Why You Should Invest Boldly When Money Market Rates are Low

Interest rates are low all around but money market rates are especially depressed.  Most people are looking elsewhere to find competitive interest rates.  Here are a few ways to maximize your investments in this depressed economy.

Commodities

Commodities are always a good investment option.  For the most part, they are insulated from the rest of the economy and certain commodities such as gold and silver actually do better the worse things are elsewhere.   Commodities trading requires a great deal of research and prices are dependent on a variety of factors that are beyond anyone’s control.  Pick the right set of possibilities and you can clean up in the commodities market.  Choose wrong and you can be wiped out.  Generally, the more niche the market you invest in, the better your chances are to get it right.

ETFs

Exchange Traded Funds are a great alternative to money market accounts.  These ETFs allow you the convenience of a mutual fund with the flexibility of stock trades.  Most of these funds invest in a basket of stocks that track a particular market index such as the S&P 500.  There are an endless variety of ETFs so you should have no problem finding one that fits your particular interests and area of knowledge.

Stocks and Bonds

Stocks and bonds are still the most popular investment type.  Though they are riskier than money market accounts, through good diversification your portfolio can be rendered quite safe.  A stock portfolio that contains investments in a large number of sectors is the best hedge against poor market performance.

Money Market Funds

Money market funds have some of the safety of money market accounts but offer higher yields.  These funds are controlled by a manager who invests the money into safe investments such as CDs and government bonds.  You can purchase these funds through either a bank or brokerage, but brokerages almost always pay a much higher interest rate.

Retirement Accounts

While money market rates are low, it might e better to place more money into your retirement account.  Funding your 401K or IRA at a higher rate can offset the low interest rates of money market accounts.  Though these accounts might not pay any more than the money market, you will get the tax benefits that the market account will not give you.  Keep in mind that both types of accounts have upper limits for tax free investments.

Play the Market

Though it may seem counterintuitive, when the market is in the dumps, it’s a good time to take some risks.  There really is no way to predict what will happen next so almost any investment could pay off big.  Since safe forms of investing are paying so little, it’s hardly worth your time.  Use the market slump to venture into some new areas.  Take a chance that you normally wouldn’t take.  As long as you properly diversify your portfolio, you can minimize your risk and enjoy gains that you just won’t see with safer investments these days.