The $10,000 Question

A question that I am often asked goes like this:  “I have $10,000 (or some other dollar amount) in savings earning nothing.  Any ideas on how I can do better with it?”

First a word of caution.  If you ask any broker that gets paid to sell you products (in other words they do not invoice you for their counsel) you will probably end up with something that could bite you down the road.  Examples of bad ideas include bond mutual funds (which lose value when interest rates rise), floating rate funds that sometimes freeze up (like in 2008) or annuities that tie your money up for years.

So what should you do?

Do not get greedy with your “safe” money.  Keep it in an FDIC insured savings account where you can get at it quickly if you have an emergency.  The extra interest you might get by putting it in an uninsured money market account or bond fund is not worth the extra risk.

Sometimes the hardest thing to do is to do nothing at all.