One of the principal problems with ownership investments like stocks, real estate, and small businesses is that you may not be able to quickly convert your assets into cash. As an example, cash equivalent investments allow you to make withdrawals more easily and often without any costs involved.
The most obvious example is the basic checking account available at your local bank from which you can easily withdraw funds by writing a check or by making a withdrawal at an ATM. Of course, the problem with the checking account or a savings account is that you simply are not going to grow your money very much at all because of the low interest rates being offered.
Money market mutual funds are a good alternative to consider, and as a matter of fact investors take advantage of these higher yields to the tune of hundreds of billions of dollars. The disappointing news is that current rates are quite low even for these money market funds, but you may want to consider them anyway because they still offer a better deal than your typical savings account. The interest rates will potentially increase over time, which would make these investments more attractive.
Are money market funds risky? Many people prefer to keep their money in a savings account despite the lower yield because they have the impression that these higher-paying funds are riskier, but these kinds of investments usually involve United States treasury bills, short-term bank certificates of deposit, and bonds from trustworthy corporations. So you see, these types of cash equivalent investments are much safer than many people think, so it’s wise to consider these accounts as part of your overall savings and investing strategy.
You may also be pondering how easy it is to access your cash in a money market mutual fund. The majority of bank accounts make withdrawals easy and convenient, but money market funds usually offer check writing privileges and other methods to withdraw your money (although they often have a minimum withdrawal amount such as $250).
You should seriously contemplate moving your savings into a higher-yielding account, but if you’re serious about building wealth and are willing to take on a reasonable amount of risk, you should strongly consider ownership investments as part of your portfolio. With some education, dedication, and patience, you can build a portfolio stock market and/or in real estate. Both of these types of investments have a strong track record over the long-term and, if you’re willing to hold tight for several years or more, you have a good chance of yielding about 10% in annual returns.
Jacob Lumbroso is an enthusiast for foreign languages, history, and foreign cultures. He recommends http://dualrecliningloveseat.org/ for anyone looking to buy dual reclining loveseat.