IN Brentwood-Baldwin-Whitehall Summer 2016 | Page 36

Once you determine where your money is going,
and what you have left over, start by paying off your
most expensive debt first.
minimum payment, while continuing to make the minimum payments on all other cards.
Taking these steps to start eliminating debt will allow you to start investing your money to
allow it to grow for the future.
INVESTING ESSENTIALS
We all work hard for our money, but it is important for your money to
work just as hard for you. Now that you’ve determined that 20% of your
money should be budgeted to financial goals, you just need to figure out
how to invest. No matter what you are saving for, you should start by setting
realistic, manageable goals for your money, and then find the discipline to
reach them.
Investopedia breaks investments into three groups: ownership, lending, and cash
equivalents.
Ownership Investments: Typically the most volatile and profitable. These types
of investments span from stocks, to owning or running a business, to buying
investment real estate, to purchasing precious objects such as jewelry or art with the
purpose of reselling to make a profit. While you can make the most money out of
these investments, there is often greater risk. If you have a “risk is worth the reward”
mentality, then ownership investments may be a good option for your money.
Lending Investments: Similar to Monopoly, you get to be the banker. These lowrisk investments, in the form of savings accounts, tend to return less than highrisk alternatives. Questioning why your savings account is considered a lending
investment? Your bank uses the money in your savings in the form of loans, and in
return pays you interest. Also, the Federal Deposit Insurance Corporation (FDIC)
insures up to $250,000 per depositor per FDIC-insured bank if the bank goes out of
business.
Cash Equivalents: Money market funds are easy to convert back into cash and
the risk and return are both minimal. Your money is liquid in this type of account,
making it easy to get money out. These types of investments are considered safe
bank deposits, but often yield a higher return. Investing in “cash equivalents” is best
for older investors who are looking for a safer option, rather than investing in risky,
long-term stock options.
Paying down debts and putting your money toward your future is a rewarding
experience. You’ve worked hard for your money, so whether you are saving up for your
first car or looking toward a relaxing retirement, make sure your money is working just as
hard for you. n

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