Back to basics as study shows consumers confuse savings and investment accounts

The complexities of investments and wealth management can often be highly technical, but sometimes even the things that advisors might consider the basics can be confusing for clients.

For example, when is money being invested and when is it simply being saved? And do some savings accounts cross the line into investments with the kind of risk that might not be associated with these accounts?

The confusion has been highlighted by a new survey from Santander Bank which found that many Americans believe that putting their emergency savings into a high-yield savings account is risky in the same way that buying stocks or bonds can be, prompting them to leave funds in lower-yield accounts.

Specifically, 52% of respondents said they didn’t realize that high-yield accounts are a good place for emergency savings with 28% not aware of the FDIC protection these accounts have. Just 35% realize high-yield savings accounts are safer than accounts that have various investment options and only four in 10 know that high-yield savings accounts are generally predictable from month-to-month.

Conversely, 43% are not aware that accounts with investment options carry risk of loss, with 13% believing there is no such risk with these accounts and 30% who simply don’t know. This means that more than a third have used brokerage accounts for emergency savings or short-term goals such as a vacation without understanding the risk to their capital.

For those with greater knowledge of different accounts, 58% of respondents said they adjusted their savings behavior in response to market losses and economic uncertainty to protect their emergency savings.

However, 45% said they are not happy with the emergency savings they have and 51% do not have at least three months’ worth of emergency savings available.

Almost two thirds of respondents do not have a high-yield savings account for certificates of deposit, instead opting for traditional savings accounts (39%) or checking accounts (32%) as their primary savings destination.

A recent report shows that the 401(k) savings rate reached a record high in the first quarter of 2025.