We’re more than halfway through 2018. Perhaps you were full of good intentions to grow your nest egg way back in January, but things haven’t quite lived up to your hopes as the year has unfolded.
Fortunately, there is still time to turn things around. With more than five months left in 2018, you can still get your finances on a better pathway before 2019 dawns.
To turbocharge your finances in the last half of 2018, consider the following tips.
1. Compare interest rates on savings accounts
With seven Federal Reserve rate hikes in the past couple of years, banks are finally raising the interest rates they pay on savings accounts. And with Fed rate hikes expected to continue, banks are likely to continue raising their rates.
So, if you take a little time to compare what your bank currently pays with the interest rates of other banks, you stand to find a better return. That’s particularly true of online banks, which tend to be more competitive.
To streamline the process of shopping around for a better interest rate, use a free online resource like the Money Talks News account comparison tool.
2. Carefully weigh buying individual stocks
Yes, individual stocks can be risky. Choose the wrong company, and you could lose much — or even all — of your investment.
You might increase your odds of making money if you buy shares of companies that are stable and that pay dividends higher than the interest rates you’ll find at banks. Still, there is no guarantee that any stock will pay off.
All investors — especially first-time investors — should carefully analyze any stock prior to purchasing it. Never make a hasty decision. And once again, remember that no matter how much due diligence you do, no stock is guaranteed to rise in price, or to continue to pay large dividends.
For more on the potential pitfalls of buying individual stocks, check out “Why Picking Stocks Can Be Disastrous for Your Nest Egg.”
3. Carefully weigh buying individual bonds
Likewise, it’s important to tread carefully when buying individual bonds. When you invest in bonds, you’re basically loaning money to a business or government for the promise that you will be paid back with interest. Sounds perfectly safe, right?
Well, not exactly. When interest rates go up, bond prices can go down.
If you are uncertain of which way bond rates are likely to go, consider using a strategy called “laddering.” It involves buying bonds that mature at various times, and it can offer some protection in a rising-rate environment. Ask a financial pro for more about how laddering might work for you.
To learn more, check out “Ask Stacy: Should I Invest in Bonds?”
4. Consider mutual funds
Mutual funds allow you to buy a large basket of stocks through a single investment. When you purchase such a fund, you get shares in hundreds or even thousands of companies.
You can also purchase mutual funds that contain bonds, or a combination of stocks and bonds.
5. Look into other options
There are plenty of options beyond bank accounts and classic stock and bond investments. Examples include:
- Peer-to-peer lending: Basically, you loan money to individuals through an online platform such as Prosper Funding. Interest rates vary.
- Real estate: Buying a rental property and becoming a landlord is another way to earn a return on your money.
Do you have other suggestions for building your wealth during the rest of the year? Share them by commenting below or on our Facebook page.