Make The Most From Your Savings
One of the most critical aspects of personal finance is ensuring that you are getting the most bang for your saved bucks. The actual purchase power of your savings can go down in the future thanks to inflation. You have to make sure you grow your money enough to keep up and hopefully even generate returns on your investments so that you can save for future goals ranging from your kids going to college or your own golden years. Whatever your motivations, you are going to find terrific ideas within this article for maximizing your savings.
Your first savings should be an emergency cash fund that can cover six to nine months of your living expenses. Do a thorough search on the Internet for the savings and money market accounts that are the best to use and offer the best interest rates. With online banking, you are no longer restricted to just banking locally, although a neighborhood checking account might be required to deposit and receive money to your online accounts.
Once you have an emergency cushion built up, think about certificates of deposit. These offer you higher yields than savings and money market accounts, but are not as fluid. There are serious penalties for early withdrawals, so these are not great vehicles for emergency funds. However, once you are past that level of savings, consider dividing your excess and dividing it by twelve, investing in certificates of deposit every month for a year to set up a rolling savings fund that has money available every month. Then you can shop around every four weeks for the best CD rates to reinvest.
When you are ready to start investing, bonds are a great place to start. They have a bit more risk than bank accounts, but they are almost certain to beat inflation and even give you some income. If you have a lot of money you want to invest into conservative income, an annuity is a sound choice, as you can get monthly payments for the rest of your life under certain circumstances.
If you have enough money that you are inclined to invest in the stock market, mutual funds are the way to go. These give you exposure to large swaths of the stock market so that you can capitalize on the overall market gains. They are usually professionally or computer managed, so that you do not have to follow hundreds of stocks on your own, and you are part of larger group purchase power. Index funds have very low fees and always do as well as the market, since they follow it precisely.
The Internet, computers and software make it all very easy to manage a lot of your money on your own. Still, it never hurts to talk to a professional consultant or money manager. Some investors allow money managers to handle half their funds, just as a hedge that they make a mistake on their own.
You have to make sure that your investments at least pace inflation at a minimum so that your dollars do not lose their value. If you really want your money to be there for you when you need it, then you should give it every chance you can to grow for you. Apply all the ideas in the preceding paragraphs to be a smarter saver.
