Investing is one of the best ways to save your hard-earned money. People looking to build some good financial savvy and who want to make sound personal finance decisions for the future turn to different methods of investing beyond the traditional savings account.
The best investments are not just about money, but time, too — the most profitable are ones that have been researched to make sure they’re worth investing into. Learning about different types of investments can prepare you for putting money into either a stock, bond or other product to watch your money grow.
Saving money is all about depositing funds into a bank account to build interest. A standard savings, interest-bearing checking, or CD account ensures liquidity of your money since funds are able to be withdrawn in a relatively short period of time (CDs, for example, can be time shared anywhere from 3 months to 5 years). Most savings are also insured against losses for up to $250,000 by the federal government. Savings are essential for short-to-long-term goals and are easy to withdraw funds from.
Investments, on the other hand, are also savings accounts, but involve depositing your money into an asset that builds value over many years. Real estate properties can increase in valuation over time; a classic car or antique coin collection are also examples of investments. In banking, investments are categorized into a group of advanced savings products that can yield big returns as they increase in worth.
There are several different popular investing options to choose from:
Bonds: A bond is a monetary deposit into a company, firm, organization, or governmental entity — U.S. Treasury Bonds are common investments. People who take out bonds are essentially investing into the future of an organization; when that organization grows in assets over time, the depositor is rewarded with interest earnings for placing their money and confidence into the company. Bonds are like loans in that a company is borrowing a depositor’s money with the promise of paying you back with interest. Investing in bonds such as savings bonds can be a wise decision and pose a low risk to a depositor’s money.
Stocks: Stocks are similar to bonds, but with a difference; here, a depositor literally takes “stock” of a company by investing money and becoming a shareholder, or part owner. In short, the more money one puts into a stock, the more control they have as a stakeholder in making decisions into the direction of a company. Shareholders who’ve invested stocks in a company are allowed to vote in key company decisions and receive a portion of profits, too. Stocks can be risky and pesky at once — since the stock market fluctuates and varies on any given day or week, a stockholder needs a keen eye to make sure their investment is building, not losing, value.
Mutual funds: A group stock. Mutual funds are a pooling of money with other investors into a group or company. The fund is a “mutual” decision between shareholders into which investment should be deposited into. Mutual funds are popular and can yield returns more quickly since the partnering with other investors requires less time to research and invest when depositing as an individual.
Though these are some of the most common investments today, there are plenty more to choose from for your money, like money market accounts, real estate investments and annuities. Investments are a big decision that take a lot of dedication, patience and funding, so always check with a financial advisor for investment advice before pursuing a major deposit. Good investments can prove to be your biggest asset yet.
Consumers seeking ways to make money or profitable capital gain returns are interested in financial investments. There are many ways a person can diversify their investment portfolio. Some of the most common types of investment accounts are CDs or mutual funds.
Whether you have a 401k plan through work, or if you are self-employed and put your money into IRAs, saving and investing is the way to successfully build long-term wealth. By investing wisely now in a assortment of investment accounts, like CDs, mutual funds and other brokerage opportunities, you can better prepare for future goals, such as purchasing property, retirement or using the profits gained on your investments to travel the world.
Investment opportunities will help your money grow by providing a return in the form of income, interest or appreciation in value of the original investment. By stowing away your money into certificate of deposits, mutual funds, IRAs, brokerage opportunities or a 401k, you are making wise decisions to ensure your future financial health.
Thinking about making the jump to start investing your money? Here is a compilation of Go Banking Rates' investment tips and strategies to help you get started: