Money in the Bank By George Kline At Isnare.com Ezine Articles

With the financial markets continuing to plummet, you may be hesitant about investing your hard-earned money in stocks. Whether buying stocks for the long-term or engaging in day trading, there is no guarantee that the dollars used for stock shares will ever make you a profit- or even be returned. Stories abound of individuals who played the stock market because of a hot tip from a friend- only to end up losing everything they owned.

Unless you have extra money that you will not need for the next 10-20 years, and whose potential loss you can allow, your best choice in terms of making a safe investment is to place your money in a bank. Many individuals take this to mean opening an interest-bearing savings account; this is certainly one of the many ways you can invest your money.

Putting your money in a savings account ensures that that it will still be there tomorrow, the week after, and even ten years from now. Also, the longer you keep your money in a savings account, the more interest you accrue. Interest is also paid on the interest that the bank previously paid out.

For example, if you invest $20,000 in a savings account paying 3% interest, after one year goes by you will have accrued $600 in interest. If you do not remove the initial $20,000 or the additional $600, the next year you will receive another $600, plus an extra $18. Compare this with stocks, some of which have dropped below 90% of their original value!

What if your bank is forced to close? Unlike the stock market, the Federal Deposit Insurance Corporation, or FDIC, insures at least the first $100,000 in each account. So, if your bank collapses, the United States Federal Government will guarantee that you receive your money back.

You may also set up a checking account, which offers the convenience of instant access to your money via checks. Instead of going to your bank and making a monetary withdrawal every time you need to pay a bill, you can just write out a check from your checking account. Alternatively, you may set up an instant pay program for many of your monthly utility and other bills, ensuring peace of mind that you have not forgotten to pay a credit card or other statement.

If you are interested in obtaining as much interest as possible from your cash, consider opening a money market account. Like a savings account, a money market account pays interest on the money you invest. However, the interest rate will be much higher than that of a savings account. Generally, money market accounts require a higher initial investment.

If you do not have the amount of money needed to open a money market account, a Certificate of Deposit (CD) is another good way to earn high interest. CDs yield as much, and sometimes even more, interest, than money market accounts. The money invested in a CD must not be withdrawn for a certain time, however; otherwise, there is a penalty for early withdrawal. CD maturities (the time during which money cannot be withdrawn) vary: some are as short as 6 months, while others last 10 years or more.

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