7 best places to store your money

If you’re looking for the safest place to store your money, look no further than a savings account. Your money is insured by the FDIC and can be accessed at any time via online transfer or debit/ATM card, depending on your bank’s policy. But there are plenty of other safe places to store your money besides a savings account. Still, you can get at least some benefit.

See also: 3 things to do when your savings reach $50,000

A place to save and grow money

Where’s the safest place to save money? Here are the 7 best ways to keep your money relatively safe and grow.

US government securities

U.S. government securities are backed by “the full trust and credit of the U.S. government.” Essentially, this means the government will not default on interest or principal payments on these securities. U.S. government securities are considered the safest in the world because the government has cash reserves, tax powers, and the ability to continually issue new debt to pay off old debt.

As an added benefit, US Treasury bills are exempt from state and local taxes.

Insured municipal bonds

Municipal bonds are typically issued by cities, states, and localities to raise money for public works such as infrastructure and schools. Like corporate bonds, most municipal bonds are assigned a rating by a third-party independent agency.

However, unlike corporate bonds, many municipal bonds are also insured. This means that in the generally unlikely event that a municipal bond defaults, the independent insurer will pay off the bond and keep investors in good spirits. This puts insured municipal bonds a step below U.S. government securities in terms of safety.

certificate of deposit

A certificate of deposit is another type of safe investment favored by conservative investors. CDs are issued by banks and usually have fixed interest rates and maturity dates, although in some cases they are flexible. The certificate of deposit comes with his FDIC insurance, the same as a savings account.

CDs often pay a slightly higher interest rate than savings, with the caveat that withdrawing money before maturity can result in early withdrawal penalties.

money market account

Money market accounts are less common than they used to be, but many banks still offer them. One of the main attractions of money market accounts is that they are a kind of hybrid, combining the best features of savings and checking accounts. Most money market accounts pay similar or higher yields than savings accounts, but also have check writing capabilities.

In addition, money market accounts are insured by the FDIC just like savings accounts and CDs.

dividend aristocrat

If you’re willing to take the risk of owning individual stocks, Dividend Aristocrats are a good option to start with. Dividend Aristocrats are companies that have not only paid dividends for 25 or more consecutive years, but have also increased them. This is only possible if the company has a relatively mature business with consistent cash flow. Dividend Aristocrats generally represent the world’s most famous companies.

All stocks can fluctuate, but Dividend Aristocrats are generally more stable than the market as a whole because customers tend to buy products from well-known name brands in any economic environment. The income portion of their returns, by definition, rise every year, providing a cushion for investors looking for safe harbor investments.

workplace retirement plan

If you’re looking for a place to put your money for the long term, one of the best options is a workplace retirement plan.

Contributing to a retirement plan like a 401(k) not only allows you to contribute a pre-tax amount, but it also defers taxes until you withdraw your assets. And with an early withdrawal penalty of 10% applied until you reach the age of 59½, you’re more likely to stick with one of the keys to long-term investment success. In most cases, your employer will pay you an amount equivalent to a portion of your contributions.

Within a 401(k) plan, you can choose conservative investment options, typically short-term Treasury bills, if you prefer. However, the best use for a 401(k) is generally for long-term growth. That is why you should consult your financial advisor to ensure you are getting the most out of your retirement investment.

real estate

Real estate is one of the least liquid investments, and it’s important to understand it before depositing money there. Selling a property can take months or even years, so you should not invest short-term needs in real estate.

However, unlike many other investments, real estate is a tangible asset. Unlike stocks and government bonds, real estate is something you can touch and see. Combined with people’s unique needs to have a place to live, real estate can offer excellent long-term value when located in attractive neighborhoods.

However, the illiquidity of real estate, the long holding periods typically required, and the lack of insurance or guarantees make real estate riskier than many other options on this list.

Conclusion

Investing is inherently risky. This is a trade-off for the potential rewards they offer. However, risk is not evenly distributed among different investments. Where is the best place to store my money? Investments with insurance or government guarantees, such as CDs, insured municipal bonds, savings accounts, and US Treasuries, are good choices, especially for risk-averse investors.

But for those willing to sacrifice some security in exchange for higher return potential, investments such as high-dividend stocks, S&P 500 index funds, and even real estate could attract more interest. There is a nature. However, before taking the plunge, always consult a financial advisor to understand exactly where you stand on the risk-reward spectrum and devise a suitable portfolio strategy.

Frequently Asked Questions

• Where should I store my money instead of a bank?

  • If keeping your money safe is your primary concern, consider US government securities – They are considered the safest in the world.

  • However, if you have a little more risk tolerance, consider investing in dividend aristocrats or real estate.

• Where’s the safest place to put money in a recession?

  • bank account – Savings account, checking account, certificate of deposit, etc. – We are insured with the FDIC. You can also invest in assets such as gold.

• Where Do Billionaires Keep Their Money?

  • Stocks, bonds, private equity funds, and even cash are all ways billionaires store their money. Wealthy people keep their money in different places – Diversification is an important part of smart investing.

This article originally appeared on GOBankingRates.com: 7 Best Places to Store Money