What Type Of Investments Are Right For You?
When it comes to finances, many experts have differing opinions. Some say that you should save in the most reliable way possible, and others say that you should try to make the most amount of money off of your savings as is possible. There are benefits to both ways to go about it. Here is a list of ways to save your money, including investing and good old-fashioned bank deposits.
There are mutual funds, low risk and high-risk stocks. When you invest in mutual funds, you are pooling your money with other small investors. The broker then invests all of the money into companies and bonds that you otherwise could not invest in with that same relatively small amount of money. Everyone involved makes a share of the profit accrued. Someone else is managing the portfolio and it is diversified, which is good.
You can also invest in stocks that you have interest in. Daily trading is when you watch the trends, the news, and everything about the market to trade your own stocks. Each day you buy and sell to make profit for the day. Over the long run you typically make the same as someone who lets their stock sit there through the ups and downs of business. But if you know what you are doing, you can definitely make more money over time trading daily.
You can put your money into a CD for a certain amount of time and make more money off of it than you would in a regular savings account. Of course, there are perks and drawbacks. The plus is that a CD is insured for a certain amount and the interest rate is fixed. There is no way you won't get your money back with some profit. If you put enough money in there for a long enough time, you can make more than the inflation rate and really get some good out of it. This is a giant plus because no one likes to lose his or her money to bad investing.
A drawback to this is that you make less money over the long term than you would by investing in stocks or mutual funds. There is always a tradeoff. If you have any extra money, stocks might be the choice for the best growth. A CD is also a downer just because your money is stuck there for the period of time as stated in the contract you agreed to. If it lasts for 10 years, you cannot use that money for that long with penalties. It is almost like a retirement fund or 401-K in that aspect. It is even less liquid than stocks in a way. You should only put money into a CD that you will in no way need for the next 5 to 15 years.
The great thing about putting money in your savings account is that it is safe from being lost by a broker. Just make sure that it is insured. You can legally insure up to 250,000 dollars in each account at each bank, so make sure that you do not stick more money than that in your accounts.
The bad thing about putting your savings in a regular bank account is that it has very low interest. You make little to nothing each year unless you have millions in there. In that case, the bank is still the least profitable bet.
Choose the best avenue for you. Financial gurus say that you should diversify. So put some money in the bank for emergencies, some in a CD for steady growth, and some into stocks for the best retirement.