order, should the company fail. Make sure you check a corporation's credit rating. The rating scale starts at AAA, which is considered the lowest risk, and goes to C and D ratings, which are considered "junk" or "high-risk" bonds.

10. Gold

Based on the considerations at the beginning of this article, gold may not be considered a low-risk option for your money. It's not liquid, not protected by a government or institution and it can have high price volatility and high minimum purchase requirements.

However, some people might buy gold for its higher rate of return or to add diversity to their long-term portfolios.

Take some time to think about it.

As you've seen, there are many options when it comes to where to save your money. And each one has its pros and cons. Start by thinking through what you're saving for and how long you'd like to save. Then use this guide to decide what best meets your unique needs.

The USAA Advice Center provides general advice, tools and resources to guide your journey. Content may mention products, features or services that USAA Federal Savings Bank does not offer. The information contained is provided for informational purposes only and is not intended to represent any endorsement, expressed or implied, by USAA or any affiliates. All information provided is subject to change without notice.