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How the average person can save money quickly and easily

How Can Savings Make Money for You?

How Can Savings Make Money?3508403334_48500a99e4_o

Savings make money in several ways, but it depends on you to make the right choices. Simply setting up a piggy bank is not going to be enough to double your money in a reasonable amount of time.

Pay Yourself First

When you receive a new paycheck pay your savings account first. Setting up an automatic transfer is one way to ensure the money goes into your savings account. The more money you have in your account the more you can earn in interest, but more on that later. The most important aspect of making money from savings is to make sure you add to it.

Choosing the Right Type of Savings

There are two types of accounts you can have for your savings: a savings account or stock investment. A savings account has fairly low interest. Many of the accounts today offer only 1% to 5% in interest earnings. However, earning something in interest is better than not earning any at all. You can also compare products from online only savings accounts to regular savings accounts to see which bank might offer a higher savings rate.

Investment accounts like IRAs and 401Ks will offer you a chance to save more money over the long term. There are more benefits to these accounts than with your regular savings account.

Stock Investment

IRAs and 401Ks are retirement account plans for most people. Someone who sets up one of these accounts can choose to invest in stock market funds like the Standard and Poor or S&P. You can choose to have low, medium, or high risk investments with these accounts, as well as adding in more money like you do a savings account. With this type of account you are earning money on your money, but often in larger amounts.

Deciding on the Type of Account

Savings accounts will make the lowest amount of money and is solely based on your contribution. You have access to this account, which means you can transfer money from it whenever you wish.

IRAs and 401Ks penalize you to withdraw funds. Not in the sense of fees, but in taxes. If you withdraw early from the accounts you can lose a huge amount of your investment. Each time you withdraw from your account you are also going to pay a percentage to your taxes. This makes it less likely that you will withdraw and continue to build on the retirement fund or nest egg you are creating.

When you ask how can my savings make me money,  the best way is an account you cannot reach easily that will allow you to invest the funds you add to the account.

It is best to have low and medium risk investments for your IRAs and 401Ks. You might have one or two high risk investments to make money; however, high risk, high reward can have its consequences. A steady portfolio of low and medium risk ensures you are slowly adding to your savings. These are the best ways savings make money for you.

Can Savings Make Money

Can Savings Make Money For You

 

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