Help reduce your financial risks by varying your investments
Worried about the news of people losing hard-earned money in sinking investments? One way to potentially reduce your financial risk is to diversify your savings and investments. There are plenty of ways to help build your money, each with their own benefits and risk levels, so using several at one time can be a smart step toward your financial goal. The way you spread out your money, and diversify your risk, is known as allocation.
Here are some different places where you may want to allocate your savings and investments.
FDIC-Insured Regular Savings:
The big plus with a traditional savings account is you can often start off with a minimum balance as low as $25. While savings accounts typically pay a minimal interest rate, your money will appreciate with low risk. Check out the monthly maintenance fees if you’re starting with a low balance, as they can chip away at your savings. Often, if you keep at least several hundred dollars in your account or set up and use automated savings transfers from your checking account, your bank will waive the monthly maintenance fees.
Automated savings transfers are also a smart way to build your savings; using online banking, you determine a set amount that is transferred each month from your checking account to your savings account.
FDIC-Insured Money Market Savings Accounts:
When you have enough money in your regular savings account to take advantage of a Money Market Savings Account, you’ll want to consider this option. With Money Market Savings accounts, you’ll get a higher interest rate and can still access the money in the account if you need to use it for emergencies. Also, if you’re saving for a big purchase, whether it’s a car or a wedding, these accounts can be a smart choice. They often come with tiered interest rates, meaning that once your deposits reach certain amounts, the interest rate rises. Often, if you maintain a minimum monthly balance, your bank may waive maintenance fees or allow unlimited deposits or withdrawals without fees.
FDIC-Insured Certificates of Deposit (CDs):
When you have enough money in your Money Market Savings Account to purchase a CD, you will want to consider this savings vehicle. CDs also can be a handy way to save for a big-ticket item. They typically have the highest interest rates, and they can be customized to your needs. For instance, there are CDs in which you can maximize the amount of interest you get without the commitment to keep your money in the bank for a long period.
These include mutual funds, ETFs, stocks, and bonds. While some have the potential for greater return than others, they can also be riskier. Your financial advisor can help you build a portfolio that suits your investment goals and risk tolerance.
Take action now.
Be sure you are using one or more of these options. Check out your bank’s Web site or visit your bank to learn more about your savings options today. Click here for additional information regarding investments.
What's next? Treating savings as an expense
Brokerage IRAs (non-FDIC insured) are available through Merrill Edge. Bank IRAs (FDIC insured) are available through Bank of America, N.A.
Merrill Edge is the marketing name for two businesses: Merrill Edge Advisory Center, which offers team-based advice and guidance brokerage services; and a self-directed online investing platform. Both are made available through Merrill Lynch, Pierce, Fenner & Smith Incorporated (MLPF&S).
MLPF&S is a registered broker-dealer, Member SIPC and a wholly owned subsidiary of Bank of America Corporation.
Banking products are provided by Bank of America, N.A., Member FDIC.
Investment products offered through MLPF&S:
Investing involves risks, including the loss of principal invested.
Neither Bank of America, N.A. nor any of its subsidiaries are tax or legal advisors. It is suggested that you consult your personal tax or legal advisor before making tax or legal-related investment decisions.