Ways to Invest Your Savings
Ever heard of stories about old people storing their life savings in shoe boxes or some hole in the wall of their homes? Financially, that’s a bad move for several reasons. What if the house burnt down? Shoe boxes can’t protect those bills from fire. And letting all that cash “sleep” without earning interest is just wasted opportunity. Here are some ideas on what to do with the money.
Consider diversifying. If you have enough money in your savings account. Consider diversifying where you place it. Savings accounts usually have measly interest rates and it’s better off stored in other types of accounts or investments
Put up an emergency fund. Before diversifying, make sure that you have an umbrella for the rainy day. Consider taking out 6 to 12 months’ worth of living expenses and place them in a highly accessible savings account.
Get a high-interest deposit account. Now that you have an emergency fund, consider placing your money where it can earn. How much it earns depends on the risk you’re willing to take. Certificates of Time Deposit commits your money to a longer term to the bank but it earns a tad more interest than a regular savings account. And they’re protected by the FDIC even if the bank goes bust.
Get insurance and retirement funds. Worried about the wife and the kids just in case you suddenly pass away? Get some insurance with your money.
Buy bonds and stocks. Stocks can earn you higher but has more risk (you can lose money). Bonds are like lending the bank your money for them to use. Depending on the type of bond. Still, this can carry risk. But since you already have an emergency fund and some money stashed away (in CTDs), you may try and grow part of your money this way.
Invest on property. Thanks to the housing bubble crash, it’s still a good time to buy good but cheap property. Real estate values can fluctuate but at least you’re owning something tangible. Besides, you can always rent out property even if you decided not to live in it.
February 20, 2012 Monday at 4:53 pm