You Need an Emergency Fund

First and foremost, if you don’t have one (most Americans don’t), you need an emergency fund. This should be at the minimum between $500-$1,000 in easily liquid funds (i.e. a savings account) which you can draw on in case of an emergency. Most emergencies tend to be in that price range (the need for a last minute ticket, the need to send a few hundred dollars to your child who is stranded, the need to get a roof repair done, etc.). Thus, simply having a relatively modest emergency fund means that you’ll be able to pay for those problems without the need to draw on credit cards with their massive interest rates.

3-6 Months of Salary

Another common suggestion (much harder to do) is that you should have between 3-6 months worth of salary available in a semi liquid form (i.e. a money market fund, CDs which you can pull money out of early, etc.). The idea is that you’ll have a barrier against losing your job, which is a real concern with the economy being the way it is. The thing is, most people tend to find the idea of raising six months of salary to be quite daunting (if you make a relatively modest $50,000 per year, that’s $25,000 – not exactly easy to save when you just barely get by).

What about Investing?

We’ll get back to discussing how much you need to have saved in a moment, but let’s talk for a moment about investing. Most people tend to think that investing means putting thousands or tens of thousands of dollars into a single stock. However, smart investors know that you can invest as little as $25 per month. Yes, just twenty five bucks a month. Or, to put that another way, you skip eating out for lunch once or twice a month and brown bag it instead and you’ve got the money. Is it going to make you rich? Eventually, maybe (if you’re a 25 year old and invest just $25 per month until you retire, you would have a nest egg totaling more than $100,000 when all was said and done).

How It Works

These kinds of investment plans (which truth to tell are getting harder to find – about the only one we could find which still lets you do $25 per month and start with just $25 is GoalMine) work through dollar cost averaging. The idea is that you invest a little each month, regardless of whether the stock is up or down. Then, when all is said and done, you’ll find that your money ultimately grows because the steady investing smoothes out temporary dips in the market.

But How Much Do I Need Saved?

We promised you some rules of thumb at the beginning of this article and so here they are: If you have your emergency fund already put together, then the odds are good that you’re ready to start investing. Remember, you don’t need to put aside thousands of dollars to invest. You can do so with as little as $25. On the other hand, if you work in an industry where you think there’s a real chance of a layoff, then it may be best to try to save up some money for lean times before you invest (since investing needs to be a long term effort rather than one where you need to pull your money out quickly).

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George Gallagher is a writer for all things related to investing and managing your money. He also helps people with their consolidation of private student loans.

As the years went on, individuals also jumped onto the money wagon and companies also started to trade amongst themselves. Brokerage firms acted as the professional supervisors and advisers for their clients.

By hiring top investment firms, a company or individual has a legal representative who will act on their behalf on the stock exchange floor. Clients are informed of the most lucrative stocks, advised on how many stocks to buy or sell and at what price to buy or sell. By sending someone to the stock exchange floor to examine stocks, the brokerage firm gets up-to-date information on which stocks are ideal for their client and they relay this information.

If a sale goes through and the client makes money, the firm will also get a cut. A discount brokerage company would also lose money if a deal goes south so it is in their best interest to make sure a good deal is secured and this is what separates good agents from bad ones; their knack for knowing a lucrative deal.

It is not uncommon to find a full service brokerage company making their own stock transactions. When they want to buy stocks they also send a representative to the stock exchange floor to gather information on the best deals and they proceed in either buying or selling. They handle it just as they would if they were conducting business for a client.

There are many online brokerage firms and they offer personalized services where they advise clients on financial and investment plans depending on the clients’ immediate and future financial needs. If a client only requires financial advice, then their broker would only advise them on the best deals; the ultimate decision lies with the client, but still, the firm will charge a fee for the financial advice.

For people who do not want to have anything to do with the research and the hard work that goes into determining good stocks when buying or selling, there is the option of leaving all the stock transactions to a brokerage firm and have them decide on which stocks to buy and sell. They become the legal representatives of the client and make decisions that are in the client’s best interests.

Several factors determine how much stocks or shares are worth and to what degree the prices fluctuate, among which is the strength of an economy. If an economy is booming, then it will be reflected by the value of shares and stocks going up; likewise, if other forces got in the way of normal business like political situations or the laws of supply and demand, they would sway stocks.

