by John Esposito

No matter your age, investing your money is a great decision. The best advice in history just may be: “use your money to make more money”. There are many places to put your hard-earned cash, many options that are vying for your green (or confetti-colored, if you are from the UK) bills, but which ones are the safest? For a new investor like you, or an experienced investor looking to find more low-risk options, choosing carefully is a good decision.

The way you invest your money depends on how you plan to spend it. If you want to save for retirement, stocks are an excellent choice. To diversify your portfolio, adding other investments can boost your income. If you would like to start an emergency fund or save for a new car, house, or anything else, then a savings account is your best bet. A savings account is a great way to protect your money and build interest. But, it’s important to know what to look for before you open a savings account or invest in stocks.


Saving for retirement is about accumulating wealth over a long time and creating enough money to support you in your older years.


Short-term savings encompass money that you plan to use in one to five years. For these, you will want to do the following:


SAFE WAYS TO INVEST YOUR MONEYStocks vary wildly depending on the market, so they are not the best idea for your short-term savings. For instance, if you are saving for your dream vacation, it is dangerous to put all of your hopes in stocks as they go up and down. You do not want to be in the position of a few weeks near your vacation and the stocks drop. Enough of your money can be lost so you will not have enough for what you would like to do.


Putting your funds in a savings account that earns interest will be beneficial to your future. While you could put your money in any savings account, it is best to shop around. You may decide to go with your bank’s savings account offered, but many large banks have extremely low interest rates. As of 2018, the national average for savings account is a mere 0.09%. Also, some large banks have interest rates that are even lower than this.

Often, you can get higher rates with online banks. Some may offer 1.90%, which is a great deal higher than regular banks. There are a variety of reputable online banks to open a savings account. Before doing so, ensure these options are backed by the Federal Deposit Insurance Corporation (FDIC). This organization insures your money up to $250,000 in case the economy sours. If you deposit your money through a credit union, the National Credit Union Administration (NCUA) will do the same should your bank close or some other unfortunate event occurs. These safety measures are an excellent money-back guarantee.


For your short-term savings, keeping it liquid is the best idea. Because you are not saving this money for retirement, you will want it available when you need it. Many withdrawals from savings accounts, certificates of deposit, or other investment options, can be withdrawn within a few days or less. If you invest your short-term savings in assets such as a house or stocks, you would need to sell these items before receiving the money you have invested. This process can take from weeks to years, so, not a great option when you need your money and you need it now.

Excellent options for your short-term savings is a savings account, certificate of deposit (though these funds are only available once the mature date occurs in a few months or years. They have higher interest rates), a conservative mutual fund, or some other investment that can be liquidated. With many of these options you can have your hard-earned money in a couple of days.


As you are trying to save, you will not want your money too accessible. Placing your money in a savings account or similar options forces you to transfer your money before usage. This can keep a clear difference between your checking account and savings, which can help you accrue larger money because the accounts are quite different. Often, it is best to use your checking account for day-to-day purchase and your savings account for large expenses or even your retirement.


SAFE WAYS TO INVEST YOUR MONEYThere is a variety available to you. Shopping around for the best one is very important and should be done with the utmost diligence. Savings accounts and certificates of deposit (CD) are very safe, but have somewhat low interest rates. Bond funds are less safe than the former but offer more interest with limited risk, so your money can grow faster over time.


With all of these options, it’s best to do your research. There are many investments that can be used to diversify your portfolio. Other options not mentioned, but should be considered for both short or long-term investing are money market accounts, rewards checking accounts, treasury securities, money market funds, bond funds, and others.

There are a variety of resources online to learn about these potential assets. Most have certain criteria that must be met and some have restrictions. Investing your money is an excellent way to build wealth so you can retire comfortably, save for that dream vacation, or buy that car you have been drooling over for years. No matter what you have planned for that money, building assets can only enhance your finances and get you closer to financial independence. You have worked hard, why not be rewarded for it?

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