Tag Archive for Interest rates, debt

Assuming Risk To Get Higher Returns On Savings

We now have  skyrocketing debt and the the economy has been deteriorating for years. In order to try to turn things around, the Fed (really the current administration) has lowered interest rates to practically zero.

 

While that can benefit anyone who is trying to get a loan, it hurts everyone else who has money saved to invest. People who have money saved want to get some return and many retired people depend on the income that is generated from their savings. But with interest rates near zero, what is a person to do?

 

The stock market has always been a good place to put your money if you have a long time frame to invest. The long time frame is critical as that is what can allow you to recover from any sudden downturn in the market. But stocks do come with risk and for many, it is more risk than they want to take. Until now.

 

These low interest rates are forcing many people into buying stocks just because it is the only place they have any possibly of making any money from their money. Right now the stock market is one of the only games in town that offers you a chance to make a decent dollar return on your savings. If you haven’t been interested in learning how to buy stocks, you should be!

 

Stocks can be bought in most any public company and each investor needs to evaluate the amount of risk they are willing to take. For instance, buying Nokia stock at this time may turn out to be a great decision years from now or it might end up being a disaster. Nokia is a well known global company that is really struggling and many think it will go bankrupt as it continues to fall behind it’s competitors. If you buy it now, you are really gambling. 

 

But for every Nokia out there are many stocks of solid companies with good balance sheets. They come with less risk to the investor but that risk is still always greater than a bank CD or anything guaranteed by FDIC insurance. So you have to assume some risk in 2012 – 2013 if you want to make anything on your money. There just isn’t any other way.