Alternatives to the Stock Market

Sara Parker, with Utah Central Credit Union, points out some of the other alternatives that will guarantee you a return.

The financial news this week has been disturbing.

First the stock market tumbles 400 points, then it’s up 100 points.

Lehman Brothers files for bankruptcy.

The government bails out insurance giants AIG with a $85 billion dollar loan.

And Bank of America buys Merrill Lynch.

With so much volatility in the stock market, you might be asking: are there other options for saving and growing my money without the risk and where can I go for help?”

Historically the stock market has been a great place to grow your money. Over the last 24 years there have only been six times that the market has had negative earnings. In the good years, investors have earned as much as 33 % on their money -which is phenomenal. The average is about 10-11%. But I want to point out that four of those negative years have occurred in the last 8 – so the stock market is definitely showing some volatility. And of course this year, the market opened above 13,000 and is now below 11,000.

And not to pile on but the first six months of this year were the 10th worst first-six-months of any year, going back to 1900.

But interest rates on CDs, Money Market accounts, and interest bearing checking accounts are guaranteed and all of those options allow you to have access to your funds when you need them.

This is a good time to invest your money in all of those financial options -because they have a guaranteed return –money you can count on putting in your pocket.

You’re not going to earn as much interest as you might in healthy stock market or with a bond – but that’s because you’re only investing your money for a short time. But stocks may end up on a negative note this year, so, if that’s the case, these investments will actually be better than the stock market.

Let’s start with something that most people understand and might be using – Interest Bearing Checking Accounts. Regular checking accounts don’t earn interest but if you keep $2,000 to $2,500 or more a month in your checking account you qualify for an Interest Bearing Checking Account.

At Utah Central Credit Union, Interest Bearing Checking Accounts are earning 4% annually – which is quite robust and one of the highest rates we’ve seen in awhile. To qualify, members must also use their debit card at least 15 times per month,

Check with your credit union or bank to see what you might earn on this type of account.

When we say CD – most people might be thinking about music. But in the financial world, a CD or certificate of deposit is time deposit – where you put your money away for a short period of time while earning interest. It’s similar to a savings account but different because a CD has a specific, fixed period of time that the money is in a financial institution — at least three to six months. During that time it earns a fixed interest rate. When the term of the CD ends, the money may be withdrawn with the accrued interest.

CD’s earn anywhere from 3 to nearly 4% interest per year depending on the length of the investment. If you only want to invest for a short term -say 3-6 months -the interest earned will be lower than a longer term investment – say 60 months.

One important thing to mention about CDs, is that they are insured and protected by the government for up to $100,000.

Money Markets offer many of the same benefits as certificates of deposit with one additional feature – investors receive a checkbook when they open the account to withdraw funds. Right now money market accounts are earning between 1.36% and 3.29% interest. Again, if you leave your money in for longer periods you’ll earn more interest.

Another benefit that might appeal to your viewers is that there is no time commitment in terms of how long you keep your money in a Money Market.

You should have enough to support yourself and your family for at least a month or two. Financial planners say six months is ideal.

It’s important to remember that national emergencies are much less likely to occur than personal emergencies such as car repairs, layoffs, washer and dryers falling apart, etc. Having cash on hand will allow you to stay the course with far fewer worries.

For more information, you can contact your local Utah Central Credit Union. You can find your local branch by checking the website,

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