4 ways to save

So, as previously stated, savings is obviously important, but how do you go about doing it?  Well for all of you that are disciplined savers you really don't have to worry what type of an account to place your funds in to (unless you are worried about what kind of interest rate you are getting).  For everyone else that may be tempted to dip into their piggy banks without having sufficient cause, there are, arguably, four ways to save your money: Bank Savings Account, Mutual Funds/Stocks, CD's, and Permanent Life Insurance.  Let's take a quick overview of each of these common ways to save.

Savings Account: Money you place into a normal savings account gains very little interest but is completely accessible, with very minor restrictions.  If you are lucky you may be getting .3% interest on your account and interest is technically taxable if you have a significant amount of capital gains.

Mutual Funds/Stocks:  Typically, I would treat these as two seperate entities, but for now lets just put them in the same category.  These accounts can obtain significantly higher gains then a savings account (possibly 3-4%), but you take a risk in losing money as well.  The power of never going backwards in terms of your money is key and the gains you make are still taxable.  If you are not proficient in the market or do not have someone overseeing your funds, this may not be the best avenue to take.

CD's: CD's are great for those who can't keep their hands out of the cookie jar.  CD's give you a safe and relatively high interest rate averaging between 1.5-4% and prohibits you from withdrawing the funds for a designated period of time.  Average CD's last from 6 months to 36 months with varying interest rates.  This is a great way to save, but if you don't have atleast $5,000 to place into the account then it really isn't worth the time it takes to accumulate gains.

PLI: Permanent Life Insurance may not be the first thing that comes to mind when you are thinking of saving money, but it is, in fact, a savings vehicle.  Money is put away in the form of a premium payment every month, quarter, or year.  Granted you are purchasing insurance, but the policy also maintains a cash value alongside of the typical death benefit.  This cash value can be accessed at any time the policy is enforced and some of the interest rates can get as high as 8%!  Of course, this rate looks phenomenal, but you do have to remember that PLI is a long-term investment that entails complete discipline in paying your annual premium.  A good attribute of this account (in comparison), however, is that the interest is completely tax-deferred, so you can keep more of the gains you receive from the policy.

Well there you have it, the four ways to save those precious green-stamps of yours.  Always remember that diversification is key and having a combination of all four of these approaches would be ideal.

later days