Saving For Young People

Saving starts now! Check out WISER's resources to learn how to save for college, how to avoid debt, and about the miracle of compound interest.

Once You Start Saving, Here Are Good Places to Put Your Money:

1. Checking or Savings Accounts - You can open a checking and/or savings account at your local bank or credit union. You can have your paycheck automatically deposited into your bank account. A savings or checking account may pay less than 1% interest these days – not even keeping up with inflation.

2. Savings Bonds - Savings bonds are backed by the US Government and are very safe. You can buy them at a bank or credit union. I Bonds are savings bonds that are indexed to inflation – so as the inflation rate goes up or down, so does the I Bond interest rate. As of May 2012, I Bonds are paying 1.18% through October 31, 2013. EE Bonds are paying 0.20% through October 31, 2013.

3. Certificates of Depost - You can get CDs at a bank or credit union. The amount of interest a CD pays depends in part on how long you can leave your money there. Current rates for high-paying CDs range from 1.0% to 1.54% for a 1-year CD and from 1.3% to 1.98% for a 2-year CD.

4. Mutual Funds - There are thousands of different mutual funds available. You can invest your savings in a mutual fund, or you may have to choose one to invest your 401(k) money in at work. Mutual funds can be invested in stock market, bonds or both. Mutual funds invested in stocks have had the highest return over the past 30 years – higher than savings bonds, savings accounts or CDs, but they also carry more risk. You do not have to have a lot of money to invest in mutual funds.

5. Pension Plan - Some employers provide a pension plan, which can be a very important and valuable benefit. If you start your own business, it is a very good idea to include a pension plan for yourself in your business plan.