3 Places I’d Rather Stash My Cash Than an HYSA Right Now

High-yield savings accounts (HYSAs) are living up to their name right now. Many of the best HYSAs have rates of 4% to 5%. At those rates, you could earn $400 to $500 in interest per year. That's an impressive return, especially considering there's no risk involved.

Even with the benefits of HYSAs, there are some potentially better options available. If you're keeping most of your cash in a savings account, consider moving some of it to one (or more) of the following.

1. A Roth IRA

Individual retirement accounts (IRAs) are a way to invest money for retirement while saving on taxes. There are two types: traditional IRAs and Roth IRAs. Traditional IRAs will be on this list, too (spoiler alert!). But my personal favorite is the Roth IRA.

Roth IRA contributions aren't tax-deductible. Instead, you get to withdraw money tax free in retirement. If you end up with $300,000 in a Roth IRA, that's $300,000 in tax-free income you'll have when you're retired. Your investments also grow tax free. If you have money in an HYSA, all the interest you earn is taxable income.

Another reason I love Roth IRAs is their withdrawal flexibility. With most retirement accounts, you pay an early withdrawal penalty if you withdraw money before age 59 1/2. With a Roth IRA, you can withdraw contributions you've made at any time. You only need to wait until 59 1/2 to withdraw earnings on your investments.

Many stock brokers offer Roth IRAs, but few offer a match on contributions. Robinhood does, which helps you grow your retirement savings even faster. WARNING SCL [brokerage slug=robinhood field=apply_url] does not generate a link. Anchor tag will not render in production.Click here to learn more and open an account today.

2. A traditional IRA

Traditional IRAs are another popular way to save for retirement. This type of IRA allows you to reduce your taxable income. If you contribute $7,000 to a traditional IRA, you get a $7,000 tax deduction. The annual contribution limit for IRAs is $7,000 in 2024 and 2025. Those 50 and older can also make an additional $1,000 in catch-up contributions.

If you think your income is higher now than it will be in retirement, a traditional IRA could be the best option. You'll save now while your income is higher and you're paying more in taxes, instead of in retirement when your income is lower.

Can't decide between a traditional and Roth IRA? Keep in mind that you can use both. Your combined contributions to both your IRAs just need to stay under the annual contribution limit.

Since this is such a popular type of account, there's no shortage of options. To find the right one for your situation, check out our curated list of the best IRAs.

3. A taxable brokerage account

IRAs are great, but as mentioned, they have yearly contribution limits. Since they're retirement accounts, they also have that age minimum of 59 1/2 for penalty-free withdrawals. While they're still certainly worth using, you may want to have a taxable brokerage account, too.

This is an investment account with no contribution limits or early withdrawal penalties. You can deposit as much as you want, invest it in anything your broker offers, and withdraw money at any time. You just don't get any tax savings with this type of account.

With all the top stock brokers, you'll have plenty of investment options. If you want to prioritize growth, you could invest in an index fund that tracks the entire stock market. If you want to play it safe, you could go with a money market fund and get returns equal to or better than HYSA rates.

HYSAs are useful, and there's nothing wrong with keeping some of your money there. For example, an HYSA is perfect for your emergency fund and short-term savings. But don't put all your eggs in that basket. The accounts listed above give you access to investments with greater growth potential, and the first two have excellent tax benefits, too.