Strategies to Protect Your Money
Gone are the glory days of high-interest savings accounts. Today, anything north of one percent is a good deal for consumers. Internet-only banks typically offer the highest interest rates of 1 percent or higher while traditional brick-and-mortar banks stay around 0.01 percent. On $10,000 in savings, it's the difference between earning $100 and $1.
While a $99 difference is significant and savings should be kept in the highest interest rate account possible, you still shouldn't be sitting on much more than six to nine months' worth of living expenses in savings. This should include money to cover rent or mortgage payments, utilities, phone bills, transportation costs and average food costs.
It's a financial imperative to have easy access to an emergency fund that's kept in a non-risky vehicle. But it's also important not to get into the habit of hoarding money in a savings account because you're too afraid to invest.
Ultimately, your money will start to lose value to inflation if it remains strictly in savings.
There is an exception: if you're saving up for a down payment on a home, you may want to keep a bulk of it out of the market to avoid risk.
Where to Else to Put Money
Once you've hit your six to nine months emergency savings fund, you can start to dabble with putting your money into investments. You should consult a financial professional and educate yourself before blindly making investments. You need to also assess your risk tolerance.
Beginners can start investing without stock picking but instead by opening an index fund, mutual fund or exchange trade fund (ETF) through low-fee investment companies like Vanguard, Fidelity and Betterment.
Just be sure any money you invest won't need to be accessed in the case of a financial emergency and that you have enough liquid to cover life's unexpected surprises.
For more tips on protecting you finances, managing mortgages and other loans, or other financial management strategies, visit Madison Monroe and Associates online today!