We have $100,000 left after paying 75% of the debt.
How can we earn some money with that money that is safe?
Its in a savings account for safe keeping but not generating any interest.
Actually, theres a good reason I still remember those days.
Im referring to 2019.
Then… well, COVID-19.
To stimulate economic recovery, the Fed slashed interest rates to nearly zero.
Now youre lucky to get 0.7% or 0.8% APY for your savings account.
The Fed is likely to keep interest rates close to zero until at least 2023.
That means the next couple of years will be great for borrowers and lousy for savers.
So how can you safely earn money on your money?
Well, it depends on how you define the word safe.
Unfortunately, risk is unavoidable even if you avoidrisky investments.
Probably not as good as youd like.
It always seems like an uphill battle to build (and keep) a decent amount in savings.
But what if your car breaks down, or you have a sudden medical bill?
Even if your bank collapses, the FDIC will step in to double-check you get your money back.
Same goes for funds you put in amoney market accountorCD.
Likewise, Treasurys are considered the safest investments on the planet.
Any of the options above would be safe places to park your money without risking your principal.
Technically, your money will still be there.
But as the cost of living rises, that money will be worth less and less.
You dont say how close you are to retirement or if youre retired already.
Of course that makes a big difference here.
If youre already retired, Id stick with 20% or maybe even less.
Yes, you will lose money if stocks tank.
But suppose you invest 20% in stocks and the market plunges 20%.
Your loss would be 4% of your portfolio, and its highly unlikely that it would be permanent.
Stocks have historically recovered after crashes.
Year over year, the S&P averages annual returns of about 7% after inflation.
Stocks need time to recover should they drop.
Thats why people approaching retirement often shift assets from stocks to bonds and cash equivalents, like CDs.
That means for every $100 you pay off, youll save yourself $16.
Thats a guaranteed 16% return.
Focus on paying off that balance so youre not losing money to interest charges.
Then you might decide how to earn money on your savings and how much risk youre comfortable taking.
Robin Hartill is a certified financial planner and a senior editor at The Penny Hoarder.
Send your tricky money questions to[email protected].
When you log into your bank account, how do your savings look?
Probably not as good as youd like.
It always seems like an uphill battle to build (and keep) a decent amount in savings.
But what if your car breaks down, or you have a sudden medical bill?