It’s Easter season, and at NACCC, Easter always has us thinking about growing our retirement nest eggs. Saving for retirement is essential nowadays, and for most people, a simple savings account no longer cuts it. Spring is about growth, and consumers want their money to grow, too. Take time to invest this spring season, and build prosperity for the future. Read on to learn more about different investment methods.
This post is introductory information on types of investing. Ready to learn more? Enroll in our Financial Health Counselor certification.
Savings Accounts
Savings accounts are a safe and effective way to store money, however, they don’t really yield any additional earnings. Savings accounts are best utilized for emergency preparation and saving for larger goals (down payment, education, vehicles). It is money that isn’t locked so it is available whenever the consumer needs it. However, sometimes the availability of savings makes it too easy to dip into whenever it feels convenient.
Quick Tip: Once money is placed in savings, try to keep it there unless it is absolutely needed!
Bonds
Bonds are often perceived as a safe and low-risk investment. With a bond, the consumer loans money to a bank, city or government, and receives the money back in full with regular interest payments. For example, many may recall the war bonds of World War II, where citizens loaned money to the U.S. government.
Quick Tip: Most banks offer bonds and are a great place to get started and learn more about how they work.
Stocks
Stocks are part of a corporation’s assets and earnings available for consumers (stockholders) to own. Stocks have a higher risk than other investments, but bring a potential for higher returns. Stockholders receive earnings through dividends, or by selling stocks at a higher price than when purchased.
Quick Tip: Start small and safe, then consider riskier stocks after acquiring some experience.
Gold
Gold has been used as currency for centuries. It is a popular investment because its value often holds over the long term, especially during times when other investments may become more risky.
People can invest in gold by purchasing physical gold, or by investing in more secure ways such as gold futures or gold ETFs.
Did you know that one of the reasons jewelry became popular among women of the past is because many were not allowed to open their own bank accounts? Jewelry made of gold, silver, diamonds and other fine gems provided financial security and empowerment in times when women’s financial rights were lacking.
Quick Tip: Gold futures or gold ETFs are more secure than storing physical gold.
Real Estate
If you have the means and time available, real estate is an excellent investment. Those who invest in a home can earn by avoiding costly rent, receiving rent from tenets, and increased property values. If choosing to invest in a home, be sure to have money available for a down payment, and a secure income to make mortgage payments. Also be prepared to put in time and effort for repairs, maintenance and other tedious tasks that come with property ownership.
Quick Tip: We recommend first-time buyers consider lower-priced condominiums that require less maintenance.
Index Funds
There are several indexes that track values in the stock market. For example, most financial news reports provide daily coverage of the Dow Jones Average. The Dow Jones Average is an index based on thirty stocks. If these thirty stocks happen to go up, so does the Dow Jones Average, and if they go down, the Average does the same.
Quick Tip: Consider consulting a financial advisor when starting to invest in index funds.
Of course, this list doesn’t include every type of investment available. Which types of investments do you prefer? Let us know in the comments below!
