So you are working on building up your savings. Great job! Now, where do you put it? The best place for your savings will depend on what type of savings they are.

For retirement savings, your best bet is likely some form of a 401(k) or 403(b) offered by your employer. In these accounts, you can contribute income pre-tax, it grows tax free, and you only pay taxes when you withdraw  funds. If you don’t have access to a retirement account through your employer, you can set up an individual retirement account. Even with an employment-based account, you can establish a Roth IRA. The benefit of a Roth IRA is that withdrawals are not taxed. If possible, it’s great to have accounts with different tax statuses so that, in retirement, you can maximize your income while you minimize your tax liability.

For college savings, your best bet is likely a 529 account. These accounts, established by the states, allow you to make contributions that can grow tax free. Some states even offer state tax deductions for your contributions. You can set up an account in any state (though the tax deduction doesn’t travel), so make sure that you check the quality of the investment options available and the fees. You can set it up in your own name or for the benefit of a specific individual. You just need that person’s social security number. Many states will allow you to set up an account and then create a web portal that allows people to contribute for birthdays, Christmas, etc.

Your emergency savings need to be accessible. That means you shouldn’t invest them in mutual funds, stocks, etc.  You can’t take the chance that you’ll need the money when the market is down.

Where you put other savings will depend on when you will need them. The longer the term and the more flexible the withdrawal will be, stocks and mutual funds become a better idea.

For savings that need to be accessible, keep in mind that interest rates on standard accounts are extremely low. They aren’t even keeping pace with a very low inflation rate. If you have a longer range on your savings (meaning that you don’t need to access them for a year or so), a certificate of deposit might be a good option.  Use websites like bankrate.com to find the best interest rates for the term and amount you’d like to save.

Another good choice is an online bank. Most of them offer rates far in excess of those offered by traditional banks. But do some research. Some online banks offer rates twice as high as others. Moving money from an online savings account to your checking account can take a few days, but that’s not necessarily a bad thing, since it might discourage moving money without thought.