Kazira

Recently, I met a friend who invests a lot in stocks. He mentioned how much money he made from stocks last year and the chances that he would earn the same, this year. The topic was so interesting and came just at the time when I was evaluating various options for investing. So, I got interested in stocks and it made me start browsing Yahoo Finance the very next day. Having said that, I’m still going back and forth on what is a good investment. In this article, I’d like to share a few thoughts on investing and even more importantly…"Safe Investing".

A few friends and some magazines gave a very crucial tip for investing…to always tie a safety net before climbing the trapeze. I absolutely agree with that. The top investment option on my annual plan is the one that fetches a growth of 3-4%, at least and this is what I’d like to talk about in this article. This will be followed by the more risky but higher yielding investment options. To start with, here are some investment options that fall in my safety net.

For short-term investment and returns, my choice would be to go with an online savings account and a CD account. Both of these have an annual yield of around 3-4%, even after such a terrible time for the banks. This is a much better option than doing nothing with your money in a traditional savings account. For the detailed rates for each of these, my pick would be BankRate.com. This website not only gives the latest rates for almost all types of bank accounts but also a few useful tools for investing. However, it was interesting to note that this website did not list WaMu while comparing the rates from various banks. Considering the fact that WaMu offers one of the highest interest rates for online savings, I thought it was worth checking out. So, I also check Deals2Buy.com frequently as this website often provides info on the highest rates being offered by the banks.

Here are a few thoughts on opening a CD account -

• Decide whether you want to make it a long-term investment (like 1 yr, 5 yrs etc) or just a short term (like 3 months, 6 months etc). If someone asked me this question, I would decide this based on my requirement for cash in the next few months. So, let’s say, a person wishes to invest $20,000 in CD and doesn’t have the need for cash for at least 1 yr, my suggestion would be to invest $10,000 in online savings and the remaining in CD for a period for 1 year. This is just in case if a sudden need comes up, the money can be withdrawn from the savings account with no penalties. -

• Decide which bank to go with. The first thing to check for before opening an account with a bank is whether the bank is FDIC insured or not. Since there’s too much happening with banks these days, I feel that this point becomes very important.

Believe me, these accounts are very simple to open and can be applied for online. Please do note that the interest earned is taxable in most states.

For a long-term investment, I would prefer to go with a traditional 401K or an IRA account. I’d rather not go much deeper into these as most of the information can be found from your employer or from www.bankrate.com.

In my next post, I will present a few more "safe" investment options. But until that time, here is wishing you a Very Happy and Safe Investing!