Financial Advisory

By Michaela Heilesen

Savings: Why Are They Important?

Savings aren't just beneficial to yourself but also contributes to the nation's overall economic growth! How can this be? Well when you put your money in the safe hands of a bank, they can then lend some out to businesses, who then invest in capital goods. This in turn, increases growth in the economy. Another reason why savings are important are they can help you reach your goals! When the bank lends out your money, they do charge the business borrowing it an interest rate. Which ends up rewarding you and gives you a little bonus for trusting the bank with your money. It's best to have a steady put-and-take account. Last but not least, savings can do wonders for your retirement. Some of these ways are social security, company retirement plans, and personal savings. One of these is bound to work for you!

Tips On Savings

Looking for a way to save your money without ending up empty handed? Here's a few that might help you out. Create a budget; this will help assure that you will have all your monthly/yearly expenses covered! Another tip is whenever you're about to go shopping, have a set amount of money that you're going to spend. This makes it easier to cut down on useless spending, help you control your budget and money going in to savings. One last tip is to have a checking and savings account so there's a limit on how much you can spend in between paychecks without having to transfer money from your checking and savings accounts.

The Power Of Investing

Whoever said money grows on trees was obviously wrong, it really grows in the bank! You may ask yourself, I already have a stable savings account that I can rely on, why should I invest? One reason is that bank deposits insured by the FDIC are among the safest investments you can make. Even if the bank were to lose all your savings or go out of business, the FDIC would reimburse you up to $100,000. However you should invest in slow/steady rates as it's riskier than just savings. Another reason is that it does in fact help you reach your long-term goals! By investing your money, you're earning more money by keeping it in the bank. There's no easier possible way earn money, so why not start making money off your own money? It gets better! How could it possibly? Well t has to do with the number 72. The Rule of 72 to be exact. This is how it works. If you left your savings in the bank to compound year after year, you would have eventually doubled your investment. You can figure out how long you this would take by dividing the number 72 by the annual rate of return on the investment. Sounds pretty great for not even lifting a finger!

Investment Options

Beginning Investing: Once you have a stable put-and-take account, this is often the next step. You can invest in low-risk things that won't be like to lose any money on. Because of this, there's not a high rate of return. This has a fair amount of liquidity.

Systematic Investing: This includes investing on a regular and planned basis. This is more of a long-term investment as the bigger results happen in 20+ years. There's not much liquidity. There's a pretty nice rate of return, a little tip is to go and find out more about The Rule of 72.

Strategic Investing: If you've made it this far you're doing well! You can now begin strategically thinking and take more risks. Managing your portfolio and keeping an eye on balancing out losses and gains in your stocks, funds and/or annuities. These goals are medium-term: 5 to 10 years. There's not much liquidity. The rate of return will vary depending on how well your investments do.

Speculative Investing: A lot of people don't get to this step and it's okay! But if you do, kudos to you! This investment option has the highest risk, yet the highest possible gain. To many, this involves investing in things such as penny stocks or collectibles. With this in particular the liquidity and rate of return will vary, as investments are usually in physical items.

Tips On Investing

One good way to start with smart investing is to put the right amount for you (amount will vary) in to your savings account. You will want to be careful with how much you put in because if you choose to take it out early before the year is over, you will not get the rate of return on that amount. Don't invest more than you can afford. Another tip is to be patient! Try to not be hot and cold with your investments, put in a certain amount and leave it be. You will be content if not happy, with the results at the end of the year! One last tip is once you have beginning investments handled, you can move on to investing on a regular and planned basis. This helps your money to grow at a much faster pace.