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Having money in a savings account may feel like a smart financial choice. And to some extent, it is. You want to have your emergency fund in a savings account. If you’re going to need money for a big purchase soon, then that belongs in savings, too.

Putting money in a high-yield savings account in these situations keeps it accessible. You can use it when you need it without penalties while also maximizing your potential returns — especially if you shop around to find the best savings account that pays a high rate of interest with no fees.

However, outside of your emergency fund and your savings for short-term purchases, you should forget about putting any additional money into savings. Here’s why.

You can more than double your return by investing instead of putting money into savings

If you have money you aren’t going to need for a couple of years, there’s a far better option than sticking it in a savings account, where you’re likely to earn in the 4.00% range or less. That better option is a brokerage account.

Many brokerage accounts can be opened with no minimum balance. Once you open one, you can get your money into the stock market. You don’t need any real investing knowledge to do this, either.

You can just buy an S&P 500 index fund, which tracks the performance of around 500 large U.S. companies. An S&P fund provides instant diversification, comes with low fees, and has consistently produced a 10% average annual return over the last 50 years.

You don’t want to put your emergency fund or short-term savings into an S&P 500 fund because you need a long time horizon to minimize risk. If you need to take your money out for an unexpected expense at a time when the market is performing poorly, you might have to cash out your investments at a loss.

A longer investing timeline gives you more time to ride out any short-term dips. If you have a couple of years until you need that cash, opting to earn around double — or more — than what a savings account offers is an easy call.

If you have money you won’t need too soon and you don’t already have a brokerage account, consider opening an account with Robinhood. You’ll enjoy easy trading right from your phone with no fees. Click to learn more and get your account open so you can start making your money work for you.

CDs can provide a better return, and your rate is locked in

So, the market is a good option if you have an investing timeline of a few years or longer, but what about money you’re going to need in six months or a year, or even two or three years?

That money often doesn’t belong in savings either. Instead, a top-rated certificate of deposit (CD) is likely the better place for it. CDs historically offer higher rates than savings accounts do, and your rate is locked in for the duration of the term so you don’t need to worry about it going down — unlike with a variable-rate savings account.

You do have to lock your money up in a CD until it matures to avoid early withdrawal penalties. But if you know you won’t need that cash for a few months or a few years, that’s not really a problem.

So, there’s really no reason to add extra money to a savings account once you have your emergency fund and short-term savings needs met. Instead, put it into a CD or a brokerage account where it can work harder for you.

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