Checking accounts and savings accounts are the first steps towards building financial independence. As time goes on and more money is earned through career advancements, it becomes more important to increase the sophistication of your portfolio. If you have some extra money that you do not expect to need for a few years, you should consider managed funds.
When it comes to investment strategies there are different routes you can pursue at any given time. They are:
- Short Term Investments- such as money market and CDs
- Long Term Investments- including managed funds
- Retirement Planning- along with IRAs and 401k
The managed funds route is quite attractive if you are comfortable with the risks and can survive without touching that money for several years. Managed funds offer higher returns, on average, than many other investment products. Unfortunately, the returns are not very predictable, so you can easily see a 5% or 10% drop in the very first year after you invest. Only long-term investors would be ok with such risk.