You’ve saved a little bit of money. Now, where should you put it? It depends. Some options are riskier than others, some are more accessible and some will earn you more money. Before you put your cash in one of these investments, weigh these factors:
Liquidity means how quickly and easily you can take your money out of an account or investment and turn it back into cash. With some investments, you may have to wait until a maturity date before you can get to your money or pay a penalty for withdrawing your funds early.
Money in the credit union is typically insured up to $100,000 or more. If anything happens to your savings, money market or certificate account, your money will be replaced. U.S. Savings Bonds are also insured. If you invest in the stock market or buy mutual funds, this is not the case.
Risk and Reward
There is risk with mutual funds and stocks because no one insures your investment. If the stock price drops, you lose money. However, if the price rises, you may earn a large amount of cash.
Credit union savings accounts typically have little or no fees. There’s also no fee to purchase savings bonds. Mutual funds, on the other hand, typically have management fees. Also, stock market trading fees are assessed when stocks are bought or sold.