Savings and Investments - Bonds, stocks and mutual funds

As we all know, it is important to make provision for the day we can’t provide for ourselves anymore, thus in this post I will be looking at two forms of investment and saving vehicles. Short term savings and investments as well as long term investment options:

Short-Term Savings Options

• National Savings account: Savings accounts are probably the first accounts anyone owns as they are needed for employers to be able to make your monthly income payments. Unfortunately savings accounts only earn a small percentage in interest (anywhere from 2.0% to 4.0%, often less), this often discourages people from using them and the money ends up under the mattress..
• Money market funds: Money market funds are a specialized type of mutual fund. They are mostly utilized for short term bond investments. Unlike most mutual funds, money market shares have been designed to never go under the $1 per share mark during the investment lifetime. Money market funds usually pay better interest rates than a conventional savings account, but below what you could get in certificates of deposit. Money market options usually also enforce a minimum amount required to keep the account open and function unlike a savings account which you can start with any amount.
• Certificate of deposit (CD): A cd is a specialized deposit you make at a bank or any other financial institution. The certificate of deposit’s interest rate is usually about the same as that of short term or intermediate bond investments. Interest payments are made at regular intervals until the CD matures, at which point you get the money you originally deposited plus the accumulated interest payments are paid out.

Long-Term Investing Options

• Bonds: Bonds come in various shapes and sizes. Bonds are also known as “fixed-income” securities because bonds generate the same amount of interest each year, this amount or percentage is calculated when the bond is sold. From an investor’s point of view, bonds are very similar to CDs, except that they are issued by the government or by corporations instead of banks.
• Stock: Stocks allow individuals to own parts of a specific company or corporation. A stock share represents a proportional share of ownership in a company. A share’s value will increase and or decrease over its lifetime as the value of the company increases or decreases.
• Mutual funds: Mutual funds allow many people to buy certain stocks, bonds or any other commodity the fund manager deems a worthy investment. This type of investment allows people to own stocks that they normally would not be able to afford on they’re own.

I hope this sheds some light on the investment and savings options that are available today. Please check back soon for more.