The personal savings rate for Americans has taken a hit lately and hovers around 12%. What should you do with the money you’ve got left after paying your taxes and other bills?
Low interest rates are great when you’re buying a house, but they’re not so good for your savings account. There are better ways of making your money work for you.
Are you wondering where to invest money so you’ll earn more? Don’t put your money under the mattress!
Read on for 6 crucial tips for where to invest your money.
1. High-Yield Money-Market Account
A money-market account offers higher interest than a regular savings account, and it’s a safe investment. Money markets are FDIC-insured up to $250,000. If you’ve got a few thousand to invest and you want easy but infrequent access to the money, this is a good option.
Interest on the cash in money markets is higher because you’ll only have the option of withdrawing a few times a month.
2. Certificates of Deposit (CDs)
CDs are also low risk and have higher interest rates than regular savings accounts. CDs come with term lengths like six months or even five years. The longer the term, the higher the interest.
The downside? There are early withdrawal penalties. Don’t lock your money away unless you know you won’t need it.
3. Government Bonds
Government bonds are mutual funds sponsored by the U.S. government for paying off debt and funding projects.
They’re great for low-risk investors and those with cash-flow needs. The bonds are government-backed and safe but inflation and fluctuating interest rates do affect them.
4. Treasury Securities
Treasury securities are also U.S.-government backed and issued. They raise money for debts and government projects. You buy Treasury securities for a term of 20-30 years.
You can hold them until they mature or sell them sooner. While you’re invested, you’ll receive payments from the interest. When they mature, you’ll collect the entire principle.
5. Coins and Collectibles
This is a risky investment but one that a lot of people love. Collecting is best left to those who have a strong interest in what they’re collecting.
You’ll need a lot of knowledge about whatever collectible you choose. Military challenge coins are a good example of investing in collectibles. Many of the coins are collector’s items in high demand.
Other coins are solid gold, making them worth even more money.
6. The Stock Market
The stock market can be risky but it’s a great place to earn a lot back on your money. Don’t invest in the stock market until you’ve done a lot of research. But don’t avoid investing in the stock market out of fear.
Putting your money in index funds and leaving it there for long periods of time is a good strategy due to compound interest. With some historical exceptions, the stock market is a good place to put your money to work.
Where to Invest Money
Knowing where to invest money depends on many factors. Your budget, risk tolerance, and age all play into how and where you should invest.
When you’re starting out, do lots of research and talk to a few investment professionals. Beware of investments that sound too good to be true because they usually are!
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