Getting full brokerage services will help someone in deciding what would be the best course of action in the very dicey world of brokers and stocks. There are enough online brokerage companies that offer qualified agents to carry out research and do the math on which stocks to buy first so that a client does not lose their money on the wrong investment. A prime brokerage firm should be well credited and offer full brokerage services.

There are three separate ways individuals or organizations can get funding through means of crowdfunding. They include; donations or pledges, lending and investing. Crowdfunding for a non-financial return consists of pledging money to a cause or project by means of donation, sponsorship, or philanthropy. In return supporters receive non-financial acknowledgement for their patronage. One of many popular crowdfunding websites that act as a funding platform for these projects is kickstarter. Kickstarter professes to be the largest funding platform in the world today. Creative projects must be fully funded before the funding period expires otherwise all monies are returned to those who have contributed. Project creators maintain 100% control and ownership over their unique project on Kickstarter.

Crowdfunding for a financial return through P2P (peer to peer) lending is another option of funding. These platforms provide an opportunity for people to invest in debt for entrepreneurs and start-up companies. By omitting the middleman lenders receive higher returns, and borrowers pay out a lower rate. Lenders usually control their level of risk and return. It is recommended to ensure there is a plan in place to service the loans in case it ceases operation.

The final means of funding is crowdfunding for equity with the potential of ownership and financial return. This web start-up concept challenges traditional business providing different advantages for both entrepreneurs and investors. These platforms enable direct investments from investors to be taken in, and direct returns on those investments in a company to be paid out. These platforms allow entrepreneurs to describe their investment opportunity and people to become investors in these opportunities for very little money. Investors can fund a small amount of money or a large amount. The decision lies in their hands. Crowdfunding for equity in a company online is currently not an option for companies in the United States. Rules created eight decades ago by the Security and Exchange Commission prevent it, however there are currently efforts in place to get this changed, and it will likely be available in the future.

Also known as crowd sourcing, this community propelled process allows individuals and organizations to create something new and supplies supporters a meaningful way to contribute to something they are passionate about or interested in funding. It gives good ideas, which are not of interest to conventional financiers, the chance to attract resources through the interests of the crowd. Projects are able to receive promotion from word of mouth amongst people sharing the same interests. The web has the ability to organize communities simplifying interaction between those with a common goal. It also provides a forum of feedback. It is a relatively inexpensive way of raising funds. Concerns surrounding this funding choice include disclosing ideas at an early stage before they are properly developed. This exposes a unique idea to the public by placing the concept in an environment where it may be copied. A competitor with more solid financing may be able to develop the idea quicker. There is often a cap on how much a project is capable of raising.

Entrepreneurial projects are noticed and funded much more easily due to the worldwide rise of platforms. It is essential to find the right site for your business or creative idea. Setting a realistic goal and target time in which to raise funds is equally important as locating the right atmosphere in which to present your project. Too little of an amount can result in failure to secure the proper funding to make your vision a success. Creating a personalized campaign video and keeping supporters informed and engaged can create some momentum of interest which will benefit the project. Crowdfunding is becoming a popular business. It has created a healthy atmosphere for those interested in creating a platform to fund ideologies or jump start their next project.

Starting a 401k plan is obviously very advantageous in terms of the tax benefits it provides, but it is a very attractive option for other reasons as well. Although employers are not obliged to contribute to the funds of their employees, many do offer to match contributions, as part of a package of employment benefits. This greatly increases the final retirement amount available to the investor. In addition, the growth of the fund is tax deferred, and employees have a great deal of control over the types of asset in which their funds are invested, according to how risk averse they are. Another benefit is that the plans are portable, that is, employees can take at least their own portion of the plan with them when they move companies.

The reason that 401k plans were created was to ensure employees had reasonable financial provision for their later years. Ideally, therefore, the money in the fund should be left alone till retirement. However, the government recognizes that in the real world, there are going to be times when you have a desperate need for a cash sum and you have no other option but to draw on your retirement savings. The government has therefore drawn up 401k withdrawal rules, to clarify the circumstances under which investors may be able to legally withdraw their funds.

The overriding principles of 401k withdrawals are first and foremost that the sums withdrawn from them are classed as income, and thus are subject to tax. The reason for this is that the original contributions were made on pretax income, and the investment growth is tax deferred. Second, if the employee makes the withdrawal before reaching the age of 59 and a half, this is classed as early withdrawal and is subject to stringent hardship rules. There are two kinds of 401k hardship withdrawal: financial and non financial.

