Investing Money
Following are some of the most common ways that you can save and invest your money.Bank and credit union savings accounts
The federal government insures savings accounts and certificates of deposit. That makes them a very safe investment, but they may pay a relatively low interest rate, so your money will grow slowly. In general, bank or credit union savings accounts are a good place to put your emergency fund or to save for a short-term goal such as a vacation or down payment for a car.
Mutual funds
When you invest in a mutual fund, the mutual fund company pools your money with that of other investors to buy shares of stocks and/or bonds of many different companies. If the stock market goes down, the value of the mutual fund also may go down. Unlike savings accounts at a bank, mutual funds are not insured by the federal government, so they might be considered riskier. At the same time, they also tend to earn a higher average rate of return than a savings account. In general, mutual funds are a good way to invest for long-term goals such as retirement or your children's college education.
Individual stocks and bonds
You can also buy individual stocks and bonds, but this can be riskier than investing in mutual funds-unless you are confident that you have investment experience or can rely on a competent financial advisor and have a sufficient amount of assets to properly diversify.
Try to avoid taking big risks with your money. At the same time, you want the return on your investments to outpace inflation. One way to balance risk and return is to have a mix of higher-risk and lower-risk investments-stocks, bonds, mutual funds, certificates of deposit and savings accounts. This is referred to as "diversification." A professional advisor, such as a financial planner, can help you select the right mix of investments for your particular situation.
If you are receiving Social Security Disability Insurance (SSDI) benefits, money you save and invest will not affect your payments. If you are receiving Supplemental Security Income (SSI) benefits, the value of assets you own, including your savings, can affect your benefits. However, you may be able to participate in a program called Plan for Achieving Self-Support (PASS). PASS permits you to save money to reach a work goal. For example, you could save money to go to a trade school or start a business, and the money you save for those reasons will not reduce your SSI payment. The Social Security Administration oversees this program and must approve your plan. Work with your state's vocational rehabilitation office if you think PASS might apply to you