Parking your money in a zero interest savings account or under the mattress may be one way to play it safe, but you will be forfeiting potential profits you can receive from your hard-earned income. Let’s look at some ways to put your money to work for you:
CD investing tips
A CD is a form of deposit account with a banking institution that usually provides a higher interest rate than a standard savings account. They are insured for up to $250,000 by federal deposit insurance.
CDs are a great, low-risk way for beginning investors to see some gains in their portfolio. If you are considering purchasing a CD, find out when the CD matures and confirm the interest rate. Do your research before you buy. You might look for tips on finding the highest CD rates online.
Bond investing tips
Governments and companies issue bonds to raise money for funding their operations or for financing specific projects. By buying a bond, you are loaning out your money for a length of time to the issuer of the bond. In return, you will receive the original amount of your loan plus interest. Bond investing is considered a conservative investment.
Stock investing tips
Although there are sometimes short-term downturns, over time the stock market has generated good returns for most people. It is important that you do some basic research so that you are selecting stocks that are likely to increase your investment.
Buy and hold
This is the strategy employed by famous billionaire investor, Warren Buffet. It is very simple. Pick good companies with sound finances and talented management in a growing industry. There may be ups and downs in your stock periodically, but investing in this way gives you the best chance to grow your investment.
Day trading is moving in and out of stocks in short time frames based upon where you think the market is moving short-term. It can be lucrative, but it is much more risky than the average investor has the appetite for.
We have all heard the saying, “Don’t put all you eggs in one basket.” This principle holds true when it comes to investing in stocks. You should invest in several asset classes to ensure that you limit risk and reduce volatility.
We all want a retirement where we can living comfortably well into our golden years. Keeping these tips in mind should protect your portfolio and generate positive returns for years to come.
Guest Post Bio: This is a Guest Post by Samantha Peters, a contributor on the personal finance blog Paid Twice. Sam enjoys writing about ways to ensure that your money is working hard and earning you the highest rates of return. Sam lives in sunny San Diego, California where she enjoys live with her puppy Leona.