The desire to save your money and have it grow before you spend it may have you wondering where to invest money now. By investing your money now, and not waiting until tomorrow, next week, or even next month, you'll start a healthy financial habit that will benefit your long-term financial goals. There are plenty of options to choose from that allow you to start investing today. All of these options are available online and/or from your local bank branch making them easy options for investment beginners.
This is the old standby for investing money. Whether by going directly to a bank office or online, you can open and deposit into a savings account in just a few minutes. The pros of a savings account are that you can just as easily make future deposits and have immediate access to your money with an ATM card and online. Usually, savings accounts kept under $250,000 are FDIC insured so you cannot lose the principal balance in the account. The biggest drawback of a savings account is that you will earn very little in interest.
Certificate of Deposit (CD)
Similar to a savings account, you can find CDs at most any bank and open the account in the branch and sometimes online. These are also usually FDIC insured and a fairly safe investment. With a certificate of deposit, you deposit you money and let it sit in the account until it matures. Once the CD matures, you get your money back with interest earned. Different CDs will have different maturity rates, often in the range of 1 to 10 years and will have different interest rates. You don't have easy access to your money when locked in a CD, which may or may not be a drawback for you.
A mutual fund invests your money into multiple types of investments. Depending on the mutual fund you choose, this may include bonds, real estate, gold, high-risk stocks, and low risk stocks. Mutual funds are not insured and you do risk losing the money you invest. However history has shown that as a long-term investment, mutual funds tend to earn you more for your money than a safer CD or savings account.
For many mutual funds you will need a significant investment to start with, sometimes $10,000 or more. But look around at mutual fund investment firms online. Some will allow you to open accounts with just $100 by signing up for their automatic investment plan. With these plans money will be deducted from your checking account on a regular basis and deposited into your mutual fund.
Depending on the mutual fund terms you have different options for accessing your money. With a money market account, you'll be given a checkbook and can write checks (usually for a minimum amount of $500) to yourself or others. Other accounts will allow you to go to your bank or online to request a withdrawal by check or directly into a checking account. These can take 3 to 10 business days to receive.
Individual Retirement Account (IRA)
An individual retirement account builds your income for retirement. By opting for automatic deposits into your IRA you'll build a substantial retirement fund and probably not even miss the money being taking out of your checking account. You have the choice of a traditional IRA or a Roth IRA.
With a traditional IRA the money you deposit is tax deductable in the year you make the deposit but you are taxed when you withdrawal the money in retirement. With a Roth IRA you are typically (with some exceptions) not taxed when you withdrawal the money for retirement but you also receive no tax deduction when contributing to your Roth IRA. Essentially, with a Roth IRA you are paying your taxes now, with a traditional IRA you pay your taxes later.
Money put into any IRA are meant for your retirement and there are federal rules about when you can take a distribution. Making a withdrawal from your IRA prior to the specified retirement age may require that you pay taxes and penalties. Few exceptions do exists to this rules such as when using the money for college expenses or purchasing your first home.
TreasuryDirect.gov makes it easy for you to buy bonds online. Simply go to the website and open an account. You can then make purchases of bonds for as little as $25. Once fully matured, the bonds will be worth the face value stated on the bond. However, you can redeem your bonds at any time for less than the face value. All of the transactions can be handled through TreasuryDirect.gov.
Buy Gold Bars
Several online brokers allow you to buy gold bars over the internet. With these companies, you deposit money with the brokerage and then select what you want to buy. Most will store the gold for you, but some do offer shipping the gold directly to you. Check out the World Gold Council and Better Business Bureau to find a reputable online gold dealer.
Start a Collection
While starting a hobby may not be the most secure investment, it is one of the more fun ways that you can invest your money. If you have an interest such as coins, baseball cards, stamps, movie memorabilia, or even antique fishhooks, you can search the online auction website eBay and start your collection and invest your money today. As you grow your interest and collection, take the time to educate yourself about the hobby and learn what's valuable and likely to be a good investment so that you can avoid just throwing your money away on stuff.
Choosing which investment to start with may be the biggest hurdle when trying to invest your money now instead of waiting. Do take the time to research each option, the financial institutions that offer these investments, and decide how much risk you are comfortable with before investing your money. If you find that you are uncomfortable with the risks and want to take more time to research then start with a savings account or CD get help you get into the habit of investing and saving your money.