Best Investments
In a turbulent and uncertain financial environment, many investors are wary of turning to the stock market for short- or long-term growth. Customers may see the stock market as a gamble of their hard-earned money and decide instead to put their savings into zero-risk investments, such as certificates of deposit (CDs) and Treasury Bonds. The best stock investments, however, with long-term planning, may have return rates doubling or even tripling that of CDs. Stock market investing historically gives about a 9% return on investments while a CD gives, at best, around five percent. That figure alone should encourage stock investments, but the interest earned on the respective figures push the profit margin even further in the direction of stock investing. A forty-year plan for CDs, for example, can return about $150,000 on yearly investments of $1000. For stocks, a forty-year plan can and often does push near or above a million dollar return.
Many customers do not have the time required for individual investments, or lack the necessary education in finance for the complex return strategies. As a result, many stockholders choose to retain mutual fund corporations who can invest their money, along with millions of other customers, with experience and planning. While this option gives customers a way to invest their money without the headache of maintaining and updating their stock portfolios, they must surrender commissioning fees to their brokers and broker agencies.
The very best stock investments cannot be undertaken without strong financial backing on an individual level. The average American family carries upwards of twenty thousand dollars worth of debt, and attempting to set aside funds for stocks at a time when there is no margin of error will likely prove foolish given the fluctuations of the market. As such, customers should clear all credit card debt or second/third mortgages before considering allocating any money to even the safest investments. In the same vein, consider acquiring a cash fallback in case the money is needed immediately — whether for an act of God or for an opportunity that cannot be passed up. Money that you will need in months (or in a year or so) is better kept in savings accounts than in stock options. All the best safe investments are over long-term periods — often decades.
If you believe you have the financial health, capability, and time to begin investing in the stock market, consider the options. If you work full-time, your employer likely offers a 401(k) plan. This plan will double your contribution at no or minimal cost to you (other than, obviously, continuing to work at the company for the duration of the plan). A 401(k) is one of the best stock investments as the money is directly taken from payroll and is not taxed. Furthermore, while the remaining paycheck will be lower, this will place you in a lesser tax bracket, thus actually returning more of your paycheck directly to you. Customers should be careful of whether or not their workplace offers a comprehensive plan, and especially if the plan has a good track record.
Another one of the best safe investments is with an IRA. IRAs, unlike 401(k) plans, have a maximum ceiling, so customers can only put a fixed amount of money into the plan. There are two types of IRAs, and the best investment rates for IRAs depends upon a customer’s tax bracket. A traditional IRA is not unlike a 401(k) in that there are no taxes upon investments until the money is withdrawn. A Roth IRA charges taxes on all invested money, but allows the funds to be withdrawn without taxes or penalties. Thus, the decision for IRA customers is whether their tax situation is more or less favorable now than it will be in the future. Dependents, exemptions, and other tax-deductible factors come into play, so customers must be careful to determine which IRA tax policy will give the best investment rates and returns.
Both 401(k) and IRA plans have maximum returns for customer funds, but that does not mean there are not more investment plans for when the two are exhausted. One of the best safe investments left to customers is a taxable account. As the name suggests, the government carefully takes their share of taxable accounts, but there are many easy (and legal) ways to minimize taxation and maximize returns. Bonds and real estate, for example, have high inefficiency rates, so over a long time period they will have larger turnouts but have ordinary tax percentages. Brokers and stock companies urge investing in taxable accounts for retirement plans, as they need a decade or more to stabilize to market fluctuations.
The best safe investment is ultimately an exercise in personal control. Many investors, with little knowledge of how the stock market operates, are quickly to jump on and off certain shares as the market spikes and dips. Patience wins out in the best stock investments as the turtle will always beat the hare — ensure that your investments are earmarked for long-term success rather than day-in, day-out highs and lows. Customers who do so will avoid the knee-jerk, erratic decisions that lead to loss of personal funds.
Sometimes I have a real problem with procrastinating. It is something that I’ve been working on, but it seems that there are so many areas in life where we need to address issues in order of priority, that sometimes we spend our days shuffling one priority in front of another, and before you know it very little actually gets done.
