Major Money Strategies that Work

Helping you develop your financial plan is simple once you have the resources available to help you. Consider the following major money strategies that have worked for others:

 

·        Cash Equivalents – These are accounts that are safe like cash. They earn a small amount of interest and you can convert them to cash quickly. These are:

 

o       Savings deposits – These are the simplest ways to save. You make interest on your account either quarterly or yearly. What is good about these types of accounts is the fast availability of funds.

o       Certificates of Deposit (CDs) – This is a special type of deposit account that offers a higher rate of interest than a savings account. The only drawback to CDs is you tie up your money for a set length of time established by your financial institution. If you withdraw too soon, you will pay a penalty.

o       Money market accounts – These are similar to savings accounts. The biggest difference is money markets pay higher interest.

o       Money market mutual funds – These are not the same as money market accounts. To open one you have to open an account with a mutual find company or through a bank or brokerage. And money market funds are not insured like money market accounts are.

·        Bonds – There are three types of bonds – Municipal, Corporate, and Government bonds.

o       Municipal bonds – These are issued by state and local governments to pay for public improvements, to reduce their debt, or other reasons. The good thing about buying municipal bonds is they are tax free.

o       Corporate bonds – These are issued by corporations that wish to raise money for certain business ventures including buy new equipment, expansion, or merging with other companies. Interest earned is taxable so the rate of interest is higher than municipal bonds.

o       Government bonds – These are issued by the government and are the safest bonds you can get. The most often purchased bonds are Treasury (T-bills), and Savings Bonds.

·        Stocks – Owning stocks is one good investment. You can buy stocks today and sell them tomorrow to gain profits. Or if you hold on to them you can make money through the company’s profits, known as dividends. It would be best to buy stocks only from companies they can trust or that has a history of making money and being successful. 

·        Mutual Fund - A mutual fund is a pool of money that is managed for the benefit of shareholders. When you invest in a mutual fund, you own a portion of the fund, sharing in any increases and decreases in the value of that fund. There are many types of funds available – funds with a focus on stocks, bonds, cash, or a combination.

 

Having strategies that work are a great help in your efforts to plan your financial future. By knowing what you can do, will help you focus on what you need to do and how to get there. But this is not all. You need to know other factors. Let’s consider them next.