Investing Basics: 4 Ways to Grow Your Money
Working your way out of credit debt can be a challenging process, and you will need to develop many new skills and positive habits along the way. There are many ways to invest and grow your money, but without clear goals and upfront knowledge, you can find yourself in a swamp of unfamiliar terms and difficult decisions. Let’s go over some of the basics of investing.
How to Start Investing Your Money
While the amount of savings of the average household may be at an all-time low, it might surprise you to discover that one of the simplest and safest forms of investment is an interest-bearing savings account.
Many checking accounts offer joint savings accounts, and most have programs and incentives in place to entice you to deposit money into savings and leave it. At CreditGUARD we have discussed the importance of building an emergency fund. If that fund is in an interest-bearing savings account, you have already made your first investment!
What Are Safe Investments?
While it is impossible to call any investment completely safe, there are still several in addition to a typical savings account that are considered safe enough by all to be generally worry-free. Among these are Certificates of Deposit (or CDs), treasury securities, and US Government Savings Bonds.
Some of these require locking up your money for a certain length of time, and in most cases, the longer you lock up the money, the more you will earn in interest. There are also limits on how much you can invest in some cases. For instance, there is a limit on the amount you can put into savings bonds each year.
Be sure to have clear-cut goals when deciding which option will be best for you. If you lock your emergency fund into an account you can’t access for any length of time, you will no longer have an emergency fund to draw on in the event you truly need it. (Obviously, we do not recommend locking up your emergency fund in a plan that leaves you without access.)
How to Invest with Only A Little Money
When you first start getting your finances under control, a typical interest-bearing savings account is absolutely the way to go.
In order to make any other type of investment, you will need at least a little money saved up. Start with a savings account and look for programs and incentives that create opportunities to save passively.
Many savings and checking accounts require significant minimum balances, $2,500.00 or more. If your balance falls below the minimum balance, a monthly account maintenance charge will apply. Ask your bank for details.
The thing to keep in mind when considering investments is this — the “safest” bets offer the smallest returns. Higher risk options like stocks carry the risk of loss but have more potential to bring a better yield.
A savings account will only provide nominal results, as the average annual rate of return on a savings account is 0.06%.
As your account grows over time you can familiarize yourself with some of the other investment opportunities out there so that you are able to make an educated and informed decision when the time comes.
CreditGUARD is Here to Help
If you are struggling with credit debts and under mounting pressure to make ends meet, give CreditGUARD a call today. Our certified credit counselors are here to help come up with a plan that can help you find your way out of debt and onto the path of investing today!
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