How to expand your savings.
People must be well aware of saving their income from the young age. Once you are in your 20’s you must start saving as it can be fruitful to you in the upcoming future. It depends on you which kind of investment you want to choose barred opon short-term savings or long-term savings. If you would like to save for making a down payment for your car or renting a property, you will might want to choose short-term investment and if you want to choose for your child’s education or your child’s marriage, you must choose long-term investment schemes. Your choice may also vary on the interest rate which you will get, once you start saving. There are various methods which you can opt for saving your money.
- Savings account: You can open a savings account and start depositing your money in it. It allows quick access to your money with privileges of check-writing and access to ATM but the interest rates that you get in your savings account is substancially low which may vary between 0.2% to 0.5%.
- High yield savings account: You may get some extra rates on high yield savings account but you need to deposit your money online as the banks which provides these types of accounts operate online and do not have any branch. You can choose to opt for this account as the interest rates which your money will incur can be high from traditional savings accounts. This also provides limited access to your money with 4 or 5 transactions per month from your banks.
- Money market accounts: These are the accounts which provide quick access to your money and incur high rates of interest than the other two mentioned accounts. The only difference in money market accounts is that there is a high minimun deposit amount and the rates of interest can be also high comparitively. Money market accounts will help you with check-writing facilities and quick access to your account with 2 or 3 transactions per month failing which penalty can be taken from the account holders.
- Money market funds: These are not the bank accounts and are not provided by banks. These are the mutual funds which are provided by investment companies and there is a fixed minimum amount and fixed rate of interest. These funds do not allow access to your money until a certain period of time. For example, you may purchase a money market fund for another 3 years and your money gets locked for this period and once the time gets finished you get your money with added interest to your money. This type of fund can be profitable if you are looking for a long-term investment but saving your money in money market funds for next 10 years can be less beneficial because of less access to your money and changing rates of interest from time to time. Instead, you would want to purchase several funds with different locking periods so that you can get your money once you need it.
- Certificate of deposits (CD’s): A certificate of deposit is a savings account that holds a fixed amount of money for a fixed amount of time, say 6 months, a year or 5 years. The bank pays you the interest along with the original money invested for the period of time. The difference is money market accounts and certificate of deposits is that the minimum money to be deposited is high in money market accounts and you can start saving with any amount in CD’s.
- Investment bonds: This is a type of investment/bond which you get as giving a loan to the company and once the share of the company starts getting high you get your money along with increased interest rates.
- Other investment methods (property, stock market, gold): You might also want to opt for other investment methods like buying a property which allows you a long-term investment and once the rate of market/property start increasing you may want to cash the amount with increased rates. Similarly, buying gold is also an option for saving money considering it as a long-term investment, but these kind of investment methods can be considered risky as you might not know when you can expect the increased rates and might lose your money altogether.
Conclusion: The only thing that can stop you from start saving at an early age can be a lack of knowledge/literacy which many of the young chidren do not get at the right time. Once you start saving your money at the right time just before you know that it can be a good age to start saving, these methods of saving can be very advantageous. People who would want to invest for long-term might take a chance with their money getting in Carey street but the short-term savings can prove to be a good method for starting to save for a longer future.
You might also want to leave your comments on getting started at the right age and how would you start saving your money for the first time.