Access your money at any time,<\/p>
Earn interest and<\/p>
Move money easily from one account to another.<\/p>
Certificate of Deposit (CD):<\/strong><\/p> Earn interest during the term (one month, three months, six months, etc.),<\/p> Must leave the deposit in the account for the entire term to avoid an early-withdrawal penalties and<\/p> Receive the principal and interest at the end of the term.<\/p> Investing Tools:<\/strong><\/p> Investing is not a get-rich-quick scheme!<\/p> Smart investors take a long-term view, putting money into investments regularly and keeping it invested for two, five, 10, 15, 20 or more years.<\/p> Stocks \u2014 Owning Part of a Company:<\/strong><\/p> Shares of stock may be acquired on an organized exchange such as the Nasdaq or New York Stock Exchange, through a stock-broker, over the counter or by direct purchase in some cases.<\/p> When you buy stock, you become a part owner of the company and are known as a stockholder, or shareholder.<\/p> Stockholders can make money in two ways:<\/p> A.<\/strong> Receiving dividend payments and<\/p> B.<\/strong> Selling stock that has appreciated.<\/p> A dividend is an income distribution by a corporation to its shareholders.<\/p> Stock appreciation is an increase in the value of stock in the company, generally based on its ability to make money and pay a dividend.<\/p> However, if the company doesn\u2019t perform as expected, the stock\u2019s value may go down.<\/p> There is no guarantee you will make money as a stockholder.<\/p> In purchasing shares of stock, you take a risk on the company making a profit and paying a dividend or seeing the value of its stock go up.<\/p> Before investing in a company, learn about its past financial performance, management, products and how the stock has been valued in the past.<\/p> Learn what the experts say about the company and the relationship of its financial performance and stock price. Successful investors are well informed!<\/p> Stock Options:<\/strong><\/p> Some companies offer employees stock options, which they can use to buy stock in the company at a fixed price.<\/p> For example, your employer, AAA Company, offers a stock-option plan, and its stock is valued at 20 a share.<\/p> The stock-option price is set at 30 a share.<\/p> As part of your compensation for meeting company goals and contributing to increased profits, you receive options to purchase 100 shares.<\/p> Over time the value of the AAA Company\u2019s shares appreciates to 60 a share.<\/p> You may now want to exercise your stock options and purchase the shares valued at 60 for 30.<\/p> Bonds \u2014 Lending Your Money:<\/strong><\/p> When you buy bonds, you are lending money to a federal or state agency, municipality or other issuer, such as a corporation.<\/p> A bond is like an IOU.<\/p> The issuer promises to pay a stated rate of interest during the life of the bond and repay the entire face value when the bond comes due, or reaches maturity.<\/p> The interest a bond pays is based primarily on the credit quality of the issuer and current interest rates.<\/p> Firms like Moody\u2019s Investor Service and Standard & Poor\u2019s rate bonds.<\/p> With corporate bonds, the company\u2019s bond rating is based on its financial picture.<\/p> The rating for municipal bonds is based on the creditworthiness of the governmental or other public entity that issues it.<\/p> Issuers with the greatest likelihood of paying back the money have the highest ratings, and their bonds will pay an investor a lower interest rate.<\/p> Remember, the lower the risk, the lower the expected return.<\/strong><\/p> A bond may be sold at face value (called par) or at a premium or discount.<\/p> For example, when prevailing interest rates are lower than the bond\u2019s stated rate, the selling price of the bond rises above its face value.<\/p> It is sold at a premium.<\/p> Conversely, when prevailing interest rates are higher than the bond\u2019s stated rate, the selling price of the bond is discounted below face value.<\/p> When bonds are purchased, they may be held to maturity or traded.<\/p> The bonds the U.S. Treasury issues are sold to pay for an array of government activities and are backed by the full faith and credit of the federal government.<\/p> Treasury bonds are securities with terms of more than 10 years. Interest is paid semiannually.<\/p> The U.S. government also issues securities known as Treasury bills and notes.<\/p> Treasury bills are short-term securities with maturities of three months, six months or one year.<\/p> They are sold at a discount from their face value, and the difference between the cost and what you are paid at maturity is the interest you earn.<\/p> Treasury notes are interest-bearing securities with maturities ranging from two to 10 years. Interest payments are made every six months.<\/p> Inflation-indexed securities offer investors a chance to buy a security that keeps pace with inflation.<\/p> Interest is paid on the inflation-adjusted principal.<\/strong><\/p> U.S. savings bonds are government-issued and government-backed.<\/p> There are different types of savings bonds, each with slightly different features and advantages.<\/p> Series I bonds are indexed for inflation.<\/p> The earnings rate on this type of bond combines a fixed rate of return with the annualized rate of inflation.<\/p> Some government-issued bonds offer special tax advantages.<\/p> There is no state or local income tax on the interest earned from Treasury and savings bonds.<\/p> And in most cases, interest earned from municipal bonds is exempt from federal and state income tax.<\/p> Typically, higher income investors buy these bonds for their tax benefits.<\/p> Mutual Funds \u2014 Investing in Many Companies:<\/strong><\/p> Mutual funds are established to invest many people\u2019s money in many firms.<\/p> When you buy mutual fund shares, you become a shareholder of a fund that has invested in many other companies.<\/p> By diversifying, a mutual fund spreads risk across numerous companies rather than relying on just one to perform well.<\/p> Mutual funds have varying degrees of risk.<\/p> They also have costs associated with owning them, such as management fees, that will vary depending on the type of investments the fund makes.<\/p> Before investing in a mutual fund, learn about its past performance, the companies it invests in, how it is managed and the fees investors are charged.<\/p> Learn what the experts say about the fund and its competitors.<\/p> Remember, when investing in stocks, bonds and mutual funds:<\/strong><\/p> Find good information to help you make informed decisions.<\/p> Make sure you know and understand all the costs associated with buying, selling and managing your investments.<\/p> Beware of investments that seem too good to be true\u2026<\/strong><\/p> They probably are!<\/strong><\/p>","protected":false},"excerpt":{"rendered":" The simplest way to begin investing and earning money on your savings is to open a savings account at a financial institution. You can take advantage of compound interest, with no risk. Financial institutions offer a variety of savings accounts, each of which pays a different interest rate. Savings Account:…<\/p>\n","protected":false},"author":1,"featured_media":7410,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"pmpro_default_level":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[16,17],"tags":[77,76],"class_list":["post-7409","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-elementary","category-intermediary","tag-investing","tag-savings","pmpro-has-access"],"yoast_head":"\n![\"\"](\"https:\/\/edu.investdataonline.com\/wp-content\/uploads\/2022\/07\/savings.jpg\")
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