If you’re young, you may have decades to make up for risky investment decisions. But as you age, it may be important to keep your money in moderate investments that aren’t as risky.
To secure your investment, you need to know how to keep your money in a place that provides consistent, modest returns to help you in the future.
Here are the 3 investments to secure your money according to thebalance.com.
1. Bank Savings Accounts
A bank savings account is one place to hold money that you don’t need to access too regularly. When contrasted with checking accounts, bank savings accounts tend to pay interest rates that could help you earn money on the cash you stash away there.
To open a savings account, you can access in person, online, or over the phone.
It’s important to know that you may pay taxes on the interest you earn on your money in your savings account, too. However, that’s only if you earn $10 or more in interest per year.
If you plan to have a savings account, consider an online bank. These banks offer the same level of protection and often offer higher interest rates than a brick-and-mortar bank down the road.
2. Certificates of Deposit (CDs)
Certificates of Deposit (CDs) may be one of the safest investment vehicles out there. If you want to be at the low-end of the risk/reward spectrum, CDs might be the right choice. CD investments often require as little as $500 or $1,000 to open, and they pay consistent interest for the length of the term.
Compared to bank savings accounts, CDs could potentially pay slightly higher interest rates. The higher rate compensates you for agreeing to leave your money in the CD until the maturity date, which could be from three months to 10 years.
But, you also need to be careful to notice any special features of the CD before purchasing. For example, if a CD is “callable” then a bank could cash out your CD before maturity if they so desire. Callable CDs benefit the bank if interest rates go down. In that case, the bank may call in callable CDs.
3. Fixed Annuities
A fixed annuity is a contract with an insurance company. You give them your money to manage, and in exchange, they pay you a guaranteed return. Usually, the interest on a fixed annuity is tax-deferred.
Fixed annuities are usually not liquid, which means you will not have easy access to the funds like you do with a bank savings account or money market account.
Additionally, annuity investments are typically offered by insurance companies, and you run the risk of the insurer filing bankruptcy and never paying out on your policy.
And then there’s also the chance that the annuity may have higher costs associated with it than other investments, due to fees involved.
