The selling point for a money market savings account has constantly been security and stability. As a result of the recent downturn in the stock market plus a general skittishness following the worldwide crisis, some individuals are falling back on banks as the safest place to put savings. Before you join this trend, on the other hand, consider this: banks are giving very low interest rates currently, which means that after inflation and taxes, the value of your savings will really decrease with time.
Everyone prefers safety, however is an account that loses money safe? Although money markets are still deemed to be safe investments, they're actually not much better than putting your money in a mattress. When we define a safe investment as one which safeguards your money while providing for at the least some positive growth, than the usual money market savings account falls short.
History shows us that downturns in the stock market are common. Also historically speaking, the harder it falls, the greater it comes back up once more. While savings accounts appear to be a safe harbor in a storm, what they actually do is to take your funds out of circulation exactly at the improper time. From time to time all of us need to cut our losses and run, yet the shrewd money remains in the game if it can.
One useful way to prevent the stress that causes many people to run for the hills will be to constantly keep in mind that investing is a long term affair. Investment money really should be savings you don't expect to need for ten years at least. By only risking money that falls into this category any investor will be able to settle back and calmly wait out fluctuations in the market.
Studies demonstrate that a diversified portfolio which contains a good base of safer investments will typically give growth through the long term. It is common for well known stocks to turn around and experience growth even following long periods of low activity or downturns. It is the nature of the stock market to move up and down then up again, and the patient investor will most frequently be the person who is in the appropriate place when the tide turns.
A money market savings account will consistently be a lot less volatile than the open market, however in exchange your cash remains inactive. Added risk is the cost of higher returns, but averages show that the added benefits commonly outweigh the risk. By following the 10-year rule and just using money that you can afford to leave alone, investing in the stock market continues to be the most effective method to make your money work for you. One thing is sure: risk nothing and you gain nothing. Money markets are "safe," however they offer you no dynamic growth, and they are not going to permit your money to reach its full potential.
Everyone prefers safety, however is an account that loses money safe? Although money markets are still deemed to be safe investments, they're actually not much better than putting your money in a mattress. When we define a safe investment as one which safeguards your money while providing for at the least some positive growth, than the usual money market savings account falls short.
History shows us that downturns in the stock market are common. Also historically speaking, the harder it falls, the greater it comes back up once more. While savings accounts appear to be a safe harbor in a storm, what they actually do is to take your funds out of circulation exactly at the improper time. From time to time all of us need to cut our losses and run, yet the shrewd money remains in the game if it can.
One useful way to prevent the stress that causes many people to run for the hills will be to constantly keep in mind that investing is a long term affair. Investment money really should be savings you don't expect to need for ten years at least. By only risking money that falls into this category any investor will be able to settle back and calmly wait out fluctuations in the market.
Studies demonstrate that a diversified portfolio which contains a good base of safer investments will typically give growth through the long term. It is common for well known stocks to turn around and experience growth even following long periods of low activity or downturns. It is the nature of the stock market to move up and down then up again, and the patient investor will most frequently be the person who is in the appropriate place when the tide turns.
A money market savings account will consistently be a lot less volatile than the open market, however in exchange your cash remains inactive. Added risk is the cost of higher returns, but averages show that the added benefits commonly outweigh the risk. By following the 10-year rule and just using money that you can afford to leave alone, investing in the stock market continues to be the most effective method to make your money work for you. One thing is sure: risk nothing and you gain nothing. Money markets are "safe," however they offer you no dynamic growth, and they are not going to permit your money to reach its full potential.
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