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January 27, 2015 | money-management

How to Diversify Your Savings Plan

Get the Right Mix

Everyone’s financial landscape, life goals, and circumstances are different; therefore no two savings plans are exactly alike. A well-developed savings plan generally should align to your life goals—and may involve several different types of low- and high- yield savings vehicles, such as Savings Accounts, Money Market Accounts, and Certificates (also known as CDs).

Diversifying your savings plan refers to the mix or blend of the different savings vehicles you’re using. The key to successfully diversifying your savings plan lies in finding the best mix between liquidity and earning the best return on your savings. Liquidity refers to how accessible your funds are. Generally speaking, high-yield savings vehicles tend to be less liquid than accounts that offer a lower rate.

Diversify Your Savings Plan According to Your Life Goals

Depending on where you are in your progress toward your life goals, you or your financial advisor should allocate your funds to these different account types appropriately. Consider these three scenarios and how the allocation of funds affects liquidity and earning potential.

Plan 1

This would likely be a savings plan appropriate for those who are focused more on growing their savings, and who don’t need to access those savings very often, like a young family with a long runway for saving. The majority of the funds is tucked away in long-term Certificates and other investments with higher rates, while a smaller amount is available in Money Market Accounts, short-term certificates or Savings Accounts, and can be used in case of emergency.

This savings plan offers an ideal mix of long-term certificates and other high yield investments for young families.

Plan 2

This plan more evenly spreads liquidity and earning potential with half of the funds in long-term Certificates and other investments, while the other half is in short-term Certificates, Money Market Accounts and Savings Accounts. This can be a good way to allocate your funds if you’re equally concerned with liquidity and earning the highest interest rates.

This balanced savings plan keeps funds in both high yield and lower yield certificates and accounts

Plan 3

This plan might be appropriate for someone who is likely to need access to funds in the near future—and on an ongoing basis. A good example is a family nearing retirement who may want access to funds for travel. The majority of funds are in a liquid Money Market Accounts, Savings Accounts, and short-term Certificates that are maturing and being reinvested every 6 to 12 months. Meanwhile, a portion of the funds can remain in high yield saving vehicles like long-term Certificates and other investments to maximize earning potential.

This lower yield savings plan is ideal for people who need to regularly access their funds


There are an infinite number of ways to allocate the funds in your savings, but which is best for you? Only you can make that decision. Take the time to map out your savings and financial goals with a financial advisor. Together, you can create a savings plan that will meet your goals—and that peace of mind can make all the difference in the world.

Once your savings plan is in place, be sure to set aside time regularly to check on what your money is earning. At Amplify Credit Union, you’ll get the personal attention you need to help you diversify your savings to earn more.

Concerned about locking your funds away in a Certificate (CD) for too long? Learn more about CD Laddering.

Interested in increasing your earnings?

Certificates of Deposit (CD)