I am starting a savings account for an event 3-5 years away. What type of account will yield the best results interest-wise? I would like to be able to keep adding to it regularly, but will not be touching the money for at least three years.
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Saving for that event certainly makes a lot more sense than borrowing for it in today's economy. You can use an ordinary savings account for this purpose, although you are correct if you think it doesn't pay much interest. The beauty of a savings account is that it is very flexible, allowing deposits any time. The shortcoming, of course, is the rate.
Another option is certificates of deposit. They typically pay more than a savings account. A very few banks offer certificates of deposit to which you can add from time to time. Most don't allow additions except at each maturity, which can be as short as a month or less or as long as two or more years.
You might use a combination of certificates of deposit and savings accounts, accumulating funds in the savings account and moving them to the certificate of deposit when additions can be made there. If you use 6-month certificates you could build up savings for six months and move them into the CD account each time it matures. It can vary from bank to bank, but short-term accounts pay lower rates than long-term accounts.
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Saving for that event certainly makes a lot more sense than borrowing for it in today's economy. You can use an ordinary savings account for this purpose, although you are correct if you think it doesn't pay much interest. The beauty of a savings account is that it is very flexible, allowing 