Q: What is the Best Way to Save Money and Get a Good Return on it?
A: I recently wrote the following article that answers your question about saving money and getting a good return on it. Here is the article, entitled, Three Ways to Save More Money By Getting Paid to Save.
Three Ways to Save More Money By Getting Paid to Save
Everyone wants to save more money. Yet many cash-strapped people feel like they “can’t afford” to save. One way to make saving each month a little easier is by super-charging your savings – and making your money work as hard as you do. Here are three special ways to turbo-charge your savings. Try them and watch your savings grow faster than ever.
Strategy #1: Open an Individual Development Account or IDA
An Individual Development Account, or IDA, lets low-to-moderate income earners save money for a specific goal – such as a down payment on a house or starting a business – and receive matching funds from non-profit groups, corporations, and government agencies. Many IDAs provide a $3 to $1 match, meaning for every dollar you save, you get $3 in contributions. What’s the catch? You must agree to save money for a set period of time, usually at least one year. Some IDAs require you to set aside money for two or three years. Whatever the term, it’s worth it – because you’ll get rewarded with a huge cash bonus in the end.
The Payoff: If you save $100 a month, or $1,200 in one year, and your IDA has a $3 to $1 match, at the end of a year, you’ll receive a $3,600 contribution.
Resource: Visit http://www.IDAnetwork.org to find an institution in your area that offers Individual Development Accounts.
Strategy #2: Open a High-Yield Savings Account
Are you frustrated by savings accounts that are paying a paltry 0.5% or less in interest? Don’t despair. There are better yielding options available – if you shop around online. For example, the new InterestPlus Online Savings Account from Capital One currently carries a 1.45% Annual Percentage Yield (APY) – well above the national average. Plus, you can get a quarterly bonus equal to 10% of the interest you earned in the previous quarter. That’s a fantastic deal because you’re basically getting paid twice to save.
The Payoff: Keep $2,500 in your Capital One savings account each month, and you’ll earn an APY that’s roughly three times the amount that’s being offered elsewhere with other savings accounts.
Resource: Go to http://www.CapitalOne.com/directbanking to learn more about the no-fee InterestPlus Online Savings Account.
Strategy #3: Enroll in Your Company’s Retirement Savings Plan
If your company has a 401(k) or a 403(b) retirement savings plan, and you’re not contributing to it, you’re making a big financial mistake. Not only are you missing out on the opportunity to set aside money for your Golden Years, you’re also likely forgoing one of the best perks available to workers these days: a corporate match on your retirement contributions. Some companies offer a dollar for dollar match on the money you save for retirement, up to a certain percentage. Other firms offer 50 cents on the dollar. No matter the amount, it’s free money, so it’s foolish not to grab it.
The Payoff: Getting a dollar for dollar matching contribution from your employer’s 401(k) plan translates into a 100% return on your money. Guaranteed. You’ll never get that on Wall Street, or anyplace else.
Resource: Head to your company’s Human Resources Department today, and get the enrollment papers you need to sign up immediately for your 401(k) or 403(b) plan. If you’re already in the plan, consider boosting your contribution slightly. Also, read up on the benefits of having a retirement plan at the Employee Benefit Research Institute (http://www.ebri.org).
By using these three savings methods, you’ll become a more diligent saver, you’ll watch your money grow quickly, and you’ll make the process of saving money pain free. Best of all, pretty soon you’ll feel cash rich instead of cash-strapped.