Ever heard of those special investments that only certain investors can get in on? You know the mysterious ones that make the rich get richer leaving out the little guy. What if I told you there was a way to get the highest guaranteed rate of return, something as high as 12% or more? Well I have one of those for you here, and most likely it is exclusive of the wealthy people. That’s right, most of those wealthy people can’t take advantage of this opportunity. This particular investment is designed for the average American and you are guaranteed the stated rate as your return. Do you want to know what it is? Read on….
First let’s take a look at the profile of the average American. They probably have a 401K or some other type of retirement account from their place of employment. They might have a savings account and maybe a certificate of deposit or two. The average American may even have a personal investment account. Most Americans will probably have some type of mortgage, a car loan, and unfortunately a few credit cards as well.
Guaranteed rate of return on CDs… Not enough!
So if you are the average American where could you put your money and get a guaranteed rate of return? Most people think of certificates of deposit. Bad idea. The rates for CD’s are so low you will probably end up losing money because the rate of inflation will likely exceed the rate on your CD leaving you with a decrease in purchasing power. Basically, when your CD matures you can buy less with that dollar than you could before you socked it away.
Guaranteed rate of return on bonds… Not enough!
The second place most people look is at a bond. It’s a better idea, but in a lot of cases you have to have a large sum of cash to get started. Unfortunately here the rates are not much better, and there is a risk factor. Sure, most likely you will earn the rate stated on the bond, but it’s not a guarantee. So where do you put your money then?
Guaranteed rate of return… What’s in your wallet?
Here you go. The average American has over $15,000 in credit card debt according to Nerdwallet.com. Do you know how much this costs you every month? Typically you are paying 12 to 15% on that debt. That cost on a monthly basis is will run you between $150 and $190 a month in interest. Let’s say you had a thousand dollars to invest. If you put it in a CD you might get 1 or 2% annually, that’s $10-$20 a year. If you invested in a bond you might make 4% (good luck you’ll have to go long term with some risk) and earn $40 a year. If you took that same $1,000 and paid down the balance of your credit card that charges you 12% you would have an extra $120 a year. That’s 10 times the amount of what you could get from a CD.
Sure, you do need to make sure you have a savings for emergency funds, but if you are deciding where to invest some extra money, first look at the rate you are paying on your debts. If the rate on your debts is higher than the rate you feel you could earn on an investment maybe you should consider paying off those debts first guaranteeing you are getting that savings on interest. It has the same effect as a guaranteed rate of return if compared to an investment. If you have some extra savings maybe you should consider the return on your investments, set some SMART goals and get our of debt.