A 401k hardship withdrawal of the financial type can be made if you find yourself subject to an urgent and immediate financial emergency, and you can demonstrate that you have no other way of meeting this commitment. Such emergencies could include imminent eviction from, or foreclosure on, your primary residence, or medical expenses which will not be refunded. An emergency could also include a simple inability to make ends meet on your current available income. You need to specify the precise amount which is required, for instance to prevent home foreclosure, and the withdrawal may not exceed this amount.

A 401k hardship withdrawal of this type is subject not only to the 401k early withdrawal tax, but to the 401k withdrawal penalty as well. Amounts withdrawn cannot be returned to the fund at a later date. Once withdrawn, the money has to be used for specified purposes, mainly to meet the emergencies which were conditions of the withdrawal being allowed, such as preventing home foreclosure or meeting emergency medical expenses. However, it can also be used for college expenses for a child, or as a 401k withdrawal for home purchase.

A 401k hardship withdrawal for non financial reasons is still subject to tax, but not to the 10 percent penalty. You can qualify for early 401k withdrawal without penalty if you meet certain conditions, one of which is a complete and permanent disability. You can also qualify if the amount you owe for your medical expenses comes to more than 7.5 percent of your gross income, or if a court has directed that you hand over the money to a divorced spouse, or to a child or other dependant. In addition, you can withdraw your funds without penalty if you leave your employment permanently in the year you turn 55 or later, whether you are terminated or laid off, resign or take early retirement.

Another way you can take a 401k withdrawal without penalty is if you immediately transfer the cash into another qualifying retirement plan, such as IRA. This is called a rollover and it must take place within 60 days of withdrawing. You can do this without penalty because the money is still serving as provision for your retirement. Payments from the fund made to your estate or your beneficiaries after your death are also not subject to penalty.

One possible way in which you withdraw your 401k money without either tax or penalty is by taking out a 401k loan, that is, borrowing against the funds in your plan. Employers are not obliged to offer this facility, and those who do will usually impose restrictions, including a minimum balance such as $1,000. Generally, you can take up to 50 percent of your vested account balance (the vested balance is the percentage to which you have built up a permanent entitlement, even if you leave the company) up to a maximum of $50,000. It must be repaid within 5 years unless it is for a home purchase, in which case a longer period is allowed. Interest is payable, but as it goes back into your fund it still benefits you, unlike paying interest to a bank.

Once you pass the age of 59 and a half, your 401k withdrawals count as retirement benefits and so are not subject to penalty, though they are still taxed as part of your normal income. You are not required to make any withdrawals, or distributions, until you reach 70 and a half, after which you have to take at least the required minimum by April 1st of the following year at the latest, and then annually by December 31st of each year. You should therefore take your first distribution earlier than April, to avoid paying tax on two in the same year.

There may sometimes be no alternative to early withdrawals from 401k funds. However, they should be avoided if at all possible. Not only do they attract penalties, but you lose out on all the growth which the amount would have generated. Withdrawing is a major decision and you should always discuss it with a financial adviser, to ensure you understand the 401k withdrawal rules, and that you have explored all the options.

What Is An Annuity?

Simply put, an annuity is an investment. It functions somewhat differently than most, as it requires a rather substantial sum of money to fund and is only paid out over time. Consider it to be a “middle ground” between a certificate of deposit (large deposit, time-sensitive, accrues interest) and being the recipient of a large sum of money (single pay out, problematic for taxes, no change in sum). It allows its owner to avoid some of the tax consequences of receiving a large sum while still “putting the money to work”. An annuity is also an alternative to a traditional retirement savings account, as it can allow an individual or couple to fund an account to be paid out after a set period of time, usually over a period of time that is decided at the funding of the account.

How Do Annuities Work?

The typical annuity is funded by an insurance company. The party that wishes to hold the annuity will place a certain lump sum of money into a special account. Each year, the recipient will receive a certain amount of money from the lump sum, while the insurance company profits from investing the initial capital in a variety of stocks and bonds. While the money is “at work”, individual payments will be made to the individual that funded the account, and certain qualified withdrawals may also be made from the account. Over time, the initial sum will be fully distributed to the indicated recipient of the annuity, allowing the individual to avoid the tax consequences that might have occurred if the annuitized sum had been given as a lump sum.

