Here's Why Millionaires Rarely Use Savings Accounts Like the Rest of Us
KEY POINTS
- Millionaires put their money where it can earn the most for them.
- Keeping too much money in a savings account can lower your purchasing power.
- Be sure to keep emergency savings in a high-yield savings account.
Generally, when people think about building wealth, they assume that keeping money in a high-yield savings account is a smart move. After all, it's safe, it's easy to access, and it even earns a little interest. But here's the truth: Most millionaires don't treat savings accounts the way the average person does.
So why don't the wealthy park their cash in savings like everyone else? And what do they do instead? Let's take a closer look.
1. Millionaires hate losing money to inflation
Savings accounts might keep your money safe, but they can also cause you to lose purchasing power over time. Even with high-yield savings accounts offering around 3.00% to 4.00% APY, inflation can outpace those returns. For example, if inflation is running at 6% and your savings account returns 4%, you're actually losing 2% in real value every year.
Millionaires understand this, which is why they don't let large amounts of cash sit in savings accounts for too long.
Our Picks for the Best High-Yield Savings Accounts of 2025
| Product | APY | Min. to Earn | |
American Express® High Yield Savings
Member FDIC.
APY
3.70%
Rate info
3.70% annual percentage yield as of April 5, 2025. Terms apply.
Min. to earn
$0
Open Account for American Express® High Yield Savings
On American Express's Secure Website. |
3.70%
Rate info
3.70% annual percentage yield as of April 5, 2025. Terms apply.
|
$0
|
Open Account for American Express® High Yield Savings
On American Express's Secure Website. |
CIT Platinum Savings
Member FDIC.
APY
4.10% APY for balances of $5,000 or more
Rate info
4.10% APY for balances of $5,000 or more; otherwise, 0.25% APY
Min. to earn
$100 to open account, $5,000+ for max APY
Open Account for CIT Platinum Savings
On CIT's Secure Website. |
4.10% APY for balances of $5,000 or more
Rate info
4.10% APY for balances of $5,000 or more; otherwise, 0.25% APY
|
$100 to open account, $5,000+ for max APY
|
Open Account for CIT Platinum Savings
On CIT's Secure Website. |
Capital One 360 Performance Savings
Member FDIC.
APY
3.70%
Rate info
See Capital One website for most up-to-date rates. Advertised Annual Percentage Yield (APY) is variable and accurate as of Feb. 6, 2025. Rates are subject to change at any time before or after account opening.
Min. to earn
$0
Open Account for Capital One 360 Performance Savings
On Capital One's Secure Website. |
3.70%
Rate info
See Capital One website for most up-to-date rates. Advertised Annual Percentage Yield (APY) is variable and accurate as of Feb. 6, 2025. Rates are subject to change at any time before or after account opening.
|
$0
|
Open Account for Capital One 360 Performance Savings
On Capital One's Secure Website. |
2. They prioritize investing over saving
The average person might deposit money into a savings account and feel secure knowing it's FDIC insured. But millionaires see money as a tool for growth. Instead of letting it sit in a low-yield account, they invest in:
- The stock market: The S&P 500 has returned an average of 10% annually over the long run.
- Real estate: Property values tend to appreciate over time, plus rental income provides cash flow.
- Private businesses: Many millionaires either own or invest in businesses, generating higher returns than a savings account ever could.
If you want to grow your wealth like a millionaire, consider shifting excess savings into stocks and exchange-traded funds (ETFs).
Start putting your money to work for you today. Check out our list of best online brokers.
3. They keep just enough cash for liquidity
This doesn't mean millionaires don't use savings accounts at all -- they do, but with a strategy in mind. Typically, they keep just enough in cash for:
- Emergency expenses: A liquid fund covering three to six months of expenses.
- Short-term purchases: Any big expenses coming up within the next year.
- Opportunistic investments: Having cash ready to jump on good investment deals.
The rest? They put it to work in higher-yielding assets.
What should you do?
You don't need to be a millionaire to start managing your money like one. Here are a few steps to take right now:
- Keep an emergency fund in a high-yield savings account, but don't hoard excess cash there. Have enough to cover three to six months of expenses.
- Invest in the stock market through index funds or ETFs to grow your money over time. Pick a great online broker today and let the stock market start working for you.
- Explore higher-yield alternatives like money market accounts or Treasury bonds for extra liquidity.
If you're ready to take your finances to the next level, start by reviewing your savings strategy. Are you using your money like a millionaire -- or letting it lose value in a low-interest account? Make adjustments as needed to ensure your cash is working for you.
Our Research Expert
Jake is a full-time Editorial Strategist for Motley Fool Money. He specializes in product ratings and all things credit cards, and wants to make sure each person has the best card for them.
We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. Motley Fool Money does not cover all offers on the market. Motley Fool Money is 100% owned and operated by The Motley Fool. Our knowledgeable team of personal finance editors and analysts are employed by The Motley Fool and held to the same set of publishing standards and editorial integrity while maintaining professional separation from the analysts and editors on other Motley Fool brands. Terms may apply to offers listed on this page. APYs are subject to change at any time without notice.