Savings accounts can have a poor reputation because they have such low returns, particularly in today’s economic climate. It’s true when taking inflation into account, you can actually lose money on a savings account in the long run. The Federal Reserve has not been kind to savers, especially since the financial crisis when the Fed dropped the interest rate to a historic low. But even in the current American economy, saving has some distinct advantages over investing.
“An average saver will do better than a great investor who doesn’t save,” certified financial planner David A. Schneider told Bankrate. The two strategies work well together, but without saving, investing would not be possible. Although investing will likely get you higher returns in the long run, this might not be your primary financial goal. It all depends on the context of your finances, where you are in life, and what’s important to you. Here are five times when it’s smarter to prioritize saving.