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Investing can help youbuild wealth.
But investing involves risk, and that scares many Americans.
Where Are Safe Places To Put Your Money?
In general, there are a few places you could park your cash that are considered safe.
These accounts are safe because they offer deposit insurance or because they are backed by the U.S. government.
These investments can lose value over time and dont guarantee a return.
This means that most Americans dont trust other types ofaccounts and investmentsas much.
Here are some of the pros and cons of each punch in of investment.
This makes them a good choice for conservative investors who prioritize capital preservation over high returns.
They are especially useful in a low-interest-rate environment when keeping cash idle might mean losing purchasing power to inflation.
Anarumo doesnt think CDs are for everyone, though.
The main downside is their lack of liquidity, Anarumo said.
Theyre typically FDIC-insured, making them a secure place to park cash while earning a modest return.
Plus, some limit the amount of withdrawals it’s possible for you to make in a month.
They offer a hedge against stock market volatility and can provide steady, albeit modest, income.
Thats why its a good idea to add stocks into your investment portfolio for long-term investing.
However, it might seem scary to invest in stocks when there arerecent market crashesthat wiped out many portfolios.
And while this is all true, the market does grow more than most other investments.
From 1926 to 2024, the S&P 500 delivered an average annual return of about 10%.
For long-term goals like retirement, a diversified stock portfolio remains one of themost effective waysto build wealth.
Where Should You Invest Your Money?
Its important to have a plan for your money.
But when it comes to protecting your money and trying to grow it, its important to understand risk.
And if youre not comfortable choosing investments for yourself, it may help to hire alicensed financial advisor.
Just confirm you understand how the advisor gets paid and their investment approach before you hire them.
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