A review of the Savings Account, Money Market Accounts, Certificate of Deposits (CD’s) and The 401 (k) plans. The year 2010 finds many wondering how they should for the new year.
The Importance of Money and Banking the year 2010 starts with many of us wondering what we should be doing when it comes to our money and banking procedures. We are still wondering if the old familiars like Savings Accounts, Money Markets, Certificate of Deposits and the familiar 401 (k) plans are still legitimate ways of banking or will there be newer methods.
Everyone knows that you could need a quick money fix because of an unexpected emergency. The idea of having a Savings Account is still a very good one. The Savings Account can come in handy not only for those who have an emergency but for future investment. The unemployment situation as it is and the possibility to lose your job means that it is wise to have at least six months or more in the bank of our salary. This is also nice way to build nice nest egg with just a little bit of effort you will be surprissed at how quickly your Savings Account can grow.
The Money Market accounts are still a great savings tool and something the wise investor may want to look into. The Money Market accounts let you earn a higher interest rate on higher balances. You can liquidate your account instantly for cash whenever an emergency arises. Today you will find that most Money Market accounts are very easily accessed by the convenience of funds transfer between accounts, ATM access and limited check writing possibilities. Money Market accounts do require a minimum amount to open and you must keep a minimum daily balance to avoid account maintenance fees. It is best to check with your local financial institution concerning, their account requirements before opening up your Money Market account.
Certificate of Deposits
The old familiar Certificates of Deposits or CD’s as they are commonly referred too are still there to provide you with a higher interest rate than a savings account. The CD’s are still deposits that have maturity dates and fixed interest rates. Interest on your Certificate of Deposits are compounded daily and credited monthly. Commercial banks usually issue CD’s and is insured by FDIC up to $250,000. This is a great way to invest your money on a long term basis if you do not want to touch for an emergency. You can earn a substantial higher amount of money but it does require a larger investment that can’t be touched as readily as your Savings Account or Money Market Investments.
The 401 (k) Plan
This plan is a defined contribution established by employers that allows employees to make tax-deferred contributions for retirement. In some cases the employers match employee contributions up to a certain percentage. This empowers the employee’s to invest in their future and they can also move their plan in the event that they change jobs. Social Security is still one of the best plans set up by the government for the employee. You can invest into your Social Secuity retirement program to increase your retirement funds. The 401 (k) programs is similar, however, the employer is also making an investment which helps increase your funds.
The future for most of us is uncertain because of how the economy is going. The nation as a whole is watching to see if the government can pull us out of this downward spiral but it is still a great idea for each of us to rely on one or more investment programs in order to save for the future and to have for emergencies. It is always best to play it safe with your budget and your future. We hope that the information given on the different formats of investing will be helpful source of information fo those of you who are not familiar with the programs or for those of you who would just like a simple reminder on how each program works. Good Luck and Happy Investments for the year 2010.