Annuities are generally locked in to a certain period of time. As with many other similar accounts, there tend to be penalties for withdrawing the deposit before the end of the annuity term. Generally written in contractual language, an annuity might be best thought of as an agreement between the first party (the investor) to give the second party (the insurance company) a certain sum to invest, to be paid back over a period of years. It might be easiest, in fact, to consider most annuities to be an interest-free loan to the insurer or other annuity originator. A number of different annuities exist, though, and the variety of terms available can lead to a number of different pay-out schemes.

Different Types of Annuities

In general, annuities can be divided into those that pay out immediately, or those that have deferred payments. Immediate annuities are generally an investment tool, a way to avoid certain tax consequences for large payouts. These policies may pay out over a relatively short period, for periods that are determined by the life of the annuity holder, or for other set periods of time. A deferred annuity, on the other hand, tends to be a retirement tool. These funds are tax-deferred during the funding period, and may be paid in to ay once or over a period of time. These annuities can be thought of as a retirement savings account, as they may be funded until one is ready to make withdrawals.

Even past the differentiation of immediate and deferred policies, there are also fixed and variable annuities. These policies are exactly what one would imagine: fixed annuities have a guaranteed rate of return, while variable annuities are pinned to certain market fluctuations. Either one can be the “best annuity” depending on your personal needs, but one should remember that both types have significant drawbacks. A fixed annuity is only as strong as the annuity insurance company that backs it, while variable policies tend to have no guaranteed rate of growth or of return.

Finally, one must choose between liquid or non-liquid annuities. The liquid annuity has no penalty for withdrawals from the lump sum, and can allow the investor to have quick access to their cash (with certain tax penalties). Non-liquid policies, on the other hand, limit the amount the investor may take out of the fund to a certain percentage per year. Many of the non-liquid policies offer a bonus to the investor, perhaps as much as five or ten percent of the original lump sum. Which type works best for your needs will largely depend on your need for quick access to your money.

What Type of Annuity Is Best?

There is no easy answer to determine what kind of annuity that you actually need. Take the time to determine how soon you need access to the money, the purpose of the annuity itself, and the amount of risk you are willing to take. If you merely wish to save for retirement and do not trust the market, you might want to stick to a non-liquid, fixed and deferred annuity. Those looking to make money and have quick access might prefer a liquid, variable and immediate annuity. There are a range of options between the two, and different sorts of annuity may work for different individuals.

Annuities are a fine way to invest your money. They have less uncertainty than a 401(k), but allow for more flexibility and potential than a typical savings account. While the processes by which the accounts work may be a bit confusing, most individuals can determine what sort of program that they need by a simple consultation with a financial advisor. If you wish to put your money away safely for a rainy day, it might be wise to consider using an annuity.

Savings Account/CD

The good thing about putting your money into a savings account or CD is that it is likely the single safest investment that the average consumer can make and actually make a little bit of interest. The reason for that is the Federal Deposit Insurance Corp, which guarantees all savings account and CDs up to $250,000 per account. This means that unless the FDIC goes broke (it’s funded by the banks, which are all legally required to contribute to it rather than by the Federal government, though the government may step in when extraordinary circumstances require them to do so), your money is secure.

The bad news with this is that while it is one of the safest investments you can make, it’s also one of the worst, for the simple reason that interest rates are so low today. If you can eke out 2-3% interest from a CD, that’s considered extremely good today. One option which has the potential to make more money but which isn’t quite as safe is foreign currency denominated CDs. These CDs are still insured, but they are denominated in a foreign currency, meaning that the value in dollar terms could go up or down. However, with the relative weakness of the dollar on Forex markets, this could be a good way to guarantee most of your money while still getting a decent return.

US Government Bonds

Another option which is considered one of the safest investments on the planet are US government bonds. Series EE bonds, which are, as of this writing, still available from the Federal Government as well as from most banks offer a fixed interest rate for the life of the bond, which is set each year. Note that as of January, 2012, EE bonds will become purely electronic rather than being offered as paper bonds.

The bad news here is twofold. First, interest rates on EE bonds are extremely low. As of July, 2011, they are in the range of 1.10% annually. This means that you can’t even keep up with inflation with these bonds. Plus, while the chances are extremely slight, there is still the possibility of the US government defaulting on their loans, as the recent impasse over the debt ceiling shows. Those looking for safe investments with slightly better returns may want to look into foreign government bonds, which often have somewhat better interest rates, though they do come with more risk since some other governments don’t necessarily have the stability of the US government.

