Should I save in a HYSA or CD??

I would always prefer to be liquid in a HYSA. The variance in rates basically evens out over the long term, and really the variance from highest to lowest rate will only be a loss of a few dollars, but is worth it in exchange for being fully cash

There's a world where you can take advantage of both. My Emergency Fund (12 months) is split up like: 1 month - checking 2 months - HYSA 9 months - rolling CD ladder. I've been considering moving the CD ladder into VUSXX though. However, I'm still finding CD rates higher than VUSXX is returning (even including the 6% State tax advantage I would get) so it's difficult to make the swap.

And they haven't changed much anyways. They tend to only change when the fed rate changes.

I do both. I have 60%ish in an HYSA and two staggered CDs that make up the rest of my emergency fund. My save to spend accounts (car, travel, etc) are all HYSAs.

If truly only sitting for 2-3 years, I would choose the HYSA option. Keeps the money easily accessible and like the other comment mentioned, the fluctuations of the interest rate should not be too extreme where it would meaningfully effect your returns.

Why does it matter to you if HYSA rates bounce up and down a bit? How will you contribute to a CD from every paycheck? You'd have to constantly buy new ones, at different rates. With a HYSA the money will be easily added, accessible, and will grow fastee than your current savings account. Checks all boxes.

If it’s money you absolute do NOT plan to use, use a CD. But if you also need cash for emergencies, put it in the HYSA. Money you can access that you might need in an emergency shouldn’t be in a CD. You can do both. It just depends on the amounts and purpose.

Me, I like the flexibility of a brokerage account, invested in SGOV. You'll get a similar 3-4% yield, same security of principal. As you save/build this account, it's then easy-peasy to buy ETFs with the surplus.

CDs are mostly outdated products, not sure why people still think they're viable. They benefit the bank, not you. The only time they can work is if your time period is pretty solid, and that specific CD rate is noticeably more than a HYSA. If you need access, stay with a HYSA. The other option is a treasury fund like SGOV within a brokerage account. That has the benefit of saving state tax, depending on your state. The rates of these things will always fluctuate. Even a CD after it matures, you have to see where its at again. The difference in the rates is not going to be huge, for most balances, you're talking a couple hundred bucks on like $100k invested. Thats not going to lose you a house.

I keep about 10-grand in HYSA. My other savings are in my brokerage account. Only downside I see is if you needed to liquidate that brokerage account during a market low although your situation doesn’t seem like you would ‘need’ to take the money out rather it’d be a spending choice.

> But I don’t trust interest rates of a HYSA Regarding the above comment - There are two reasons why the interest rates on an HYSA change. One is that the market rate changes - there is nothing you can do about this and it impacts all investments, period. The interest paid on all accounts was higher in 2023 when we had high inflation than in late 2020 when the near-zero interest rates due to COVID made the yield on most interest bearing accounts close to zero. The other reason is temporary promotions being run by various banks that offer HYSA. Most of these promotions last for 6-9 months when they are trying to raise funds and then the promotion expires. If you are inclined to "chase these promotions" then you can do that and if you are on top of it, you will do better than other guaranteed fixed interest rate investments. But be prepared to move the money roughly every 6-9 months, and if you do not stay on top of things, be prepared for a worse outcome than the alternative below. An alternative is to invest in a good money market fund at one of the better known brokerages (Schwab, Fidelity, Vanguard). You will consistently get a good market rate of interest and don't have to worry about "yield chasing" (although it will be lower than successfully yield chasing). Note again that a "good market rate" in 2023 was very different than in late 2020.

We have an HYSA for our main emergency fund and have some laddered CDs running at around 6- to 9-month intervals for our vehicle funds and any stretch goals like home renovations. Just make sure you're keeping up with inflation, somewhere in 3-4% ballpark. Making 3.4% vs 3.8% is not make or break for your money. Nor is paying a penalty of three months' worth of interest if you find you need to cancel a CD early. Where you can make a difference is separating out long-term goals, like retirement or a house fund, where you might not need the money for 5+ years. Then, you can consider investing your money in a taxable brokerage instead. The con there is that the market could be in a downturn when you want to use the money, and you'd have to wait that out; the pro is that you'd outearn inflation based on long-term averages.

CD rate are reflective of the current Fed interest rates too. They just don’t fluctuate over their term like HYSA. You can also create a CD ladder if you worry about liquidity but prefer CD over HYSA.

invest in the thing that HYSAs invest in and keep the profit that they are scraping of the top: SGOV

HYSA. I don't think the rates swing as much as you think they do.

Based on your stated needs and concerns, get a No-penalty CD. Interest rate is locked in, no penalty if you need to access the money unexpectedly. The rates are usually almost the same as a CD which makes no sense to me but I use these all the time.

Marcus NO penalty CD is 4% for 11 months.

Have you considered inflation risk? Any rate of return near the fed rate means you are losing buying power every day you hold said products (in my opinion, anyway). If you want to actually grow your wealth in real-value terms, you need to take on some volatility - AAA-rated CLOs ($JAAA) for instance get you above the inflation hurdle while taking on very nominal amounts of volatility.

First of all, your savings shouldn’t be in a typical savings account. It should be minimally in a HYSA. CD vs HYSA is all based on your comfort and what you can find for rates. CDs are still liquid, but you end up forfeiting a few months’ interest as a penalty.

The prime directive goes over this pretty well keep an Emegergency fund in either checking or savings (NOT CD) once that is covered you can put the rest in something more locked way. For 2-3 years a cd might be nice but keep that EF liquid

Almost always a HYSA. Only time you might use a CD if you have a huge ton of cash on top of emergency saving, and plan on spending that money in 6 months or 1 year. Example: A real estate agent gets a huge bonus of $200k. After taxes, decides to use the remaining amount to pay for their teenage child's state school college in one year. This is the perfect time to use a CD.