While savings accounts are safe and can offer you a fair bit of interest, even high-interest accounts pale in comparison to the earning potential of a mutual fund. Additionally, savings accounts often require maintenance and other fees that may cut into your interest earnings. The stocks and bonds of the mutual fund, on the other hand, offer greater risks, but also offer greater rewards. Though you may have to pay some fees attached to the mutual funds, the returns you get are typically much greater than what you will see in a savings account.

A savings account can offer you the peace of mind that your hard-earned money is safely tucked away and protected, while earning a certain amount of interest each cycle. Because you aren't investing your capital into high-risk securities, as you do with mutual funds, your savings account offers zero risk on your money. The securities that your mutual fund is involved with can be unpredictable, and while a riskier option, you can also hang onto your shares at length until rates are higher again. Lower risk options are also available, such as a money market fund which invests in low-risk securities. Another thing to consider is a savings account, because it is kept through a banking institution, is insured by the Federal Deposit Insurance Corporation (FDIC). A mutual fund, conversely, is kept by an investment firm and is not insured by the FDIC.