Gold and Precious Metals

Gold is usually considered a very bad, but relatively safe investment. These days, it’s considered to be a good investment and one of the safest investments simply because gold and precious metals allow you to hedge against the possibility of a currency crash. The theory is that if the dollar is devalued, gold wouldn’t be devalued.

The bad part about gold and other precious metals is twofold. First, the stuff has to be stored and if it gets stolen, you lose your investment. Second, there has been a bubble forming around precious metals and the value of these holdings could crash.

Real Estate

It may seem like a strange thing to list real estate as one of the safest investments available today, given the fact that, as of this writing, we are still facing a housing crisis in the United States. However, the fact is that this is precisely the time to invest in real estate, but only if you plan to hold it for the long term. Doing so means that, even if you need to hold your real estate for 10-15 years, you’ll eventually see a good return on investment. In the interim, real estate can be rented out or lived in so you can get some benefit in the short term as well.

Market Indexes

Finally, rounding out our list of the safest investments is another one for the long term investor. While the Dow, the S&P 500 and the NASDAQ 100 have had their ups and downs of late, historically, all of these indexes have outperformed most individual investors and so, for those looking for a safe investment, an index fund could very well be the perfect choice.

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George Gallagher is a finance, investment, and education blogger. He is currently working with students to find not-for-profit private student loans.

Long has America been the leading consumer of resources among the world’s developed nations, but there’s a new player on the field. Though it’s not news that China’s economic strength is growing, its demand for energy has become a top concern. We’ve seen oil and gas prices reach peak levels and this is largely to do with a dwindling supply and increased demand. This is the basis of all economics, but its effects reach far beyond the simple supply and demand based business model. This is one of the reasons that countries around the world are redoubling their efforts to find viable energy alternatives. In the very near future, there simply won’t be enough to go around.

For centuries, developed nations have relied on the relatively cheep energy from poorer countries. Nations in Africa and Asia have long been the energy basket for the world. Many of our systems ran on these resources while the energy’s country of origin relied on a far more crude method heating, cooling, and transportation. This is no longer the case. Countries in the West simply don’t have the resources to sustain their appetite and the BRIC nations are likely to surpass the NATO countries in economic power, level of resources, and land. BRIC is a relatively new term that has been attributed to four countries in particular: Brazil, Russia, India, and China. All of these countries have huge populations, vast landmasses, and an abundance of resources. It’s very likely that these countries will become the future movers and shakers of the energy world if the NATO countries don’t take stronger action to develop better energy programs.

The West is losing investors in droves as energy-consulting agencies shift the focus of their businesses to China and other countries. This is mainly due to the fact that China will only increase its appetite for energy on a global scale. This has investors excited and governments worried as China incrementally increases its global profile. China already has a daily demand for oil that’s incredible and this consumption and demand is projected to triple by 2035 to a estimated 13 million barrels a day. China will become the leading consumer of energy and its per capita carbon dioxide emissions are expected to raise by 41 percent in the same period of time.

Not everyone is worried about China’s increasing role because many investors feel that it will be China that will become the leader in the development and implementation in the field of alternative energy. Though the country hasn’t solidified its role as leader in this front, the International Energy Agency believes that China will be at the epicenter of huge strides to change the face of energy in the coming century. The possibilities are endless, as China remains committed to shaping the future of energy. Yet, not everyone is so excited by this prospect.

Western countries are looking across the world with their eyes fixed on developing countries with a quiet nervousness. As BRIC nations increase their global role, the West feels its grip on the global economy and world influence loosening. This is one reason why countries like America are currently trying to find new ways to become the top leader in the world of innovation and energy. This has become a matter far beyond the level of bragging rights but more in the vein of self-preservation. This issue is likely to find a marriage between many countries energy and national security policies as the two become inseparable on a global fight for energy supremacy. This will spark a new cold war over energy interests as every country competes to become the leader in the future of development.

John McCain, a United States Senator, has been very outspoken about, what he sees as a crucial issue in the coming decades. Senator McCain told CNN that the issue of energy has become far more than a power problem and one that threatens the very survival of nations around the globe. “Reducing the nation’s dependency on foreign oil” it’s not a new term. In fact, it’s been thrown around with increasing frequency. McCain stated that coming up with new forms of clean energy is “a national security issue when we’re dependent on more than $400 billion a year in imported oil from countries that don’t like us very much.”

