The simplest way to start earning money on your savings is by opening a savings account at a financial institution. You can take advantage of compound interest, without any risk. Financial institutions offer a variety of savings accounts, each of which pays a different interest rate.
Once you have a good savings base, you may want to diversify your assets across different types of investments. Diversification can help you smooth out potential ups and downs in your investment returns. Investing is not a get-rich-quick way. Smart investors look a lot further, putting their money in investments on a regular basis and keeping them invested for five, 10, 15, 20 or more years.
Bonuses “Loan Your Money”
Bonds. When you buy bonds, you are lending money to a government or state agency, municipality, or other issuer, such as a corporation. The bonus is like an “IOU” (I owe you). The issuer agrees to pay an established interest rate for the life of the bond and to repay the full face value when the bond matures or expires. The interest that a bond pays is based mainly on the issuer’s credit quality and the interest rates that are in effect. The value of municipal bonds is based on the creditworthiness of a government institution or other public entity that issues them. The issuers most likely to pay the money back have the highest values and their bonds will pay a lower interest rate to the investor. Remember, the lower the risk, the lower the expected return. A bond can be sold at its face value (known as nominal) or at a lower or discounted price. For example, when prevailing interest rates are lower than the rate set for the bond, the selling price of the bond increases above its face value. It is sold at a price. On the contrary, when the prevailing interest rates are higher than the rate established for the bond, the price of the bond decreases above its face value. When bonds are purchased, they can be held until they expire or can be traded. Savings bonds. Savings bonds are issued and backed by the government.