What happens after you worked the whole summer and you finally have some cash in your pocket? Do you spend it? Do you save it? Or do you make more money with the money that you already have? Although the idea of making more money with your money sounds strange and really doesn’t make too much sense, it really happens. All it takes is a little knowledge about yourself and a number of different financial tools that will make your money grow over time.
One of the most important things about making your money work for you is to look at the big picture and set a fair goal of how much money you would like to set aside. Once you set aside specific funds, you can look at a number of different ways of making money. It is important to understand that no one is going to give you cash on a silver platter, but if you use the system properly, you will be able to make money for doing close to nothing.
The first financial tool that this article is going to discuss is the idea of a bank account. Banks offer a number of different accounts ranging from savings accounts to checking accounts — which tend to offer interest. This means that when you place your money in an account the bank pays you interest for the use of your money. This is virtually risk-free and is insured up to $100,000. Bank accounts are one of the most risk-free investments, but they also offer one of the lowest rates of return.
The next financial tool is a “certificate of deposit” which is also known as a “CD”. The CD is a way of earning a higher interest rate for just putting an amount of money into an account for a longer time period. These time periods can range from one month to five years. The longer your money is in the CD the more money you will make. CD’s are virtually risk-free and are mostly insured. The interest rate is fixed which means that when you put your money in the CD you will know how much you will make and it can’t change. The important things to note is that when you put your money in a CD you have to make sure that you will not need to take it out until after the time period that you agreed upon is over. If you take it our before the period is over, the bank will charge you a penalty fee. As long as you properly decide how long you feel comfortable putting your money in a CD you will definitely be making more money. Here is an example of a CD: If you place $1,000 into a CD for one month at a five percent interest. All that means is that you multiply $1,000 times .05 and then divide by 12. Then you will see that you should make $4.16 per month. So, if you put your money in a CD for 12 months you will make $50.00 for practically doing nothing. All interest rates depend on each bank.
The next financial tool is very similar to a CD and it is called a bond. Bonds are practically the same as CDs but are normally for longer time periods. A bond can be for a period greater than 30 years while you will mostly find CDs to be less than five years. Also bonds are normally offered by governments or corporations while CDs are offered by banks. There interest rates are very similar, but bonds tend to have slightly higher interest rates, but are a little riskier than a CD. However, in general bonds are low risk investments.
The final investment opportunity that this article will discuss is investing in the stock market. This is extremely risky, but has a much higher potential rate of return than any of the other options listed above. The stock market is very complex and should only be invested in if one is properly educated in how it works. The stock market will be further discussed in other articles on the resources page on JobSwagger.com.
Investing or committing money for the sake of a higher return are important tools for making your money grow. It is better to start at the low risk investments and then move your up. I would recommend for most teenagers and college students to place their money in a CD since they currently have high interest rates for short periods. Below is a list of some of the highest CD interest rates in the country.
Bank Interest Rate Annually
| Countrywide Bank, FSB | 5.40% |
| E*TRADE Bank | 5.15% |
| ING Direct | 5.15% |
| Bank of America | 5.10% |
| Discover Bank | 5.10% |
The last important piece of advice is that when looking for investment opportunities --always shop around for the highest interest rates. Remember that all banks require different minimums for CDs and have different terms and conditions. Good luck, and if you have any questions about this article or any other financial questions email us at support [at] jobswagger.com