Savings account vs index fund: what’s better?

Choosing between a savings account and an index fund comes down to time horizon and risk tolerance. Use the calculator to compare scenarios using your own numbers.

Compare savings vs index fund

Savings account vs index fund (plain-English answer)

A savings account is designed for stability and access. An index fund is designed for long-term growth, but it can fall in value. The best choice depends on whether your goal is short-term certainty or long-term growth.

A goal-based checklist

Compare outcomes with the calculator

Use the ETF vs savings calculator to see how different assumptions change outcomes. Try a range of index-fund returns and compare them to your expected savings rate.

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FAQ

Is an index fund the same as the S&P 500?

The S&P 500 is one index. Index funds can track many different indexes (S&P 500, total market, international, etc.).

Can I lose money in an index fund?

Yes. Markets fluctuate, and the value can be down at times—especially over short horizons.

Why compare ranges instead of one number?

Because future returns and savings rates change. Ranges help you plan realistically.

What’s the quickest way to decide?

If you need the money soon, savings tends to fit better. If you’re investing for the long run, index funds are commonly used for growth (with volatility).

Related calculators & examples

These pages connect to calculators so you can run your own numbers.

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