Save or Invest
Do both if you can, but definitely take care of savings first. This usually means opening a savings account at a bank, credit union or in a money market account. Fund it automatically so you are sure it will be funded.
Types of Savings

Savings Bonds – Savings Bonds are a great way to start your savings plan. What they lack in returns, they make up in simplicity and safety. They can be the foundation of a disciplined method of investing.

Features of Series EE Savings Bonds:

  • The minimum investment is $25.00, which is one of the smallest minimum investments you will find.
  • Savings bonds are purchased at half of their face value. If you buy a $50.00 bond it will only cost you $25.00.
  • The risk is low because the principal and interest are backed by the full faith and credit of the United States Government.
  • They are convenient to purchase. You can start an allotment right out of your military paycheck.
  • There are no commissions or fees, which will make them one of the most inexpensive investments you can purchase.
  • The interest earned on savings bonds is exempt from state and local taxes and federal taxes are postponed until you cash them in.
  • The interest earned on bonds purchased by a person aged 24 or older and used to pay certain qualified education expenses may be excluded from gross income.

Certificates of Deposit (CD) – A Certificate of Deposit is a receipt from a bank acknowledging the deposit of a sum of money.

  • A CD is a time deposit account. It can be either individual or joint.
  • When a CD matures is different at each institution.
  • CD penalties may be assessed if funds are withdrawn before the maturity date.
  • FDIC insured up to the maximum allowed by law.

Money Market Savings Account – A type of bank savings account that may pay slightly more than a regular savings account.

  • Primarily used for monthly or emergency savings.
  • Ideal for accumulating liquid dollars for short-term necessities and larger planned purchases.
  • Usually pay a higher rate of interest if you maintain the required average or minimum balance.
  • Interest is compounded daily and credited to the account at the end of each statement cycle.

*Be sure to read all the information the bank gives you regarding the privacy of your account and personal information.