Quick Guide To The Best Investment Options
Here's a quick guide to some of the investment options available to you:
Savings Accounts. Such accounts are a good place to store your emergency funds. They are generally insured by the FDIC up to $100,000 for all deposits at one institution and provide easy access to your money. The chief drawback is that interest rates tend to be low.
Money Market Deposit Accounts. These accounts usually earn slightly higher interest than a savings account but still allow easy access to your money. Some banks and financial institutions require an initial deposit of $1,000 or more and limit the number of withdrawals or transfers you can make during a given period of time.
CDs (Certificates of Deposit). CDs usually earn more interest than a savings account and are a very low-risk financial vehicle. They are generally insured up to $100,000 by the FDIC for all deposits at one institution. You agree to keep your money on deposit for a fixed period of time. Usually, the longer the term, the higher the interest rate. There may be penalties for early withdrawal.
401(k) Plans. If your employer offers a 401(k) plan, it may be one of the best retirement vehicles available to you. A 401(k) is a retirement savings plan to which you can contribute a certain percentage of your gross income. However, contributions to a 401(k) and certain other qualified deferred compensation arrangements cannot exceed $9,500
indexed periodically for inflation. Typically with a 401(k) plan you have several investment options from which to choose, including stocks, bonds, mutual funds or CDs.
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