Where to Put Your Money Right Now
With record interest rates and inflation, stocks, bonds, and crypto are all in the red, you are probably wondering how you can limit your losses or where should you invest right now. Let’s explore what other possibilities are available.
Bank Savings or Certificate Deposits (CDs)
Because of rising interest rates, banks now offer higher rates on CDs. It has been in the low 1% to 2% in the last decade.
Should you invest in Real Estate?
Home prices are high, inventory is low and mortgage interests are high. Not very attractive in my opinion.
Investing in T Bonds
Interest rates are high right now so these may be worth considering. But just as prices can rise in an economy, so too can interest rates. As a result, Treasury bonds are exposed to interest rate risk. If interest rates are rising in an economy, the existing T-bond and its fixed interest rate may underperform newly issued bonds, which would pay a higher interest rate. Because of this relationship, it is particularly important for investors to consider interest rate risk when they purchase bonds in a low-interest-rate environment.
There is a misconception that, if a bond is insured or is a U.S. government obligation, the bond will not lose value. In fact, the U.S. government does not guarantee the market price or value of the bond if you sell the bond before it matures. This is because the market price or value of the bond can change over time based on several factors, including market interest rates. Source: https://www.sec.gov/files/ib_interestraterisk.pdf
What about Fixed Index Annuities?
Interest rate options include both fixed and index. The index options follow the performance of that particular index like S&P but guarantee a zero floor which simply means you don’t lose money on a down market. This gives you the best of both worlds: the ability to capture gains when the market recovers but safety when the market is down.
We don’t know what we don’t know
I can not stress enough the value of knowing what is out there. Many people keep their money in a bank CD for years and years earning close to nothing, when they could put it in a better place where they can earn higher interest, without sacrificing safety. They can use the interest gained for things like a new roof or car. They avoid depleting their money because it is continuing to grow.
I’ve had my own experience investing in all of the above with the exception of T bonds so I can’t speak very much about T bonds. Be sure to study how they work and your exit strategy (very important!), if you decide to go that route.
The Benefit of Annuities
I can definitely attest that annuities have taken the stress off my back because no matter what happens to the stock market, I know my money will not be lost to the stock market. Don’t get me wrong. I can take some losses but there is a limit.
I don’t like losing decades’ worth of savings. I worked hard for it, and the same goes for you! You shouldn’t have to lose half of your money on a bad market.
In this article, I talk about Annuities as a financial tool to keep money safe and guarantee it will last. It offers gains almost as much as the stock market but with protection from losses. If you missed it, click here to read it.
Author, coach, speaker, and philanthropist, Tony Robbins, known for his self-help seminars and books, talks passionately about annuities in the video below.
If you have questions about any of these or want to learn more, feel free to contact me. I would be happy to help you understand what is out there so you can make the best decision for your hard-earned money.
Sheilla Vidal is a Retirement Income Certified Professional RICP® and life insurance broker. Sheilla is also a physical therapist, wife, mother of two, and one of the caregivers for her 85-year-old father. She is an avid learner. She writes, speaks, and recognizes that her work in helping clients live with dignity is her God-given mission.
