Are you getting the best possible returns on your short-term savings?

Investor, take note: Rising interest rates can bring opportunity. If you currently hold money in a traditional short-term savings account, you might want to consider other investment options that may bring better returns. Here's how Vanguard can help you take advantage of today's higher-rate environment.

Assess your short-term savings

In addition to your investments, you probably have a savings account for paying bills or stowing an emergency fund. Do you know if that savings option or investment fund is giving you the best possible returns? While cash may not represent the largest portion of your portfolio, it can come with higher yields when invested strategically.

It's worth comparing the current rate of return on your savings account to alternatives that may allow your cash to work harder for you. For example, money market funds may allow you to better take advantage of rising rates.

Higher rates can help your money grow

The Federal Reserve raised interest rates by a total of 4.25% in 2022 to combat historically high inflation. While a rising interest rate environment like this can make borrowing more expensive, it can also help your money grow. One way to potentially earn more is investing in Vanguard's low-cost money market funds. These funds invest in low-risk, short-term government and municipal debt with yields that vary depending on prevailing rates.

According to the FDIC, a traditional savings account in the U.S. has an interest yield of 0.48%.* Compare this with the average 7-day SEC yield of 4.53% for Vanguard Cash Reserves Federal Money Market Fund.** Our money market funds have a history of strong performance—100% outperformed their peer-group averages over the last 10 years.***

When investing in a money market fund, you should always weigh the value of certain features against the potential risk and reward. For example, bank savings accounts come with FDIC protection, so bank deposits are guaranteed (within limits) by the federal government. Money market funds have strict controls and regulations in place to protect investor capital. Additionally, Vanguard money market funds invest largely in U.S. government securities and Treasury securities backed by the full faith and credit of the U.S. government. Choose the option that's best for you based on your goals and risk tolerance.

The benefit of investing with Vanguard

Not only can the higher-rate environment work to your advantage—investing with Vanguard can too. Vanguard is owned by the people who invest in our funds. As an investor-owner, you can trust that we are your partner.† Helping you reach your goals is a mark of our success.

Another benefit of investing with Vanguard is our lower expense ratios. Since steep fees can diminish your returns, it’s a good idea to take expense ratios into consideration when choosing a place for your short-term savings. Vanguard's lower money market fund expense ratios allow you to keep more of your money. In fact, the average expense ratio of Vanguard's money market funds is 54% less than the industry average.††

While rates are rising, take a look at your savings account to see what you're paying and earning. If you think there's room for improvement, consider exploring Vanguard money market funds.