It’s this same idea that has driven America’s approach to energy development, an area that it has been sorely lacking. Investors all over America are putting their money into the development of alternative energies at a time when the American government can barely pay its own bills. Any future innovation will likely come from the private sector and energy and tech stocks are going to be the most lucrative investments in the coming years. No one knows how it will play out but the best and brightest are tirelessly looking for new ways for us to reinvent the wheel. Whatever the outcome, one thing is clear and that’s that energy is the future of the world economy.

Investing Is a Job, Like Any Other Job

The first thing that you need to understand about being a stay at home investor is that it’s a job, much like any other one. You still have to put in the work just as you would if you were working for someone else. One of the two big differences is that there is no boss to tell you that things need to get done. You need to self motivate so that you get things done yourself. The other one is that you’ll be investing your own money into what is essentially a business which you run from home, which can be rewarding for some, but risky for others.

Start with the Fundamentals

If you’re still with us and you haven’t been scared off yet by the idea of being a stay at home investor, then you’ll want to start by doing your homework. If you know nothing about investing, start by learning more about it. Consider using one of the many stock market games available online to learn more about how to invest in stocks so that you don’t risk your own money until you have a feel for things. The way you should go about investing is to follow three simple rules which are the fundamentals of investing:

Follow the News

Even though you don’t make any kind of a physical product with your business, your business is likely to involve investing in companies that do make physical products or intellectual products (i.e. software, movies, etc.). Therefore, it’s important to follow the news so that you know what’s going on with the companies you invest in. Don’t forget that stocks go up or down because the public believes that the company has the potential to make money. Therefore, you need to read everything there is to know about companies that you want to invest in. Consider setting up a Google News alert to keep abreast of the news.

Read the P/E reports

Every publicly traded company is required to provide something called a profits and earnings estimate report. This is basically internal information that the company provides in which they say how much they earned over the past 3 months and over the past year, sometimes longer along with how much of that money was profit. You need to review the P/E reports for the companies you want to invest in if you plan to be a successful stay at home investor. Take the time to read corporate history. Check out the minutes from the most recent meetings of the board of directors, which is also publicly available to ensure that you know what’s going on with the company. Don’t just assume that they know what they’re doing. It’s your money on the line and as such, you need to know how it’s being used.

Check the Ratings

Finally, no stay at home investor can do without checking the ratings from companies which rate publicly traded corporations. You’ll want to read reports from companies like Moody’s Investing, Motley Fool and Standard and Poor. These companies provide professional ratings of public corporations based on reading the reports which are publicly available and make recommendations based on that information of which companies to buy, hold (i.e. keep it if you already own it) or sell.

Look for Unusual Ideas

Another great way to be a stay at home investor is to look at unusual places to invest your money. Consider for example some mineral investments and Forex investments. These are unusual places to invest your money, however, they often pay off handsomely, allowing you to earn very good returns, assuming you have the ability to stomach the risks involved.

Keep a Sense of Humor

Remember that as a stay at home investor, you are not just your own boss. You are also responsible for your own success or failure. Therefore, it’s important to keep a sense of humor about yourself and to realize that things can and do go wrong. If you can laugh at your problems, pick yourself up and move on from them, then you are more likely to ultimately find yourself succeeding at investing than you might otherwise be if you were to insist that every failure means the world is coming to an end.

Get Out and Talk to People

Finally, being a stay at home investor can often be a very lonely experience. It’s important to get out and talk to other human beings once in a while so that you don’t end up going stir crazy. Be sure to discuss your investments with colleagues and friends and seek their advice as well. Often, you’ll find that others, who are not professional investors, can have unique insights into the market which you may otherwise not consider.

Bottom Line

Being a stay at home investor involves risks and will mean losing some money at times. There is simply no way around it – every investor loses some money some times. The key is to diversify and have enough money in enough places to ride out storms in the investment markets while keeping your wits about you and realizing that these ups and down are just normal parts of being a stay at home investor.

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George Gallagher is a finance and education writer. His work can be read in dozens of online publications. He’s also involved in helping students find private student loans through not-for-profit lenders.

