Cash as a Long-Term Investment? It’s More Popular than You Might Think
Financial experts don’t see cash as a great long-term investment. Yet, a recent Bankrate report found that 54 million Americans prefer cash investments with money not needed for more than 10 years.
People like cash because they see it as safe and predictable, unlike stocks.
Is Cash Really Safe?
Financial advisers would argue that cash is anything but safe in this era of ultra-low interest rates: you simply cannot earn enough interest on cash to keep ahead of inflation.
They see cash as a great short-term savings tool that’s there when you need it for emergencies.
Bankrate found that the most popular investment option for money not needed for more than a decade is real estate (25%), followed by cash (23%), stocks and precious metals tied at 16%.
The least popular option are bonds (5%).
Ironically, bonds can be a relatively safe, higher-yielding alternative to cash. Yet, people seem to like this form of investing the least.
You Need a Plan
The best way to find out what’s right for you is to start with a plan. What are your goals – both in terms of monthly saving and long-term returns?
Having a goal in mind allows you to evaluate your options in terms of reaching it. You can weigh the risks of various options and arrive at “likely scenarios” that allow you to do basic things – like retire one day.
Start with Your Credit Union
Your credit union can help you find the right solutions. Smart investing follows from steady saving, and your CU can help you to maximize your monthly saving goal.
Once you know what you can set aside, your CU can offer you options for smart short-term investments (such as CDs and interest-paying accounts).
Remember, your not-for-profit CU offers some of the best rates on savings options. Your CU also has no incentive to push you into any investment that’s not in your best interest, (<cough> unlike mega banks).
Many CUs offer access to sophisticated long-term financial planning tools, which can help you to turn your smart savings plan into a long-term investment strategy.
Talking openly about risks and rewards can really help to de-mystify the various investment options you have, and to put you on the road to riches.
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