Look beyond savings accounts when investing your hard-earned money

You’ve work too hard to provide a good future for you and your family the reason why you’re keen on saving every penny you’ve got. This is the key strategy in securing your financial future and that of your family, but where should you put your money to make the best return?

Are savings accounts enough to secure your future? Well, savings accounts are good in that you have access to your money anytime, but the interest earned can be small that you will end up missing what’s out there that can give you higher potential returns.

You may want to consider keeping some money in a savings account and invest the bulk of it in other investment instruments.

For example, you can invest your hard-earned money in time deposits e.g., certificates of deposits, IRA CDs, etc. Your money will be kept by the bank for a fixed period of time usually (3, 6, or more months or years) in exchange for an interest rate higher than that offered by a regular savings account. You will have easy access to a certificate of deposit or time deposit but there are early withdrawal fees that may cost you.

Other investment instruments worth considering are the following:

1. Stocks. You get to own a portion of the company when you invest in the stocks of the company. Note however that the stock market is very volatile (prices of stocks fluctuate) in response to the changing times. A good understanding of how to invest in stocks is necessary because this could either make or break your funds. A good strategy is to hold over stock investments over the long term to ride out market fluctuations.

2. Bonds. Bonds are getting popular these days. When you buy a bond, you lend money to a government, municipal authority or company in exchange for a fixed amount of interest paid to you regularly. The risk in bond investment lies in payment defaults.

3. Mutual funds. A mutual fund gathers together investment placements from many investors which the fund manager then invests in money market, stocks and bonds based on their market study. Investing in mutual funds allows investors to diversify rather than just focus on one investment vehicle. It also has the potential of long term growth. It is best to choose mutual funds according to your preference.

4. Foreign currency. You may choose to invest in Euro, US dollar or other foreign currency savings or time deposits. Be extra careful as foreign currency may weaken with the changing times. Switch to another currency to ride out exchange rate fluctuations.

5. Real Estate. A sound investment but price fluctuates with the changing times. Don’t put all your hard-earned money on this.

The name of the game is to diversify. “Don’t put all your eggs in one basket.” This is the rule every investor must follow if one wants to be financially secure. Allocate your assets to spread out your risk. Having a good mix of investments will help you prepare your financial future well.

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