Safe Money Choices

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Since the United States stock market collapse of 2008, millions of Americans have seen their retirement savings dwindle. Many of these savers had their nest eggs exposed to the equities markets, and have subsequently suffered two periods of extreme losses in one decade. As a result, “safe money places” are getting a lot of attention.

Safe money places are vehicles that are used for the money that you cannot afford to lose; they’re products that provide peace of mind, knowing that your principal is protected from loss as a result of market fluctuations. Although some conjure up visions of fireproof safes and the space under their mattress when they think of safe money places, true examples of these products include: savings accounts, certificates of deposit (CDs), checking accounts, fixed annuities, indexed annuities and U.S. government savings bonds.

An alternative to a safe money place is a “risk money place;” a vehicle where you put the money that you can afford to lose. Risk money places offer the potential for much higher returns than safe money places. On the other hand, they do not guarantee that you will get back all of the money that you put in. Some examples of risk money places include: equities products, such as stocks and mutual funds, as well as bonds, commodities and real estate