Master Your Money Bootcamp: Decide where to keep your money

Welcome to the first week of the Master Your Money Bootcamp, where goals meet action. This week, we're deciding where to put the money we save and invest.

Exercise 1: Find the right accounts for your goals

If you want to work smarter and not necessarily harder to achieve your financial goals, you need to pay attention to where you're keeping your money. Savings and investments are often used interchangeably, especially when talking about retirement, but there's a crucial distinction when we're talking about financial accounts: Savings accounts are risk-free, and investment accounts have a sliding scale of inherent risk.

Choosing the right place to put money for a specific goal is just about as important as keeping up the habit of saving or investing.

The goal for this week: Identify the best accounts for each of your saving and investing goals.

1. By now you should have a list of financial goals. If you haven't already, figure out how many years you have to achieve each goal or make a big purchase - for example, if you want to retire at 65 and you're 25, you have 40 years to invest. Your timeline is really important when it comes to figuring out where to put the money you set aside for each goal because some accounts contain more risk than others. The general rule of thumb is this: The more time you have, the more risk you can technically take on.

2. Next, review your account options.

• Savings: High-yield savings accounts, CDs, and money-market accounts are the best options for keeping your money safe and liquid (here's how they all compare). If you tend to have a low risk tolerance, use these accounts for money you will use to fund a goal within the next five years. If you tend to have a higher risk tolerance, you may consider keeping money for goals expected to happen in the next three years in a savings account.
• Retirement: This is the alphabet (and numbers) soup of investment accounts - 401(k)s, 403(b)s, Roth IRAs, traditional IRAs, and more. The IRS has designed these accounts to reward people with tax benefits in exchange for leaving their money to grow for many years. While IRA funds can be used for purposes other than retirement (like a down payment or educational expenses), it should be a last resort.
• Taxable brokerage: These accounts are probably what you think of when someone says investing. When you deposit money into a brokerage account, you can buy and sell investments - index funds, stocks, bonds, and even crypto. Unlike a retirement account, you can withdraw your balance at any time without a penalty, but you'll owe capital gains taxes on any profits.

NOTE: These aren't the only types of accounts that exist. For example, you may need a 529 - a type of tax-advantaged investment account - if you're preparing to pay for a child's college education. Do some research on your own if your goal doesn't clearly fit into one of these categories.

3. Finally, match each of your goals with the right account. If you're actively saving for a car you want to buy next year, pick a high-yield savings account (some savings accounts allow you to separate your money into separate buckets so you don't have to open an entirely new account for each goal). Perhaps you've saved $10,000 toward a down payment to buy a house in at least five years - a brokerage account might appeal to you if you're flexible with your timeline and willing to stomach some risk.

As a reminder, here's what you'll accomplish in this month's Bootcamp (we'll link to each exercise as it goes live):

Master Your Money Bootcamp: Make a plan

• Exercise 1: Find the right accounts for your goals
• Exercise 2: Open the accounts you need
• Exercise 3: Set up a system you don't have to micromanage
• Exercise 4: Decide whether you need a professional's help
• Virtual Live Event: Generational wealth

For each exercise, you'll get a detailed explanation of how to complete it and why it's important. Use the hashtags #MasterYourMoney and #MasterYourMoneyBootcamp to share your thoughts, progress, and connect with others across our Twitter, Facebook, LinkedIn, and Instagram as you make your way through each exercise, then join us for the live events.