Home Buddies - Houston Credit Repair Coach for Investors and Homeowners

Saving - But Not the Old Fashioned Way

Ron Hargrove
Outlook Mortgage

In this month’s Item of Value, I outline the importance of putting an effective savings plan in place and sticking to it. For too many people, a savings plan is an unfamiliar concept. My goal is to make sure that you take advantage of this “age-old” strategy.

The majority of us spend more than we need to, on non-essential items everyday! Accumulating wealth is as simple as committing only 10% of each paycheck to a savings account, CD (Certificate of Deposit), or a Money Market Fund.

There is a common misconception that money is put aside to protect us for those “rainy days.” In fact, for a successful business person, savings accounts are the best way to ensure that there are many “sunny days” ahead. By not growing any savings, many people miss out on the simplest way to increase their wealth and enhance their financial security.

The simplest way to put away money is to put it in a CD with your bank. However, this is not the smartest way to save. The best way is to put your money into a large cap mutual fund. Your money should grow at about 8-10% per year. So what does all this mean? If you just put away $300-$400 per month, within five years you will have well over $20,000 and in ten years you will have almost $60,000!

Now there are several other mutual funds you can use to invest in, but large caps are more conservative. If you like to take on more risk then you can buy more exotic funds, but it is better to get established with a good large cap mutual fund before you start taking on higher risk investments.

Cliff Pape
Home Buddies