We pride ourselves giving our members the most options when it comes to financial products, and opportunities to maximize their savings and investing goals.
But all those options can be a bit confusing initially. To make it easier, there are 2 basic categories where these products fit.
In the savings camp, you have interest-bearing checking and savings accounts, money market accounts and Certificates of Deposit (CDs).
In the investing camp, you have IRAs, 529 plans and other products that are involved in the stock and bond markets.
The fundamental difference in these tools is the risk and reward. Low-risk tools, such as a money market account, have very little market risk.
A self-directed IRA, however, has more risk but also a lot more potential reward.
Finding your comfort zone by using all these tools is crucial. Make sure you’re comfortable with the amount of risk you decide to take on. It doesn’t matter what your neighbor does or even Warren Buffett for that matter.
Speak to a professional financial advisor who has your best interests as their top priority. We’ve done some of that legwork for you. Our hand-picked financial advisors can help you set up the kind of balance between your savings and investing goals that will help your money work as hard for you as you worked to earn it.
Savings Tools
Savings accounts are the most straightforward interest-bearing accounts. You put money into your account and your money earns interest on that amount on a daily, monthly or quarterly basis. Check out current rates. The goal is to allow the power of compounding to help your money make money for you.
Just remember, this is a long-term strategy. It doesn’t work if you’re withdrawing funds regularly.
Savings accounts are ideal for people who are just starting to save and aren’t yet sure how much they can afford to put away and how long they can leave it to accrue interest.
Money market accounts are the next level of savings-based interest accounts. They require a larger minimum balance, but you also get a higher interest rate.
Certificates of deposit are built for savers who want more flexibility in how much and how long they want to put their money to work. CD rates vary depending on how much you put in and how long you leave it in. For example, a $5000, 6-month CD will have a lower interest rate than a $5000 3-year CD.
All these savings-type accounts that pay interest have extremely little risk, so while their interest rates may be low, they are very safe.
Investing Tools
IRAs, 529s and other accounts that involve stocks and bonds carry a much greater opportunity to grow your money. The catch is, these opportunities come with a much higher risk for your money.
The markets are very volatile. One month you could be making money and the next, you’ve lost a chunk of your nest egg.
If you’re considering moving into any investment accounts and you’re not familiar with the markets, sit down with a trusted financial advisor who can help you find the products and the right product mix to help you get to your financial goals in a way that reflects your risk profile.
If you like this article and want to read more about planning for your future, check these out:
And always remember, we are here to serve you. Whether it’s with our retirement calculator or by getting you in touch with one of our hand-picked investment advisors.