Tuesday, March 29, 2011
HOW WILL YOU GROW YOUR MONEY OVER TIME IN A SAVINGS ACCOUNT?
4:21 PM | 
Posted by
pensionfinancialservices |
The short answer: you won't.
Even after a long decade of stock loss has changed to a more upbeat market,
there is still about $2.7-trillion sitting in money-market funds.
After two financial crises took place in the past ten years,
many people, who know the wisdom of saving for retirement or for that
rainy day, got scared. Who could blame them with all that loss?
The problem with not investing at all is that you will
not have sufficient money to achieve your financial goals. Unfortunately
(if you look at interest rates in money market and savings accounts),
you may acknowledge that they are low, but you will not fully realize that you cannot
build real savings without being in the market.
So how can you tolerate risk? You have to find your comfort level, and as
a company that works one-to-one with every one of its customers, Pension Parameters
Financial Services always weighs the risk tolerance levels of the individual.
You MUST be able to sleep at night,but you may not sleep at night
if you looked at your reluctance to invest through another lens.
Take your risk-balance temperature.
We can help you do this in a conversation, and before we have that conversation,
here's a hypothetical example that could have easily taken place by an investor
working with a diversified portfolio. Saving 10% of the average wage, in equal monthly
installments, that investor would have put away only $89,746 since 1970
(national average wage for 2009 was $40,712). By taking that money and placing it in
five-year fixed-term (relatively low-risk) investments, the investor would have
been able to almost triple that amount. And if invested in a diversified portfolio, the
investor’s savings would have grown to $619,205.
Was there risk involved in this scenario? Yes, but even if you can tolerate a very low level of risk, we can find a "sleep-at-night" investment strategy that will bring you much more value than
the money market.
Past performance is no guarantee of future results. Holding a portfolio of securities
for the long term does not ensure a profitable outcome and investing in
securities always involves a degree of risk of loss. We often counsel our clients to
diversify their investments based on their "sleep-at-night" risk tolerance.
That usually includes a mix of a number of possible types of investments including large funds; small
funds; international funds; long term government bonds that are guaranteed by the full faith and credit
of the United States government as to the timely payment of principal and interest, and cash. Stocks or bonds?
Our financial analysts keep their eyes on this every day; stocks have been more volatile than bonds, and that can change.
International investments usually carry with them special risks such as fluctuations in currency, foreign
taxation, economic and political risks, and differences in accounting and financial standards.
We keep our eye on that every day. We let our customers know when changes in the market occur.
Subscribe to:
Post Comments (Atom)
0 comments:
Post a Comment