The national average savings account rate was 0.37%, while stocks have returned more over some long stretches. But market losses can hit when you need cash most.
As of Sept. 21, the national average savings account rate was 0.37%. A broad stock fund has more room to grow over a long stretch, but it can also fall sharply and take years to recover.
Cash and stocks do different jobs. Money for emergencies or a purchase in the next few years needs a different home from money set aside to build wealth over decades.
The Federal Reserve reported an effective federal funds rate of 3.88% between September 25 and October 1, 2026. Ten-year U.S. Treasury yields were roughly 5.17% to 5.29% over that period.
Cash has a different job
At a 0.37% rate, a $1,000 savings balance would earn $3.70 in a year before taxes. For comparison, the Federal Reserve reported an effective federal funds rate of 3.88% and 10-year Treasury yields of about 5.17% to 5.29% between Sept. 25 and Oct. 1, 2026. Those market rates are not what a particular savings account pays.
The Fed's interest rate tables also showed 10-year inflation-indexed Treasury yields of about 2.83% to 2.93% over that period. That is a market measure of real yield, not a guaranteed return on a bank deposit or stocks. A typical FDIC-insured bank account protects deposits within the applicable insurance limits and pays interest. But a low rate may not keep pace with inflation. Over time, the balance may buy less.
Stocks offer no such guarantee. A broad market portfolio can lose value. Shares in an individual company can fall dramatically or become nearly worthless. That makes stocks a poor fit for money needed right away, emergency savings, or a near-term down payment, wedding, or other major expense.
Timing matters. Investing makes more sense when the money can stay put through market declines. A longer horizon gives investors more time to ride out volatility, but it cannot rule out losses or promise a particular result.
The Federal Reserve says its monetary policy is directed toward maximum employment and stable prices, with moderate long-term interest rates also part of its statutory goals. Those objectives help explain why savings yields can shift with broader economic conditions; a single current rate cannot capture inflation, investment risk, or an investor's time horizon.
Long-term returns come with risk
Over the past 98 years, the S&P 500 has delivered average annual returns of about 10%, according to the figures cited here. At that historical rate, an investment would have doubled in roughly 7.2 years. That average looks backward. It is not a schedule for future returns.
The index has gone through bear markets, crises, and crashes. Actual returns vary. Investors may face sharp rises and falls along the way.
The recent record was stronger still. The Vanguard S&P 500 ETF (VOO) returned an annualized 14.94% over the 16 years from September 2010 to September 2026. At that rate, $1,000 invested at the start of the period would have grown to about $9,280. Those figures describe one stretch in the past, not a forecast. For a plain-language look at what broad funds hold, read this market explainer.
There is a catch. The figures provided do not say whether they account for inflation. An average annual return also smooths over the steep rises and falls investors face. Someone who has to sell during a downturn may not benefit from the market's longer-term average.
Why consider VTI
The Vanguard Morningstar Total Stock Market ETF (VTI) holds 3,507 stocks. Its holdings cover companies of different sizes and styles. Its reported average annualized return over the past five years was 12.56%.
VOO tracks the S&P 500's largest U.S. companies. VTI reaches further. It also holds small-cap and mid-cap stocks, along with growth and value stocks.
That wider mix is a reason to consider VTI, not proof that it will outperform. Vanguard research cited here projects that U.S. small-cap and value stocks could outperform large-cap and growth stocks over the next 10 and 30 years. The forecast is uncertain. If those segments lag, VTI's broader exposure may not help it beat the S&P 500.
For investors with a long horizon who can tolerate declines, a low-cost, diversified stock fund may offer stronger growth potential than an average-rate savings account. It cannot replace cash reserves. Past performance does not establish future returns.
Diversification spreads exposure across many companies, but it cannot stop a broad market decline. Match each dollar to when it may be needed and to the loss the household can withstand.
