GREENSBORO, N.C. — Invest in 2024 -- in the right accounts.
The top-three New Year's resolutions for 2024, per a new survey from Forbes Health are, no surprise: better fitness, better mental health and better finances.
However, the sentiment "new year, new money" -- is often much easier said than done. Financial literacy author and Debt Sucks University founder Ja'Net Adams emphasized many clients have questions about all of the savings options available to them and how those options are fluctuating with inflation and an uncertain economy.
"A common theme over the last couple of years is that it was a guarantee that every time the federal reserve met they were going to raise interest rates. That meant borrowing money was going to become more expensive. It also meant that you could be awarded for saving money in the right places. With the Federal Reserve deciding they will cut rates this year, people are wondering should they still save their money in the right places or start to move it elsewhere," she said.
The right places
From savings to stocks to Certificates of Deposit (CDs), there are many options for where to put money, so consumers must read the fine print about time commitments and stipulations.
"Outside of investing through employer-sponsored retirement plans and the stock market, consumers have other options -- CDs, money markets and bonds. Each has similarities, like you have to keep your money in each for a certain period of time like six months or even five years. The other similarity is that if you take your money out early, you will be penalized," she noted.
She emphasized the importance of taking time to research the nuances of each account.
Changing environment
The annual percentage yield (APY) for the best CDs continues to be far better than that of the typical savings account (.46% APY, according to the FDIC). Is now the time to dump money into a CD before a possible rate change?
"The shining light in the darkness of interest rate hikes was that the rates on CDs, money markets and other vehicles were rising, as well. It was not uncommon to see a CD offering a 5% rate. Now that the Federal Reserve has decided that they are going to cut interest rates this year, there is a high possibility the saving rates are going to decrease as well. If you have been thinking about putting your money in a CD or money market, you might want to dot hat before the interest rate cut," she suggested.
Unique situations
Understand each savings and investment option carries a varying level of risk.
"Regardless if the Federal Reserve cuts the interest rate this year, you have to decide what works best for your finances. You may see that a CD is offering 5% if you leave the money in for 12 months, but you also may feel that you want to try to earn a larger return by investing the same money in the stock market through an IRA. One offers less risk than the other, so if you are a risk taker, you are likely going to choose betting on the stock market. The key is to understand that you make the decision and have to live with the results," she concluded.