Grow Your Money Without Risk: CDs, Money Market Accounts and Other Safe Investments
Grow Your Money Without Risk: CDs, Money Market Accounts etc.
If you’re new to investing, or if you’re getting close to meeting major financial goals like retirement, you may be looking for ways to invest without much–or any–risk of loss. Good news: There are low-risk and risk-free investments readily available to you. Check these options with your personal financial advisor first… Some of the safest are:
- Certificates of Deposit. CDs don’t give you a huge return on your investment, but you’re not likely to lose money on them unless the bank or credit union goes belly-up. With a CD, you earn money through interest, just as you do with a regular savings account. But CDs pay a higher interest rate because you agree to let the bank hold the money you’ve invested for a specific amount of time. The longer the term of the CD, the higher the interest you’ll earn. Once the CD matures, the bank or credit union will automatically roll the money over into a new CD, unless you give instructions that it’s to be deposited into your savings or checking account or mailed directly to you.
The drawback to a CD is that you’re tying your money up for the term of the CD. If you need to get your hands on it quickly before the CD matures, you can count on paying a penalty. But if you know for sure you won’t need the money, a CD is a safe investment that can produce decent returns.
- Money Market Accounts. A money market account is a way to keep your cash safe and growing, but it is more readily accessible than a CD in case of an emergency. When you deposit funds into a money market account, the bank uses it to invest in fairly safe financial instruments like CDs and Treasury bills. In exchange for the privilege of using your money to make its profitable investments, the bank pays you a higher interest rate (in the form of a dividend) than it would on a standard savings account. But because of that higher rate of return, a money market account typically has a minimum balance requirement and a limit on the number of withdrawals you can make from it. As long as you open your money market account at a bank, it is FDIC insured.
Our next Blog Post on AllFinancialAdvisors.com will focus on additional ways to conduct lower-risk investing. An example Treasury Securities. Make sure to ask your current financial advisor or financial planning professional what steps you should take to reduce your investment risks. Thanks for checking back with us… Cheers.
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Tags: CDs, Certificates of Deposit, financial goals, Fixed Annuities, Grow Your Money, inflated interest rate, insurance, Money Market Accounts, retirement, risk-free investments, Treasury bills