While there are smart ways to go about investing in the stock market, there are many people out there who simply do not want to take the chance and that’s completely fine because there are plenty of other ways to go about saving for your future. The word ‘invest’ tends to scare many people but if you plan accordingly and do your research before giving anyone your hard-earned cash, the risks are extremely low. Stocks can be quite stressful because if a company is ever to go under, you may be out of much (if not all) of the money you invested into the company. There are other ways to get more for your money without gambling everything you’ve worked so hard to receive.
If you aren’t looking for instant gratification but want to save for things in the distant future, such as retirement, traveling the world, planning for a family, or even just for emergencies then bonds, CDs, and savings accounts may be the better options for you and your family.
Bonds: Short and Long Term Investments Options
A bond is a form of investment that has a wide number of maturity date options, ranging anywhere from a single year to 30 years. The initial loan is offered from a business or the government with a specific face value (the money you loan gets used for business or public affairs). Each loan offers an interest rate (also known as ‘coupon’) which gets paid to you at the end of the bond’s maturity date, on top of the face value. What many people like about this form of investment is that bonds can be sold before they completely mature, although depending on how long you have had the bond, there may be a penalty. Oftentimes, within a few short years, you can sell your bond, even if the maturity date isn’t for another decade or two. Keep in mind; the higher the interest rate of your loan, the higher the risk is going to be. You may want to have multiple bonds with different companies and of different interest rates to better diversify your money.
Certificate of Deposit (CD): Low Risk Security
Certificate of Deposits are a resource many individuals reach for when investing in their futures. CDs are insured by the Federal Deposit Insurance Corporation and offer relatively low interest rates. They should not be touched until they have completely matured. This is a great option for someone new to investing and wanting to test the waters for the first time.
Savings Accounts: Hidden Treasures
Many people do not consider savings accounts to be a great way to protect and expand their money, but they are a great starting point for many families and can offer some pretty neat features. While most savings accounts are going to require a minimum amount of cash in order to open and maintain without penalty, this is not always the case. Savings accounts are FDIC insured. It is always a good idea to talk to your bank and see how much they insure you for. Many banks, including Bank of America insure up to $100,000 per account.
Just like standard savings accounts, money market savings accounts allow you to remove your money at any time. Unlike savings accounts, taking out money from a money market may result in a penalty. No matter what approach you take to reach your money-saving goals, be sure to always read the fine print. Look for hidden fees and expectations that are in place in order to avoid fees. This is going to help you save more money for your future.
George Smith-Davies is a financial advisor and he has been giving financial advices to everybody. He says that you must try to find more information about any company or investment plan before you make any decision. To know more about insurance you can follow him on twitter.