Make Money Work for You: 5 Investments That Are Well Worth It

Make Money Work for You: 5 Investments That Are Well Worth It
  • Opening Intro -

    We work so hard for our money.

    The risk of losing everything on a bad investment can make us reluctant to invest at all.

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But here are five sound investments you can make that have guaranteed good returns.

Pay Off Debt

The best thing you can do when you have extra money lying around is pay off credit card debt. Credit cards can charge interest rates as high as 25%. There is no point in paying 25% interest on your credit card, while at the same time hoping to earn a high return on money that you invested in the stock market. Even if you get a 15% return on your stock investment, you are still having a net loss of 10%.

Odds are that your stock will never earn you more than a 25% return, so you will be losing money all around. Instead, put that money into decreasing the amount of interest you’re paying on your credit cards. In addition to credit cards, you should pay off other types of short-term debt, like payday loans from companies like PowerFinanceTexas.com. Saving money is the same thing as getting a return, and paying off debt puts those interest fees back in your pocket every month.

view how to reduce debt

Get a Roth IRA

A Roth IRA is an investment account that you can contribute to every year, with a maximum of $5,500 each year. One benefit to investing in a Roth IRA is that your contributions come out of your paycheck before taxes, and they’re not taxed when you withdraw them in retirement. A Roth IRA is also a flexible investment option because you can withdraw money in an emergency, but only as much as you have contributed. You cannot withdraw the interest earned unless you have hit a minimum age requirement.

Contribute to Your Retirement Account

Putting more money into your retirement account is always a good investment. No one has ever said that they retired with too much money. If your employer matches your monthly retirement contributions, you should contribute up to the maximum allowed. This is free money that your employer is offering. It’s also important to start thinking about retirement as far in advance as possible. Money contributed when you’re twenty compared to when you’re thirty has a drastically different impact on the bottom line. The longer your money is in the retirement account, the more time it has to grow.

Invest in a Certificate of Deposit

If you would like to find a sure investment vehicle for your money, a Certificate of Deposit, or CD, is your best bet. CDs are federally insured deposits that have maturity dates for some time in the future, i.e. 3 months, 3 years, 10 years, etc. You commit to let the bank have your money for the specified period of time, and in exchange they promise you a guaranteed return. CD returns are higher than you would earn in a typical savings account, but are lower than returns usually earned in the stock market. However, CDs have much lower risk compared to the stock market. One down side is you cannot withdraw the money prematurely without incurring a penalty.

Invest in a Mutual Fund

If you would like an investment that comes with a little more risk, but also offers higher return possibilities, consider investing in a mutual fund. Mutual funds are professionally managed investment programs with diversified holdings. You pool your money with other investors to purchase a collection of securities.

Don’t be reluctant to invest. Make smart investments with your money and make your money work for you.

 
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Last update on 2017-03-25 / Affiliate links / Images from Amazon Product Advertising API

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