A savings account is one of the most basic investments that you can have, in most cases it is the first investment that you will have. With all of the issues that have come up recently with banks facing financial issues as the result of their bad loans it does raise the question of whether or not a savings account is still a safe investment option.

It would actually be fair to say that a savings account is probably the safest investment that you are going to find anywhere. The reason for this is that you are basically making a deposit rather than an investment. You are lending your money to the bank in so that they can lend it out to other people. Since banks tend to be very cautious in how they lend out this money the risk that the loan won't be repaid is very small. Even if that does happen that is the banks problem not yours, they have to pay you the money in your savings account on demand.

The only real risk that you would have therefore is if the bank were to fail, however this is no longer an issue. In the past banks used to fail all the time and people often did lose their life savings. These days however things are different. Now banks are insured by the Federal Deposit Insurance Corporation. That means that even if the bank does fail your money is still safe. The result is that a savings account is probably the safest investment option that you have available to you, and even though that does show in the not always very attractive Savings account rates, some banks still manage to offer fair value.

Another factor that a lot of people don't consider when they are looking at the safety of a savings account is how liquid it is. You can get your money out of your account at any time that you want. This is actually an important detail because it provides you with ready cash if you need it. If all of your money is tied up in long term investments and a financial emergency comes along you could have a real problem. This is actually a serious risk that you need to protect yourself against by making sure that at least some of your money is invested in a place that you can get at it easily.

There is of course a bit of a downside with a savings account in that the interest rate that it pays is going to be very low. While this is a bit of an issue there are a few reasons for it. The main one is that in large part the return that you get on your investment is going to be directly related to the amount of risk, the more risk the higher the reward. The other is that the more liquid an investment is the less it tends to pay. Since a savings account is virtually risk free and highly liquid the interest rate tends to be quite low. Nevertheless a savings account should be an important part of your investment portfolio since it provides stability. You just don't want to have all of your money in one.