Instant gratification has become an ingrained part of our culture so the ideal of saving more and spending less is in direct opposition of this concept. However, if you make tough decisions today, it ensures that you will have a stable financial future. Where the matter of savings is concerned, it is a three stage process. The first involves setting a budget and assessing your spending. The second involves building a cash reserve that will be enough to cover the expenses of three to six months. The final step is to make an investment. The question is where? Discussed below are some of the instruments that can be used for making investments:
One of the most easiest saving options at the disposal of people nowadays is that of a savings account. Essentially, it is a place where people can keep their money when they have no intention of using it and enjoy a small return. Withdrawals can be made with various savings accounts though the protocol of every bank can vary in this regard. There is also an option of a high-yield savings account that requires a high minimum balance, but pays greater interest.
This option is ideal for everyone because it involves very little risk and doesn’t require any financial expertise on behalf of individuals. However, they are not for people who wish to earn a high return from their investments because they offer little interest.
A certificate of deposit or CD is a short-term saving instrument that’s offered by numerous credit unions and banks. The similarity between a savings account and CD is that both are low-risk options. However, a CD doesn’t allow people to withdraw money from their account until it is matured. Withdrawal before that leads to a penalty. In exchange, people are able to earn a slightly higher interest through a CD.
These certificates are suitable for individuals who don’t need to use the money until it is matured. They are also great for individuals looking to make a short term investment as compared to a long one because their maturity date is somewhere between three months to five years.
Just like CDs, these bonds are a low-risk investment option and are issued by the government. They have a set maturity date and a fixed rate of interest. However, their maturity dates are set into the future so they are a kind of long term investment. They usually last for 30 years or more, but aren’t subjected to any state or local taxes.
As they have a fixed rate of interest, these bonds are considered to be the perfect choice for those people who wish to have a predictable savings option. They are also risk-free because they are backed by the government. They are a non-volatile investment option, but their return is considerably less than the more aggressive options because there are other high risk options available.
These are some safe saving products that can be used for securing your future and meeting financial goals.
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