Wouldn’t it be great if your money worked as hard as you did? If you’re depositing your paychecks into a traditional savings account, this isn’t the case.
According to the FDIC, the average interest rate for a savings account is just 0.06%. This means you earn just 6 cents for every $1,000 you deposit. Some banks even offer rates as low as 0.01%.
Luckily, other options exist for those looking to maximize their money. These three investments may be more lucrative than a traditional savings account:
Money Market Accounts
Advantages: Money market accounts may offer much higher interest rates than traditional savings accounts. For example, a bank offering a 0.02% interest rate on standard savings accounts may offer a 1.02% interest rate for a money market account. And just like a savings account, your money is insured by the FDIC.
Drawbacks: In exchange for higher interest rates, you will have to restrict your withdrawal activity. Most money market accounts offer limited checking services, with a maximum of 5-10 checks you can write per month. If you can live with these limited withdrawals, money market accounts are an attractive option.
Certificates of Deposit
Advantages: Certificates of deposit, more commonly referred to as CDs, can offer up to ten times the interest return of a traditional savings account. CDs are also fully FDIC-insured.
Drawbacks: When you invest in a CD, you are locking up your money for a predetermined amount of time. CD lengths can range from as little as one month to five years or more. The longer you put your money away, the higher interest rate you will receive. With good planning, you can spread your money across CDs of varying lengths to maximize liquidity.
Investing in Stocks
Advantages: When you purchase a stock, you are purchasing a small share of a company. When the company performs well, your stock may rise in value. Some companies even pay out dividends to their shareholders at the end of each year.
Drawbacks: Unlike money market accounts and CDs, which are more “set it and forget it” approaches, investing in the stock market takes diligence and skill. If it were easy, everyone would be a millionaire. Luckily, professional financial advisors are available to offer counsel and help you through the process.
If you are looking to maximize your investments, look no further than American Investment Planners, LLC. Our team of professional consultants will sit down with you, listen to your needs, and formulate a customized investment strategy designed to meet your individual goals.
To schedule an appointment with one of our advisors, please call (516) 932-5130 or email info@americaninvestmentplanners.com.
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