Chances are, you will not be able to get rich and stay rich with the income from your job alone. Once you have taken care of your day-to-day expenses, it is wise to set aside money to grow and invest.
Investments should be made in a safe and sane manner. All investment money should come from money available after daily and monthly expenses have been taken care of, and six months worth of emergency savings is in the bank.
The amount that you devote toward short-term or long-term investments should not impact your daily lifestyle, or your liquidity.
Money In The Bank
The bank offers you the safest investment option possible, as all deposits are insured by the federal government. Traditional savings accounts pay very little interest (some less than 1%) but the downside of stability when it comes to investments is that there also very little gains to be made by taking this route.
Banks as well as some private institutions also offer bonds. A bond is very similar to a CD, in that they both pay out a set interest for a period of four years. If you will not need the money immediately, then bonds can be a stable investment.
A Certificate of Deposit, or CD, in another investment option offered by the bank. With a CD, the bank offers a set interest rate on your deposit for a set amount of time. The average time span for CDs is six months to a year, but you can generally find CDs to fit any time span.
Shop around from bank to bank, as rates vary on savings accounts, bond yields, and CDs. Many online banks and online brokerages offer competitive rates, and ease of use.
What Are Some Good Ways To Invest Money In The Stock Market
The stock market has always been an avenue to building and preserving wealth, and can be an excellent option to grow a comfortable nest egg. The stock market comes with many considerable risks, and your investments could lose value.
Investing in the stock market doesn’t have to be a frightening experience. There are plenty of resources available, as well as financial experts that can help you make informed, logical decisions when managing your money.
There are also many low-cost online brokerages to chose from, and many also offer investing tools, market research, and stock screeners to help you chose the investments that best suit your needs and investment objectives.
Invest in high quality, blue-chip, dividend paying companies. Research every potential investment for market-share, positive cash flow, low-debt and strong balance sheets. By focusing on these types of stable companies, you can watch your money grow and get a good night’s sleep.
You can also put your capital to work by investing in broad market exchange traded funds that track a benchmark index such as the S&P500 (SPY). There is an ETF for what ever sector or industry you may be interested in, and these products make investing and diversifying a breeze.
It is important to monitor and rebalance your portfolio routinely, utilize research tools and market analysis, and keep your investments working toward your goals.