How not to be a starving artist
So you’ve got some extra cash. Now you are wondering what you should do with it. Buying those new pair of tapered jeans and some beer sounds nice. Driving to Dallas to see TV on the Radio would be fun as well. But in the back of your mind the voice of reason says that saving it seems like the most responsible approach. In reality, investing it could be the smarter desicion in your situation. There is a nimiety of different ways to invest your money—through CDs, T-Bills, mutual funds, corporate bonds or just plain stocks to name a few. Why should you invest? If you invest $2,000 every year for 35 years with an interest rate of 13 percent, you would have over a million dollars when you retire.
Most investments require a lot of time to gain a decent return. If you want to go the route where you can get your money back quicker, then go with a CD or t-bill. A CD is essentially you giving the bank your money for a specified time and they give you back more money at the end of that time. Rates fluctuate all the time and the longer you leave it in there, the more scrilla you make. Banks deal with CDs so it will be pretty easy to set that up, but you will have to toss in a minimum of around $2,000.
Another simple way is the t-bill. The moneygrubbers at the treasury will want you go this route. The good thing about t-bills is they are only 28 days long and there are less tax implications on them. They will offer a slightly lower rate than the CD. If you are interested in t-bills you can set up an account at TreasuryDirect.gov. Just know that both the CD and t-bill will give you marginal returns because there is basically no risk associated with them whatsoever.
If you like being risky with your money and taking a chance on making a lot more, there is always the stock market. The economy is doing a lot better now so this would be a good chance to jump in. Now finding specific stocks that are worthwhile takes a lot of time and research, which perhaps means less time playing the Wii.
Throw some money in a mutual fund or index fund and sit on it for a while. A mutual fund is a well-diversified portfolio consisting of several different stocks in several different industries. When you buy into a mutual fund, you buy into the fund, not the stocks. There are over 4,000 different mutual funds out there and choosing one requires a little reading on the fund itself. Defective dotards whose narrow minds are still set in baby boomer mode manage a lot of these funds, and though they have experience, they can’t seem to grasp the changes and globalization these markets are facing. If you want to pick a mutual fund, pick a good manager. Index funds aren’t managed funds, so you don’t have to worry about morons managing any underperforming portfolios. Index funds just try to match a specific index and usually provide better returns. If you are interested in the stock market, etrade.com is pretty cheap.
Remember, these are only a few options out of thousands you can make in the investment world. There’s a slew of other ways to dip into investing; this merely scratches the surface. Just don’t try to earn any money in a savings account at your bank because you can earn a lot more elsewhere.