Stock Investing 101

With the current economic market, extremely low interest rates, the fact that most banks are still hesitant to do anything financially, the yield you get from your savings account is going to be pretty pitiful. Most banks will offer you much less than one percent a year which makes it almost a sure bet that you will lose to inflation. I do not know about you but I do not like the value of my money to decrease steadily over time.

You can do two different things to combat this.

The first thing you can do is take the easiest, safest option, which is also the best option for most. Check other banks and online accounts and secure the best, highest yielding saving account you can find. Here are two of your best online options: American Express high yield savings account and Ally banks high yield account. They pay 1.5% and 1.39% yearly respectively, which far out paces all other competition. There are little fees and there is no minimum balance requirement. Both options simply make since for most, but 1.5% still loses to inflation 9 out of 10 years.

If you are willing to take on a bigger risk, for the promise of bigger returns, consider peer to peer investing. Over the past 3 years or so, sites such as Lending Club and Prosper have taken off. People who need money apply for loans and then up to dozens of individual investors fill their need. You help out the common man/woman, and you will average 8-11% over time if your investments are diversified enough.

Not only does 8% beat inflation, it also rivals returns of more traditional investments. Peer to peer lending is not a replacement for investing in the stock market or real estate, but it is an option for those of you who are tired of getting a 1.5% return on the money in your savings account.