What to Do with My Savings?

Samirah Muthoni

Are you wondering what to do with your savings? You’ve worked hard to build up a nest egg, and now it’s time to make your money work for you. Whether you have a small amount tucked away or a substantial sum, there are various strategies you can employ to maximize the return on your investment. In this article, we will explore ten effective ways to grow and protect your savings.

Paying Off High-interest Debt

An essential first step in managing your savings is paying off high-interest debt like credit card balances or personal loans with double-digit interest rates.

Why is it important?

Paying off high-interest debt ensures that you’re not losing money on those pesky interest charges every month.

How does it affect my savings?

By eliminating expensive debt payments, you can free up more of your income to put towards savings and investments. Additionally, reducing debt can improve your credit score, making it easier and more affordable to borrow in the future when necessary.

Strategies to pay off high-interest debt

  1. Debt Snowball Method: Start with the smallest balance while continuing minimum payments on all other debts. Once the smallest balance is paid off, roll that payment into the next smallest debt.
  2. Debt Avalanche Method: Prioritize paying off debts with the highest interest rates first while maintaining minimum payments on other obligations.
  3. Balance Transfer Credit Cards: Consider transferring high-interest balances to credit cards offering zero or low-interest introductory periods.
  4. Personal Loan Refinancing: Explore refinancing options that offer better terms and lower interest rates than your current loans.

Emergency Fund

Having an emergency fund is an essential aspect of financial planning because unexpected expenses can arise at any time.

What is an emergency fund?

An emergency fund is a separate savings account specifically designated for unforeseen financial emergencies such as medical expenses, job loss, or major car repairs.

Why do I need an emergency fund?

  • Provides a safety net: An emergency fund ensures you have money readily available for unexpected situations without having to rely on credit or borrowing from others.
  • Reduces stress: Knowing you have a cushion to fall back on in times of crisis can alleviate anxiety about money matters.
  • Prevents debt accumulation: An adequately funded emergency account reduces the need to use high-interest credit cards or take out loans during emergencies.

How much should I save in my emergency fund?

Financial experts recommend setting aside three to six months’ worth of living expenses in your emergency fund as a general guideline. However, this amount may vary depending on factors such as employment stability, health concerns, and family responsibilities.

Retirement Saving

Planning for retirement is crucial regardless of your age. While it may seem far off, saving early and consistently will allow you to take advantage of compounding interest and secure a comfortable retirement.

Employer-Sponsored Retirement Plans

Many employers offer retirement plans such as 401(k) or 403(b) accounts. These plans provide valuable benefits like tax advantages and employer matching contributions.

Individual Retirement Accounts (IRAs)

If your employer does not offer a retirement plan or you want to supplement your savings further, Individual Retirement Accounts (IRAs) are excellent options. Traditional IRAs offer tax-deductible contributions, while Roth IRAs provide tax-free withdrawals in retirement.

Invest in Stocks

Investing in stocks offers the potential for long-term growth and can be an effective strategy for growing your savings over time. However, it’s important to note that stock market investments carry risks, including the potential loss of principal.


Diversifying your portfolio by investing across multiple companies and industries helps minimize risk. Consider investing in individual stocks or exchange-traded funds (ETFs), which allow you to invest in a basket of stocks representing a specific sector or index.

Real Estate Investment

Real estate investment can be an attractive option for those looking for alternative avenues to grow their savings beyond traditional investments like stocks and bonds.

Rental Properties

Purchasing rental properties allows you to generate ongoing income through monthly rent payments while potentially benefiting from property value appreciation over time.

Real Estate Investment Trusts (REITs)

For individuals who prefer more passive real estate investment options, REITs are worth considering. REITs are companies that own multiple properties across various sectors such as residential, commercial, or industrial real estate. By investing in REITs, individuals can benefit from rental income without the hassles of property management.

Mutual Funds and Index Funds

Mutual funds and index funds offer an opportunity to invest in a diversified portfolio without the need for extensive research and active management.

