What Is a High-Yield Savings Account [Infographic]

Certificates of deposit (CDs) could be a good investment option if you have a large sum of cash and a short-term savings goal. These federally insured, low-risk investments offer a predictable fixed rate of return and allow you to bypass broker commissions by investing directly with a bank or credit union.

Many experts recommend keeping at least three to six months of living expenses in cash in an emergency fund that can be easily accessed in case of an unexpected setback such as a serious illness, injury, or job loss. But what about your long-term investments? How much—if any—should be in cash?

Balancing your investment portfolio can sometimes feel like walking a tightrope. Higher-risk investments may produce greater rewards, but leaning too much into one type of investment could also cause your investment portfolio to take a dive should that investment go south. Depositing some of your money into a cash investment account could help lessen some of your risk, especially if you’re older and looking to transition from riskier to less-risky investments. It’s also a decent move to make if you’re pausing to you get your bearings and want to protect your money and maintain stability as you ponder your next financial move. Just be aware that, in exchange for less risk, cash investments typically offer lower returns than higher-risk investments.