Making Your Cash Work For You
In terms of what you can make in interest on your savings or the potential profits
you can get from investments, holding your cash can be comparatively costly, especially in the long run. It's never been more expensive to hold money, which can be the reason why brokerage firms want your cash. In addition, these firms don't even have to pay you a lot to use it - consider that what they take can be put to work and give them profits in so many ways.What you lose in possible profit can be thought of as another hidden charge; it's not that different from the trading costs and other expenses that your mutual fund company won't openly tell you about. Avoid stagnant assets - making your money work for you can be accomplished by starting with these basic tips:
Calculate the costs of your money earning nothing versus possible gains of 1.5% per year, at minimum. You can do this by yourself if you're investment-savvy, or arrive at the figures with the help of an investment professional. 1.5% is arguably the highest and safest return, without considering contingent rates with which there has to be a minimum transaction count. With this figure, a hundred thousand dollars can translate to a probable loss of profit of at least $1,500.
You can put your money in reputable credit unions to earn that 1.5% minimum, although you may have to shell out a one-time fee to qualify. Some groups, such as the National Parent Teacher Association, are government-insured to a maximum of $500,000 for joint accounts and half of that for individual accounts.
If you have liquid cash that pays you nothing, you're theoretically losing part of your nest egg that could have come from the money's investment earnings. While holding your cash for safety is important, it's much more advisable to have the money working and growing.
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