Mutual Funds

Mutual funds pool money from multiple investors to invest in a variety of assets, including stocks, bonds, and commodities. They are managed by professional fund managers who make investment decisions on behalf of investors.

Index Funds

Index funds are a type of mutual fund that aims to replicate the performance of a specific market index, such as the S&P 500. They offer broad market exposure at relatively low costs with minimal turnover.

Certificate of Deposit (CD)

Certificates of Deposit (CDs) can be an attractive choice if you’re looking for low-risk investments with fixed interest rates over a predetermined period.

How do CDs work?

When you purchase a CD, you agree to deposit your money with a bank or credit union for a specific term ranging from days to several years. In return, the institution pays you interest periodically until the CD reaches maturity when you can withdraw your initial deposit along with any accrued interest.

Benefits of CDs:

  • Safety: CDs are insured by the FDIC (Federal Deposit Insurance Corporation) up to $250,000 per depositor per institution.
  • Stability: The fixed interest rate means predictable earnings throughout the term.
  • Low risk: Unlike investing in stocks or other volatile securities, CDs provide stability and preservation of capital.
  • Variety: CDs come in different terms, allowing you flexibility based on your financial goals and time horizon.

Peer-to-Peer Lending

Peer-to-peer (P2P) lending platforms connect borrowers directly with individual lenders. By participating in P2P lending, you can potentially earn a higher return on your savings compared to traditional banks while diversifying your portfolio.

How does P2P lending work?

When you lend through a P2P platform, you essentially become the bank by providing funds to borrowers who are seeking personal loans. The platform facilitates the loan origination process, including credit checks and loan servicing.

Benefits of P2P lending:

  • Higher returns: Compared to traditional savings accounts or bonds, P2P lending may offer attractive interest rates.
  • Diversification: Adding peer-to-peer loans to your investment portfolio can provide additional diversification outside of stocks and fixed-income investments.
  • Investor control: You have control over which loans to fund based on borrower profiles and risk assessments provided by the platform.

Diversify Your Portfolio

Diversification is one of the fundamental principles of investing. Spreading your investments across various asset classes can help mitigate risk and optimize returns.


Equities, or stocks, represent ownership in a company. They offer potential capital appreciation and dividend income but also come with higher volatility compared to other asset classes.


Bonds are debt instruments issued by companies or governments as a means of raising capital. As an investor in bonds, you effectively lend money for an agreed-upon period at a predetermined interest rate.


Commodities include tangible goods like gold, silver, oil, agricultural products etc. Investing in commodities provides exposure to global supply-demand dynamics; however, this comes with substantial price volatility due to factors such as geopolitical events or weather conditions.


Cryptocurrencies like Bitcoin and Ethereum have gained significant popularity recently. However, they are highly volatile and speculative investments that should be approached with caution. Consider allocating a small portion of your savings to cryptocurrencies if you have a high-risk tolerance.

International Investments

Investing in international markets can bring diversification benefits by accessing different economies and industries. Consider investing in internationally focused mutual funds or exchange-traded funds (ETFs) to gain exposure to global opportunities.


Deciding what to do with your savings is an important consideration that can significantly impact your financial future. By employing these top 10 strategies, including paying off high-interest debt, establishing an emergency fund, saving for retirement, investing in stocks and real estate, diversifying through mutual funds and index funds/ETFs, considering low-risk options like CDs or P2P lending platforms while also exploring international investment opportunities or experimenting with cryptocurrencies, you can make informed decisions regarding the best use of your hard-earned money. Remember that everyone’s financial situation is unique; therefore, it is advisable to consult with a financial advisor who can provide personalized guidance based on your goals and risk tolerance.

Share This Article
Samirah is a full-time freelance travel writer who excels in writing compelling blog content. She has written for some of the biggest names in the business and loves helping businesses create content that engages their readers.
Leave a comment