Do you think about where to save your hard earned money? Are you earning interest on the money you put away each month, or does it invariably end up in a no-interest checking account? Unfortunately, for far too many working folks these days, their hard-earned dollars don’t earn anything at all.
The good news is that there are multiple solutions to this common dilemma, and they’re all relatively easy to put into place.
For starters, let’s assume that you work full-time and do a decent job at budgeting your income. So, if you’re able to stash away $300 each month, for example, where is the best place to put it? Another question is, “Is there a ‘best place’ to put it?'”
“Parking Spots” Where to Save Extra Money
Here’s a short review of “parking spots” that working adults often find for the extra money they have in their budgets each month.
Usual Suspects: Savings, Money-Market, CDs, Bonds
Some of the most common places to store saved money don’t pay very much interest these days. That’s because the economy is in a slump, and vehicles like savings accounts, money-market funds, certificates of deposit, and treasury bonds don’t yield much more than one or two percent at best. Therefore, most savers look for other avenues for earning a return on their money.
Precious Metals
Long considered a safe-haven form of investment for bad economic times, metals like silver and gold are finally coming into their own as common ways to store wealth, both for the long and short terms.
It’s common for working people to maintain a portfolio of stocks and bonds but allocate around 10 percent of the total value to a mixture of gold and silver. This is because precious metals can be a smart way to offset the effects of inflation and downturns in the general securities markets.
High-Yield Stock Funds
If you’re not averse to a moderate amount of risk, consider looking into high-yield stock funds. You can do the research on your own or ask a broker for assistance. The portfolios consist of corporate shares that are likely to earn high returns, provided the company succeeds in its general aim of making a profit. High-yield funds fluctuate a lot over the years but can be an attractive way to earn higher-than-normal returns.
Cryptocurrency
If you have a high tolerance for risk, it’s possible to earn up to 15 percent per year by “staking” cryptocurrency. That’s the process where you leave your assets in an account in order to earn the interest. Of course, these are rather new financial vehicles, so they come with high levels of risk.
Even so, millions of people put at least some of their disposable income into crypto funds. This serves as a hedge against inflation and as a way to diversify their overall savings portfolios.
Insurance Annuities
You can buy annuities from large insurance carriers. Some of these vehicles offer relatively attractive interest rates compared to more common methods. However, they often base their payouts on standard stock-market indices. Plus, you have to leave your funds in an annuity for a fixed number of years.
The advantage is that you get a guaranteed amount of monthly income from a fixed annuity, even though there are fees and other expenses along the way. If you shop for an annuity, be sure to check the rating of the insurance carrier issuing it and read all the fine print of the contract before committing.
No matter where you park your saved cash, the point is to put it into an account or asset that appreciates. Ideally, you’ll want to earn enough interest to both offset inflation and grow the account at a reasonable rate so that it’s worth more in the future than it is today.