Gone are the days where we feel the safest when our hard-earned cash is in their homes or stored in the banks. Because obviously, now we’re aware of how much we are losing keeping those cash sealed airtight in the shoebox or the vault. Now we know there is much more than that storage!
Whether we are trying to save or wanting to earn from our savings, there are multiple ways we can store money. From allotting funds in a modern bank with a low return rate interest or investing money with a higher return and risk, here are tips and ideas on the best methods to store money.
Why save money and invest?
While there is a big difference between saving and investing money, they are equally necessary to keep our financial situation in check.
In saving money, we can earn lower return interest in banks, and your money will be secured because there is no risk on the cash.
Investing, on the other hand, will give us higher returns for our money. But we take a higher risk of loss when we invest because the stock market is always moving.
Places to safely invest your money
If you are looking for low-risk avenues for your money, here are safe places to consider:
- Bonds. One of the safest places to invest your money is in bonds. Bonds are loans you make to different organizations. Municipal bonds also carry low risk, along with some tax advantages. The safest bonds are U.S. Treasury bonds.
- Bond ETFs. If you are looking for something with a little more diversity and the possibility of slightly higher returns, you can consider bond ETFs. Exchange-traded funds are collections of investments traded on the stock market like a regular stock. You can invest in a diversity of bonds and take advantage of both the risk and the safety. Be aware of the risks, but also keep in mind that bond ETFs are reasonably stable and can provide a viable place for your money.
- High Yield Bank Accounts. If you are going for safety, an FDIC-insured financial institution can help you keep your capital safe and sound, guaranteeing that you will get it back, even if your bank folds.
- Certificates of Deposit. Another thing you can do is to put your money into CDs. Certificates of Deposits are protected by FDIC insurance, so you know that your money is guaranteed. If you are willing to commit to a longer CD term, you can also reap larger yields, in addition to keeping your money safe.
- Money Market Mutual Funds. A money market mutual fund offers you the chance to enjoy capital preservation while earning a return. A money market mutual fund has the opportunity to invest in a variety of cash assets and so is relatively safe. However, it is necessary to know that there is a chance that you could lose money in this type of investment. Your returns will be low because of the low-risk nature of cash products.
- Pay Down Debt. Another thing you can do with your money is to advance your future by paying down debt. Most of these safe products and investments have low rates of return. Whenever anything offers low risk, it is likely to have a low rate of return. It is because potential earnings are related to your risk of loss. As a result, you might find that safe places to put your money will not offer a great deal of return. If you have high-interest debt, you might be ahead to aggressively pay it down instead of putting that money in a CD or money market account.
- Prepare for the Future. Another unconventional (but safe) place to put your money is in supplies and emergency preparedness. If you have some money to spare, you might consider buying items that can be used as long-term food storage or get some emergency supplies. That way, if a financial crisis strikes your family or a natural disaster comes into play, you will be ready. You will not have to spend as much money on supplies, and you will have some of what you need. Proper preparation for the unexpected is a safe investment in your future – even if you do not see monetary returns.