Rebuilding Your Savings
Posted May 31, 2009 by Bernz
If you’ve seen your savings dwindle to an all-time low over the past few years then you’re not alone. Many people have been affected by the current recession and find that they have less cash on hand savings than at any other time during their lives. Rather than simply lamenting this fact the key thing is to get proactive and began to get your money working for you once again.
When looking to rebuild your savings, the thing to do is to start small and start safe. Simply choose a small amount of money that you can afford to invest and put it away consistently into a savings account. While savings accounts don’t offer incredibly high rates of return, they are extremely safe and any amount of interest you earn will be more than you would if your money was stuck under your mattress or in a coffee can in your closet. Choosing to have a small amount of money deducted regularly from your paycheck and deposited into a savings account is a fantastic way to begin to rebuild your savings.
Another safe and secure investment is a CD, or certificate of deposit. The rates they offer are usually higher than those of savings accounts because they make you keep your money in them for specific periods of time. Once a CD is purchased, your money will stay in them and accumulate interest for the term of the particular CD and once the CD matures you will get your money back with the interest it earned. If you are tempted to take out your money before the end of the CD’s term you will face penalties which can negate the effect of these safe money making tools.
One way to limit the amount of time that all of your money is tied up in CDs is by the use of laddering. Laddering is a technique in which you invest your money in the purchase of several CDs of different terms thereby allowing you to get hold of your cash in timed increments. For instance, if you wanted to purchase $5000 worth of CDs, rather than put it all into a five-year CD you might put $1000 in a one year CD, $2000 in a three year CD, and another $2000 in a five-year CD.
By using simple safe and secure savings vehicles, you can quickly and easily begin rebuilding your savings after experiencing a financial loss.
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Tags: certificate of deposit, Saving Money
This entry was posted on Sunday, May 31, 2009 at 4:46 pm and is filed under Financial Education, Financial Goals, Investing Basics, Saving Money. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
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