Once you determine where your money is
going, and what you have left over, start by
paying off your most expensive debt first.
Lending Investments: Similar to Monopoly, you get to be the
banker. These low-risk investments, in the form of savings
accounts, tend to return less than high-risk 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 f or you. n
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