In the days of yore our parents and grandparents often saved their money by placing it in a box in the closet or stuffing it under their mattress. Today, most people realize that this is not a very wise investment practice because, while it keeps the money safe, it does not allow for any growth. If you are thinking about saving for a house, the vacation of a lifetime, or retirement then you need to think beyond just saving your money – you want to actually grow your money. This means investing it, not just squirreling it away for the future.
Sure you could invest your cold, hard cash in a simple savings account and earn one or two percent interest; of course that won’t even keep up with inflation. Or you could put it in a CD (certificate of deposit) which earns slightly more (and probably slightly more than the inflation rate) and is good for saving vacation funds for ten years or so. But if you really want to make an investment that has serious potential for growth, especially to fund your retirement years, consider the following three investment vehicles:
Go for structured settlements and annuities.
Structured settlements refer to when a person is awarded money in a lawsuit and that money is paid out over time, in the form of payments made from an annuity. Other payments, such as lottery payments, are done the same way. Often, people who receive these payments decide that they would prefer a lump sum instead of the regular payments. You can invest with a company that buys these payments, generally for much less than their actual value, and exchange your lump of savings now for a guaranteed income stream in the future. These are very safe, dependable investment vehicles.
Invest in shares and bonds.
Stocks and bonds are common, easy investments to make; you can buy them through any financial broker, including online sites such as etrade and scottrade. There are fees involved in buying so be sure to consider what the fees are to buy and sell; you may want to save up a certain amount of money and buy a certain number of stocks or bonds all at once to minimize your fees.
When you buy a stock you are buying a share in a company; that means that you share in their success and failure, making money via a stock increase when they do well, often losing money when they do poorly. A bond is a bit different, these are actually loans to corporations that need money. They tend to have a smaller return than stocks, but they are less volatile, though your money can be lost.
Purchase life insurance policies according to your budget.
Life insurance is an incredibly important financial tool that many people use to protect their loved ones in the event of their own death. In fact, if you have a family or people who depend upon you to be a bread winner then you must have life insurance. Imagine the emotional loss that your family will experience if something happens to you; do you really want to add financial devastation to that loss? Be sure that you buy a life insurance policy that will allow your family to live in the manner to which they have been accustomed even if you die.
Often, people protect their family with a term life insurance policy; it’s a good choice. There is also the potential to buy a whole life insurance policy, one where the money grows and is then available to you as a loan, as annuity payments, or in some other way in the future. This can be a good way of saving for people who are not very disciplined and struggle with saving, or who want to save for retirement while protecting their family at the same time. But do note that many financial experts, including Dave Ramsey and Suze Orman, prefer term life policies over whole life policies.
Before you make a final decision are where to invest your hard earned money be sure to do your research. You want to understand the advantages, risks, tax liabilities and other details associated with any place that you decide to put your money. Your own research and good judgement are the best decision making tools that you have!
