Money Market Funds: A Safe Money-Investing Option?

When it comes to savings, money market accounts are among the most popular. They offer better returns than most standard savings accounts, yet still allow easy access to your money when you need it. These accounts are often confused with money market funds, but the two are actually very different.

Whereas a money market account is guaranteed not to lose value, there is no such guarantee with a money market fund. That’s because instead of a bank-backed savings account, a money market fund is an investment vehicle. Some banks offer money market funds as well as money market accounts, adding to the confusion.

One of the most attractive aspects of money market funds is that they carry much less risk than most investments. They are required by law to be comprised of numerous low-risk securities. These securities may include government bonds, CDs, and commercial paper from corporations, among others.

The idea behind a money market fund is to keep the value of each share at exactly $1. The yield, however, may rise and fall, and this determines how much the investor stands to gain. In some rare cases, however, money market funds have dropped below $1 per share, subjecting shareholders to losses.

Read more...

Don’t Let Your Money Retire

Retirement can be a joyful time of life. You get to leave the daily grind and spend more time doing the things you love with the people you care about. If you’ve saved up enough money to live comfortably, you can live a fulfilling, carefree life.

If you did a particularly good job of retirement planning, you may have enough money in savings to carry you through for many years to come. Even so, it’s wise to keep your money working for you. You’ll need to keep up with inflation, and if you live a particularly long life, you could run out of funds. And then there’s the chance that you could incur unexpected expenses such as long-term care.

So instead of putting the brakes on your investing, it’s best to continue as though you have yet to retire. If you have adequate retirement savings, you’ll only be using a portion of your money each year. There’s no reason that the rest of your money shouldn’t be earning a return for you.

The Best Investments for Retirees

Read more...

Stocks or Annuities or Both?

In order to determine whether you should invest in stocks, annuities, or both, it is important to understand each component and how they compliment each other in an investment portfolio.

With today’s stock market at an all-time low, some experts would recommend that this is a good opportunity to invest in stocks.  The “buy low, sell high” adage may yield positive results if you are willing to invest in the long term.

Conversely, some would also argue that annuities are a safer bet in today’s economy.  An annuity is an investment that yields a guaranteed payout.  There are two types of annuities:  fixed and variable.  

In a fixed annuity, a specific amount is invested and payouts are received monthly, quarterly, or annually.  The fixed annuity offers a guaranteed payment wherein the principal amount is never lost, even though there may be a decrease in interest.

Read more...