It Takes Money To Make Money

It Takes Money To Make Money

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Unless you have a money tree in your back yard you are going to need an income to make money so you than can take that money and make more.

Sounds confusing? Not really, it all boils down to making your hard-earned money work for you instead of always having to work for it.

Banks are famous for this. They take your money, give you as little of interest that they can get away with, then invest your money to make more, then pay all the account reps these great big salaries and slap each other on the back at Christmas time.

Lets keep this simple. First off, no matter where you work or what your income is, always contribute to an IRA account. For those of you that make large sums of money you need to move it around a bit more to let it work for you since IRAs have a maximum amount you can put into them each year.

Right now the maximum amount you can contribute to an IRA is $5,000 yearly if under 50 years of age or $6,000 if over 50. So what to do with all your extra money?

A couple of choices - risky or safe?

By risky we mean playing the stock market. You can make it or break it and these past few years have been good for some but also wiped out a lot of people.

So on the safe side lets discuss the CD. A CD is called a Certificate Of Deposit. It is issued to people or consumers by banks, credit unions or thrift institutions.

CD's can be a great way to make money in a shorter amount of time than tying your all your money up in IRAs or other long-term investments. Also the FDIC insures the CDs up to $250,000 and the interest rates are much higher than a regular saving account is. You can buy CDs at different lengths of time and at a fixed rate of interest. Depending on the institution they can come in lengths often three months, six months or one to five years.

Rate will vary from institution to institution so you need to do a bit of checking around for the best rates. Economics plays a part of the rates but a lot of the times it depends on how much money the bank needs that determines what rate they will pay for your money.

Years ago you could find one-year rates that paid 8 to 10 percent so you can see if you had a few extra hundred thousand dollars lying around you could make some very good returns. These days the rates are much lower but as the saying goes, it takes money to make money so go ahead and invest in CDs.

Don't forget about taxes, because after the CD matures you have to pay taxes on the earnings unless you do some fancy maneuvering by rolling it over and such but eventually you must pay the piper.

CDs are a very safe investment, always insured so you can't lose your money and they can, depending on how much you invest make you a nice little sum without much effort.

About the Author:
Casey Trillbar is the editor of YourRothIRAGuide.com, which is a website
aimed at supplying articles, information and resources to people
considering the use of a Roth IRA Agreement for their retirement.

http://www.YourRothIRAGuide.com



Article Originally Published On: http://www.articlesnatch.com


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