Many people who saw their savings accounts as the foundation of their plans to be financially secure have had to rethink that strategy. With rates low and not much hope for change in the near future, looking into other methods of earning a modest but consistent return is essential. Here are a couple of ideas that may work for your household.
First, consider investing in bonds with a relatively short-term maturity date. Assuming you can invest the money and allow it to remain in the bond for two to three years until maturity is reached, the return is likely to be superior to interest rates offered on savings accounts these days. Once the bond matures and you receive both your initial investment and any interest earned, simply reinvest that amount into another bond issue that is safe and has a decent rate of interest.
If coming up with enough money to buy bond issues is difficult, consider some type of money market fund that allows you to contribute reasonable amounts each month, incrementally building your investment in the fund. Take care to research the fund carefully, and take note of how consistent it is with earning returns for members. There are funds of this type that offer high risk investments that offer the possibility of a larger return, but if you are somewhat conservative, focus your attention on fund that stick with investments that produce a small but reliable return.
Keep in mind that you can generate funds to invest in your savings efforts by paying down credit card balances, refraining from purchases that do not provide long-term satisfaction, and managing your household costs to best advantage. Every small sacrifice made today can mean a more secure financial situation in the years to come.
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