My big goals for building financial independence is a brokerage account, high-yield savings, retirement plans. Honestly there is probably stuff I am not thinking of, but there are many ways I am trying to ensure my financial independence. Today I am addressing the savings.
Rate Changes Coming
High-yield savings is what I use for my emergency fund and general savings. They are separate accounts held at different institutions. This week it was announced that interest rates will be dropping this year. This means our high-yield accounts will be dropping as well. Rather your savings account is at 2% or like mine at over 5% we are going to start seeing that number lower.
Savings or Investing Your Savings
I have often wondered which is better, putting money in savings or investing in the stock market. First, it is only beneficial if you are out of debt. I make sure I am debt free especially interest debt free before I save or invest. The best choice is an individual one. If savings rates go down, you may earn more in stocks earning dividends and the price of the stock could go up which means you have more money. However stock prices could go down and if you don’t buy into dividend stocks then you reduce your earning potential. Do you research, see what the stock has been doing: dividends, earnings, highs, lows and more before you decide that is the stock for you. Be sure to diversify into different industries so if the electronic industry crashes you are not super heavy in that and affected worse. Balance is a big thing.