Sat Mar 08 2025, by Tyler Gardner

3 Reasons to Avoid Long-Term Investing in High-Yield Savings Accounts

Here are three reasons why I would never invest for the long-term in a high-yield savings account. I'm Tyler, a former financial advisor and portfolio manager, and I create financial content for free to guide you through essential investment concepts.

1. Guaranteed Loss of Wealth

Inflation and taxes will ultimately outpace the interest rates, even those from high-yield savings accounts. This means you're losing purchasing power every year that your money sits in that account.

2. It’s Not an Investment

While a high-yield savings account might offer you 4% to 5% today, you haven’t bought any actual assets. You're barely keeping pace with inflation and taxes, and in many cases, you may not be keeping up at all.

3. Opportunity Cost

By keeping your money in a savings account, you're missing out on the opportunity to invest in the markets, where your money could A) buy assets and B) earn 7% to 8% per year post-inflation. Yes, investing does come with risks. However, you know what's even riskier for your long-term financial wellbeing? Not investing at all.

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