I'm sure that most people would agree that money is one of the more important things around today. If you had a lot of money, you could do a lot of cool stuff. If you don't have any money, your options are pretty limited. Of course, once you have money, you've got to learn how to invest it. That's what this article will be all about. You'll learn a few basic investing methods here.
One of the reasons investing is so important is because of inflation. Inflation is what robs money of it's value over time. If you stuck ten thousand dollars in a shoe box today, it wouldn't be worth as much in ten years. You wouldn't be able to buy nearly as much stuff with it. Even though you didn't lose any money, it wouldn't be worth as much.
So just to break even, you've got to get a rate of return that's equal with inflation, which is usually between 2-4 percent per year. Of course, these figures are just estimates. Some things double in price every year, like real estate, while other things stay relatively the same.
The most basic investment is with an interest bearing savings account. These usually pay pretty low interest, many less than one percent. That means that while your money is safely sitting in the bank's vaults, you are actually losing money every year.
The next level up would be a certificate of deposit. These work just like bank accounts, but you have to leave your money in for a certain amount of time. Because of this, they'll give you a little bit higher interest rate. Sometimes as much as three or four percent.
Bonds are another way to invest. When you buy a bond, you are basically lending your money to the issuer of the bond. Usually bonds can give some pretty reasonable rates, some as high as six or seven percent. This can add up quickly over time.
As you can see, it's important to figure out how to invest your money. Even if your money is sitting in a savings account, you should shop around to make sure you are getting the best return possible.
One of the reasons investing is so important is because of inflation. Inflation is what robs money of it's value over time. If you stuck ten thousand dollars in a shoe box today, it wouldn't be worth as much in ten years. You wouldn't be able to buy nearly as much stuff with it. Even though you didn't lose any money, it wouldn't be worth as much.
So just to break even, you've got to get a rate of return that's equal with inflation, which is usually between 2-4 percent per year. Of course, these figures are just estimates. Some things double in price every year, like real estate, while other things stay relatively the same.
The most basic investment is with an interest bearing savings account. These usually pay pretty low interest, many less than one percent. That means that while your money is safely sitting in the bank's vaults, you are actually losing money every year.
The next level up would be a certificate of deposit. These work just like bank accounts, but you have to leave your money in for a certain amount of time. Because of this, they'll give you a little bit higher interest rate. Sometimes as much as three or four percent.
Bonds are another way to invest. When you buy a bond, you are basically lending your money to the issuer of the bond. Usually bonds can give some pretty reasonable rates, some as high as six or seven percent. This can add up quickly over time.
As you can see, it's important to figure out how to invest your money. Even if your money is sitting in a savings account, you should shop around to make sure you are getting the best return possible.
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