Pros and Cons of Four Best Money Saving Ways
Do you have cash in hand? Want to save it at low risk and need some return? If yes, then you have landed at right place. I’m going to shed light on both sides of four best money saving methods. I would try to make it easy for you to know what benefits and shortcomings you can expect from every method. Let’s start peeping into the details of these methods.
1. Saving Accounts
The most common and usual form of saving money is opening up a saving account. This account makes it easy for the users to enjoy real peace of mind. They don’t need to take any tension when they open up such accounts since benefit of this account is that it is insured by FDIC. In case bank defaults then your money doesn’t lost. In addition, account minimum are quite low. However, problem with this account is that its return is very low. You get minimal return on your high investment. When you don’t need very high return then this kind of short term investment seems to be very attractive and useful.
2. Money market deposit accounts
This kind of investment is very common among savers. You need to open an account in bank that requires minimum balance along with a limited number of transactions per month. For example, you are allowed to do five transfers in a month. Interestingly, this deposit account is very liquid. You are in a position to write checks, use ATM and do transfers. This account is also insured by FDIC. Unfortunately, a return on this investment is lower as compared with CD. At this point, you need to be careful for using this account. You need to pay penalty when either you exceed number of transactions or you fall below minimum limit.
3. Certificates of deposit (CDs)
It is a debt instrument usually issued by bank. You deposit your money for a specific maturity usually from three to 60 months.You can also buy CDs from brokerages. What makes certificate of deposits a very good investment is high return. In addition, it is FDIC insured so you can name it a secure investment. Unfortunately, you can’t use your money through ATM or check. If you want your money before maturity then you need to pay penalty.
4. Corporate bonds
You can pay debt to corporations. Return on investment will be great. However, it is good to know that if you buy bonds of creditworthy companies then you will get low. You should first check the details of a company before investing money. Benefit of corporate bond is that it offers higher return than other methods. You need to pay commission for buying bonds. In case you want your money before bond maturity then you never get your full investment back. The company can suspend interest payment anytime.
Now what are you waiting for? Check the details of every method and then pick a method that matches with your own requirements.