10 Safe Investments for Your Money

With the economy in a slump, we are all looking for a safe place to keep our money. Everyone is feeling uneasy about their savings accounts right now. We just do not know what is going to happen. It just isn't feasible anymore to throw your money under a mattress or in a safe somewhere. Why not put it somewhere you can earn more money? The stock market these days is not the safest place. There are a lot of people who think that now is better than any time to buy because the market is so low, but how long will it be low? Will your money be gone before the market even goes up? Consider these 10 safe investments for your money that promise a decent return with hardly any risk involved.

#1) CDs - You can purchase a certificate of deposit through your bank. Your money is insured up to $100,000 by the FDIC. With CDs, the money is locked in and you cannot withdraw the funds without paying a penalty. You can get a CD for as little as $500 and you can lock the money in for as little as 1 month or as much as 5 years. Typically, the more money you place in a CD, the higher the rate you'll get. Of course, the longer the money is tied up, the better the interest rate you get and the more you get in interest. I like to keep several CDs at different amounts for different terms.

#2) Money Market Accounts - Money Market accounts are a perfect place to store money if you know you will need to access the funds. The interest rate will always be better than a standard savings account and you can get to the money whenever you need it (usually a few withdrawals per month). Banks take that money and reinvest it in short-term securities. At the same time, they offer decent interest rates (usually around 2% right now). Make sure if you choose to use money market accounts, to check the stipulations at your bank. Every bank is different.

#3) Treasury - These are low risk securities that are issued by the U.S. government. These are not FDIC insured. The risk is typically nothing which means they have pretty low rates of return. You would purchase these directly from a bank or the U.S. Treasury (at www.treasuredirect.gov). Some people prefer these because you cna receive more money on the return than you would in the stock market. There are short term bills offered (T-Bills) that are yielding around 2% right now and there are also 10-year notes that are yielding around 4%. Most people tend to hold onto these until they mature. You are able to sell the note if you need access to the money but you could lose money if interest rates have risen since you purchased your note. Basically, you might not get what you paid for it when you are ready to sell. If you hold until maturity, you know what is coming in. Treasuries are usually considered the safest investment (if you don't need to access the cash).

#4) Savings Account - At one time, these were the best places to store money. Times have changed and we now have other options. People are more educated on finding investments that give better returns. You can park your money in a savings account, but the return will be extremely low. The money is FDIC insured and you can access it as often as you'd like.

#5) Checking Account - Please understand that checking accounts are a way to complete transactions. They are not meant as a means to gain return. If you are lucky to get a checking account that pays interest, it won't be very much. You can store your money here and access it as often as you'd like by using checks, ATM cards, and by simply going to the bank when it is open. All money here is FDIC insured as well. Some banks charge fees or require a minimum balance. Do your research on several banks around and find the best one that fits you.

#6) Money Market Funds - these funds invest in safe securities. You can have access to the money as you need it. The returns are usually higher than a typical money market account and you are able to write checks or use an ATM card to get your cash. These funds however are not FDIC insured.

#7) Municipal Bonds - these are usually called "munis." These bonds are issued by local governments to fund the building of projects for the public such as schools, highway systems, parks etc. These are exempt from federal taxes and if you live where the bond was issued, they might be exempt from state and local taxes as well. You can find this information out before you place your money here. Usually the interest is pretty low and you might have to pay commissions in order to purchase munis. If you need access to the cash before it matures, it is highly possible you will not get all the money back that you put into it.

#8) High-Yield Bank Accounts - You can find these high interest rate savings and checking accounts at some banks. You are able to withdraw the money whenever you need it. Do your research though. Some banks offer better rates on these than they do CDs and the money is FDIC insured. Usually you can find the best rates from an online bank.

#9) Christmas or Vacation Club Accounts - These accounts usually require a deposit regularly (usually once a month) and will yield a decent rate of return. Check with your bank and see if they offer these. There is usually a maximum amount you can deposit, but it is an easy way to save money if you don't need to access your cash and you would like to make regular deposits. I like to open up a Christmas club account every year because by the time Christmas comes, I will have about $1200 (I place $100/month) plus interest for gifts.

#10) Keep it in a safe - you can always lock up the money at home in a safe somewhere where you know nobody can get to it. The problem with this is that you won't earn any interest on that money. You know the money is safe (as long as it is well hidden and you are the only one with access to it). You can access it whenever you need it, add to it, and you'd never have to go to the bank to take out cash.