1. Investment portfolio. A savings account is great for a rainy day, and you should certainly think about socking some money away for the inevitable expenses that you can’t foresee just now. But let’s face it; you’re lucky if you’re earning more than 1% annually on a savings account through your bank. So you need to consider giving up some of your liquid assets to start a portfolio. The trick to sustainable growth through years of investing is to diversify. By splitting money between stocks, bonds, mutual funds, and so on, you stand to earn anywhere from 4-12% annually on your money. And even if one area hits rock bottom, you’ll still have money to play with.

2. Self-directed IRA. You might not be aware of the fact that you can take control of how your retirement funds are invested (since your investment firm generally does it on your behalf), but with a self-directed IRA, you can do just that. By rolling over your retirement funds into this type of account, you have the option to invest your money as you see fit. A lot of people use it to invest in a business that they have either started on their own, joined as a partner, or wish to support (as in a business started by a family member or friend). Of course, there are restrictions. For example, you can’t hold controlling interest in any business that you choose to invest in. And you should definitely keep your investments diverse. But you stand to do very well if you put your funds into a business that becomes successful since you will get your money back, plus interest, as well as a percentage of earnings.

3. Roth IRA. This type of individual retirement agreement provides an excellent method for beefing up your retirement funds even as it saves you money now. By funneling some of your earning into a Roth IRA, you can effectively supplement your 401K for the future (since you can’t touch the money until you hit retirement age).

4. 401K. The best way to save for your future is still the 401K provided by your employer. Contributing to this account is easy because it comes right out of your paycheck (so you don’t even notice the money is gone) and it is pre-taxable income, meaning you’re also paying less in taxes. And don’t forget to see if your company offers a matching program so that you can maximize your contribution by putting in the percentage of your pay that the company is willing to match for you. It’s free money!

5. Real estate. Okay, there’s no denying that purchasing property is expensive. But with the housing market still scraping the bottom of the barrel, now is a great time to invest in a home if you can swing it. You don’t want to try flipping in this economy, but if you can get your hands on a nice house in good neighborhood (or several) and sit on it for a few years, you’re going to see a huge return on investment down the line. Just make sure you don’t get in over your head with the mortgage.

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Mike Thimmesch writes for J.G. Wentworth, the market leader in cash for structured settlements.

After the first year of the contract has passed, the guaranteed rate of return will often be an amount that is set at the insurance company’s discretion. In general, the minimum amount of return set by these companies is 3%. These annuities may be purchased from a life insurance company or from various different financial institutions. If a consumer is interested in purchasing such a policy, it will be possible for him or her to negotiate the price of the fixed annuity. Because the monetary amounts that an annuity will yield can vary between companies, it is in the consumer’s best interest to engage in comparison shopping, rather than making a hasty buying decision.

There are two different subcategories of fixed annuities: life annuities and term certain annuities. In general, the amount of monthly payments one makes for their fixed annuity will be determined by their life expectancy. There are three primary types of life annuities for an individual to choose from: straight life annuities, substandard health annuity, and guaranteed term annuities. Of the three, straight life annuities are the most straightforward. Its primary insurance component is determined by nothing more than providing an income for the consumer until he or she dies.

The substandard health annuity is generally purchased by an individual who suffers from chronic health problems. The prices of this annuity are determined by the likelihood that the individual will pass away in the near future. The lower the life expectancy of the purchaser is, the higher the cost of the annuity will be because there is a lower likelihood that the insurance company will return a profit on the annuity. Guaranteed term annuities differ in the fact that they allow the consumer to designate a beneficiary to the annuity in the even of their passing. In the event of their unexpected death of the purchaser, the beneficiary will receive a lump sum of cash from the insurance company.

The second type of fixed annuity, the term certain annuity, is quite different from the life annuity. It will yield a specific payment per period until the end of the contract, regardless of what might happen to the purchaser over the life of the annuity. However, if the purchaser were to die before the term of the annuity is over, then the insurance company is allowed to keep the remainder of the annuity’s balance. This type of fixed annuity can be beneficial because its payout is not determined by insurance components, like the health condition; however, its primary downside is that once the term of the annuity is over, its payout ceases.

In conclusion, fixed annuities are ideal for those who are looking to obtain a stable income throughout their retirement. Additionally, they may also be used for tax deferrals and savings. In contrast, fixed annuities can be difficult to manage due to the fact that the price of the insurance components can cut into the return the purchaser might see on their annuity investment. Before investing in fixed annuities, it will behoove an individual to thoroughly educate themselves by researching the different types of annuities that are available to them.

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This guest post is contributed by Steven Hart, who writes on the topics of Annuities.