Since the dawn of time, people have been encouraged to keep a “rainy day” fund. What for? Well a “rainy day” fund represents putting money aside in the prospect that difficult times in the unforeseeable future will arise. The basic logic behind the notion seems sound. But is it?
Saving for emergencies, education costs, homes, cars, and even retirement is a very important step in creating a sound financial foundation, not just for yourself, but for the family you may plan on starting. That said, saving alone will not maximize your potential revenue. As a wise husband and father, you want your money to work as hard as you do. If your money were a teenager, you want to be able to tell it to “Get a job!”.
Here is 1 simple way to get better returns on your savings.
Invest in stocks using an online trading application
Okay super dad. So you’ve got $1000 just burning a hole in your pocket. But you’d much rather have $1100 burning a whole in your pocket. Here’s what I did. I opened an account with E-trade and another with Robinhood. Both allow you to buy and sell stocks. I liked E-trade for its exposure into trading in OTC markets. But I also wasn’t a fan of the fees and user interface. Ultimately I went with my Robinhood account, which doesn’t have any fees for trading, and is great when you’re just starting out. I deposited my $1000 which was immediately available for trading and then set out to find out more about some companies I’d been following. There was a penny stock I’d really liked for its fundamentals, no debt, and numerous patents. I basically bought 1000 shares for the $1000 investment I made.
Since I bought around the companies upcoming earnings report (ER), and all signs pointed to them beating their revenue projections based on Nasdaq, Forbes, Stocktwit and Barchart ratings and reviews, I let it ride thru the ER. What was the risk assessed result? The company beat expectations and the share price jumped by $.50. It went a bit higher but in my excitement, I sold at the $.50 mark. Beginners luck possibly, but on my $1000 investment, I’d just made an additional $500. Even after setting aside 30% for capital gains, I had made $350 in roughly 2 weeks.
Had I left the $1000 in a savings account with the best rates being offered by 2 of the top banks in America (Bank of America/ Wells Fargo at .01%), I’d have netted $.10 for the entire year. That’s right, 10 cents. Not to mention the $5 monthly fee for having a savings account under the minimum balance. After 12 months I’d have less money than when I started. $940.10 to be exact.
This is just one example. But an important one as you invest in ways that grow your savings and expand your knowledge base. Putting a little skin in the game is a great motivator. There are a lot of discount brokers out there, so you might want to spend a little time researching them and seeing which discount broker is ideal for you.
To all husbands, husbands to be, fathers, and fathers to be, make sure you invest in something today for a better tomorrow. Your wives will love you even more for your financial prowess and your kids with thank you for being a shining example of money related awesomeness. Or at least they should 🙂