The economy may be slowly improving, but interest rates have remained fairly flat. This is great news for those of you ready to take out a mortgage, but bad news for those of you with any significant savings sitting in a bank account. We have been hearing a lot about how interest rates are going to start climbing any day now, but the truth is that nobody can predict when and how high the rates will actually go. Unfortunately, a staggering amount of people are failing to allocate their investment mix properly. That means they aren’t taking on enough risk!
Inflation is a very real and very ugly thing that can eat away at our savings. The last thing you want to do is reach retirement and find out that in regard to the the time value of your money you are actually worth less now than you were a decade ago. You don’t need to get into exotic investment derivatives. There are plenty of other investment options that will help you achieve your long term savings goals.
If you have a company sponsored 401k available to you then you need to start taking advantage of it. Often times companies offer matching contributions, in which case you should be taking 100% advantage of the max contribution. Personally, I feel everyone should max out their 401k entirely.
An IRA is the next most important investment you can make. A Traditional IRA comes with tax deferred benefits. A Roth IRA comes with tax saving benefits once you hit retirement age. It’s always nice to pay less in taxes! The best part is that both of these accounts are a great way to take advantage of compound interest and long term savings.
Binary options are another investment that is gaining in popularity. This is a simply option that gauges whether or not you think an asset will be above a specific price at a specified point in time. You want to find a regulated brokerage you can trust, like topoption. It’s important to know there are two types of binary options. First, you have the cash-or-nothing option which pays out a fixed cash amount if you call the option and you are in the money. Second, you have the asset-or-nothing option, which is essentially very similar, it pays the value of the underlying security.
Rental properties are another great way to invest your money! Keep in mind that these types of investments are a bit more capital intensive. Meaning, you need a larger outlay of cash to get a return on your money. Buying a rental property is typically only a good idea if you have cash to buy the home in full. If you still want to invest in real estate, but you have limited capital saved, then you can always look into buy REIT’s. A real estate investment trust allows you to invest in real estate and receive a healthy dividend in return.
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