Everyone has heard the saying that hiding money under your mattress is the safest place for it. People might think of doing that when they are scared of losing their money. But in reality, you may not lose your actual cash that way but you will lose its buying power as inflation rises. Remember, prices of everything always go up and just staying even with the amount of savings/cash you have really means you are going backwards.
With the Fed’s multi-year zero interest rate policy, anywhere you keep your money where it isn’t earning anything is the same as putting it under your mattress. That means that bank certificate of deposits, Treasury bills, savings accounts, and annuities are all modern day “mattresses”. Your money may be safe there but you won’t make a dime and you are losing ground if all your savings are in those types of vehicles.
Like It Or Not, The Stock Market Is The Only Place To Make Real Returns
When interest rates were 5%, you could stick your money in something safe like a CD and make a good return that beat inflation. Maybe it wasn’t the best return you could make but it was easy, risk free, and anyone could do it. But those days are no more.
If you want to make any reasonable return on your money today, stocks are just about the only game in town. There just isn’t anywhere else that gives you the potential to grow your savings into something meaningful for your retirement years.
You may not like the stock market, think it is only for rich people, not trust it, or just not want to spend the time to understand it. If you fall into any one of those categories and not investing in stocks, you are losing out. Your money is going nowhere and that is hurting no one but you!
You Have To Accept Risk In 2014
It looks like low interest rates may continue for years. The Obama administration is convinced that keeping rates artificially low is the way to stimulate the economy because it makes money easier to borrow. When people borrow, they turn around and spend which then gets everything moving – that is the thinking. Whether that works is debatable but the current administration is not going to suddenly change course.
That means if you want your savings to grow, you MUST venture into the stock market. You don’t have to put all your savings in at once and actually you shouldn’t do that. But you need to get started putting some of your long term savings into stocks.
You should start learning about the stock market as early in life as you can so you aren’t left behind and have to rely on the government to pay all your bills later on. The more money you accumulate in life, the more comfortable you can be when you get older. The last thing I want when I retire is to be so poor that I can’t afford to go anywhere or do anything. Unfortunately, for a large percentage of Americans, this is what they face with no other income than Social Security and little savings.
To learn more about investing in the stock market please go to my Get Started Page and make sure to take a look at my $150,000 portfolio where I show you my real money stock account and what stocks I’m buying.