Keep Your Savings Safe
Money Saving Secrets
Keep emergency cash in the right place - Basically you want something that pays some decent interest but you can access fairly quickly. Parade magazine reports that for the next year the federal government will most likely offer guarantees on many money market funds – investments provided by large mutual-fund companies that offer a return typically higher than passbook savings. Investors usually receive a checkbook so they can begin withdrawing funds immediately. Bank certificates of deposit are another options. These are insured by the government as long as they don’t exceed $250,000 per depositor. You can’t access you money right away without paying a penalty, but CDs generally earn more than a passbook savings or checking account.
Stay in the market – Unless you are five or fewer years from retirement, keep investing in your 401K. According to InvesTech Research, the average bear market lasts about 15 months. This sell-off is already a year old. Remember the old rule “Buy low and sell high.” Financial adviser Ric Edelman is quoted as saying “When the Dow hit 14,000 institutional investors started selling but consumers didn’t start selling until it hit 10,000.” He advises watching the smart money for cues. Also – DIVERSIFY – putting you money in lots of different ivestments reduces the risk that one sector will wreck your portfolio.
Guarantee your income - According to the Insurance Information Institute, 43% of 40-year-olds will have a disability lasting 90 days or more by the time they retire. In many states, all it takes is three months of missed payments to lose your home, so workers must protect their ability to earn income. The easiest way to do this is to opt into disability insurance during your company’s benefits-enrollment period. If you work for yourself, you may buy coverage on your own from life,health, or auto agents. Also consider an income protection plan. The one I am most familiar with is called Paycheck Guardian . This program pays cash in addition to what you would get from state unemployment benefits if you are laid off.
Keep your home – According to Parade magazine, if you’ve missed a payment on your mortgage, you may be eligible for Hope for Homeowners, a government program that lets you swap your mortgage for a more affordable fixed rate loan.
Pay down debt – The average American household carries $9,900 of debt on cards with a typical rate of 14%. Paying it off is like giving yourself a 14% return. Charge only 30% of your limit to keep from hurting your credit rating.
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