By Nikki Willhite
What is frugal investing? In my mind, it is cautious investing.
Most of us are working hard to either stay out of debt, or get out of debt. If
this were not true, we would not be reading this e-zine.
One of our goals is to be able to put some money aside, for a
multitude of reasons. When we save money, we want it to grow. Some of us are
lucky to have our money invested by professionals through work investment plans.
Others of us are on our own.
It can be hard to decide what to do with our hard earned, and
carefully saved money. The Stock Market has historically given the highest rate
of return. Lately, it has taken money and in some cases, reduced it to rubble!
Most savings accounts pay only 2 percent. With a money markets
or Certificate of Deposit you gain another percent or two,
but nothing to brag about (although a very safe investment that compounds with
So, where do you put your money? While the answer to this
question depends on whom you ask, there are some good guidelines for solid, safe
PLEASE BEAR IN MIND THAT THIS, AS WELL AS ALL OTHER INFORMATION
THAT APPEARS IN THE PENNYPINCHER, IS HOMESPUN ADVICE. As always, consult a
professional when appropriate.
So here are some basics to keep in mind
*There is nothing that brings more peace of mind to a family
than to own their home. If you want to make extra principle payments on your
mortgage, you are can consider yourself achieving a rate of return on your money
equivalent to the interest rate of your mortgage.
*If you want to invest in the stock market, buy mutual funds
instead of individual stocks. By a broad based fund. Choose a fund invested in
different sectors. If you have your money in one sector, for example, biotech,
you risk losing your money if that whole sector takes a downturn.
Diversification is your biggest safeguard.
*Keep some money in more secure investments, like Treasury
bills, bonds, money markets and cds.
*Don't try and out guess the market. You won't win. Don't wait
to save until stocks are climbing or interest rates rise. Make saving a habit.
No matter where you put it, put some money aside each month.
*Be aware that when you buy mutual funds, there are different
fees involved, depending on the fund. Do your research before investing. Some
funds have very few fees, especially if you do not touch your money for several
years. However, a fund that performs well may be worth the fees.
You can find detailed information on the Internet about each
mutual fund, their top holdings, their performance and their fees. One of the
best places to start is Yahoo. Here is the URL:
*Keep your age in mind when deciding where to put your money.
The older you are, the more secure your investments should be. If you are in
your 20's, you can ride out a downturn in the stock market, and are fairly safe
putting your money there. If you are about to retire, you can't take the risk,
and your money should be in a more conservative investment.
My husband's company runs his retirement plan. We use their
"goal maker", which puts on auto pilot how much goes into the market, and how
much is put into cash with a fixed interest rate. The older you get, the more
comes out of the market and into the cash area.
*Put your money away and don't touch it. It won't compound and
grow if you do. Make sure you have an emergency fund for the unexpected.
set a goal for your long-term investments, to help motivate you to save. You
are more motivated to save money if you know what you are saving for, such
as buying a house, your children's education, or your retirement!