We all know how important it is to save money. The problem is that many people aren’t sure where to start. With so many choices available, it can be difficult to figure out which one will work best for you.
The good news is that we’ve already done the legwork for you. Here are 25 financial products that can save you thousands.
1. High-yield savings account.
A high-yield savings account is a federally insured savings account that pays you more than the national average. A typical APY is around 4%. Comparatively, the national savings rate is 0.43%.
Suffice it to say the money in your account can grow even faster. And, over time, this can result in thousands of dollars in savings — especially if you have an extremely large balance.
2. High-yield checking account.
As with high-yield savings accounts, traditional checking accounts offer a lower APY than high-yield savings accounts. However, a high-yield checking account may be the right choice if you want near-instant access to your funds and the ability to earn interest while doing so.
You can usually obtain a debit card or write checks with a checking account. With a checking account, you can make as many transactions as possible within a statement cycle. As such, you can use these accounts to save for short-term goals, such as a vacation or new appliances.
3. CDs and CD ladders.
CD ladders and certificates of deposit (CDs) can help you take advantage of favorable rates when saving for a financial goal, especially as interest rates rise.
Those unfamiliar with certificates of deposit (CDs) should know they are time deposit accounts that pay a fixed interest rate for a specified period. Banks and credit unions typically offer these savings accounts.
In terms of a CD ladder, it involves buying CDs that mature at different intervals to keep your CDs mature. You’ll have a three-rung ladder of CDs maturing every three months if you purchase CDs maturing in three months, six months, and nine months. As a result of the regular maturity schedule, you will have predictable access to your savings while also avoiding early withdrawal penalties on CDs.
As CDs in your ladder mature, you can reinvest the funds into higher-interest CDs. When higher interest rates become available, you can take advantage of them to earn more interest.
4. Money market accounts.
As with CDs, most banks and credit unions offer money market accounts. Like other deposit accounts, a money market account is insured up to $250,000 by the FDIC or NCUA.
The money you deposit in a money market account can earn interest over time. That’s one thing they have in common with savings accounts. Money market accounts, unlike savings accounts, allow you to write checks or get a debit/ATM card you can use to pay or withdraw.
A money market account is more likely to pay you a higher interest rate than another type of savings account. For example, Vio Bank offers a solid 5.25% APY for its MMA.
5. Retirement savings plan.
A retirement savings plan is a way to save up for retirement. However, you can grow your savings tax-free. Over time, you’ll save thousands.
Various retirement savings plans exist, each with benefits and drawbacks. Retirement savings plans come in many forms, including:
- 401(k) plan. Employers offer retirement savings plans like 401(k)s. Contributions to 401(k) plans can be deducted from employees’ paychecks and are tax-deductible. Employers may also match employee contributions to 401(ks).
- IRA. IRAs are individual retirement accounts you can set up regardless of whether you’re in an employer-sponsored plan. The two main types of IRAs are traditional IRAs and Roth IRAs. Contributions to traditional IRAs are tax-deductible, but Roth IRAs aren’t. Roth IRA withdrawals are tax-free, while traditional IRA withdrawals are taxable.
- SEP IRA. SEP IRAs are simplified employee pension plans that small businesses and self-employed people can set up. Tax-deductible contributions to SEP IRAs are higher than those for Roths and traditional IRAs.
- SIMPLE IRA. The SIMPLE IRA is a small business retirement plan. You can deduct SIMPLE IRA contributions, and employers can match some of your contributions.
Depending on your income, tax bracket, and employment status, you’ll want to find the right retirement savings plan. You should speak with a financial advisor before picking a retirement plan.
An annuity is a financial product that provides you with money for life or for a set period of time. Annuities can be bought from an insurance company in one lump-sum payment or installments. As a result, the insurance company will pay you a set amount every month, quarter, or year.
The most common annuities are:
- The income stream from fixed annuities is guaranteed. Regardless of how the stock market does, your payments won’t change. For example, Due pays you 3% on your deposited money.
- Investing in variable annuities can offer higher returns but also higher losses. As the underlying investments in the annuity perform, so will your payments.
The use of annuities to generate income in retirement can be beneficial, but they do carry some risks. Before purchasing an annuity, it is essential to consider your financial needs and goals carefully.
Annuities offer the following benefits:
- Guaranteed income stream. With annuities, you can guarantee a monthly income stream for life, protecting your savings from outliving you.
- Tax-deferred growth. You don’t pay taxes until you begin taking withdrawals from your annuity investment because it’s tax-deferred.
- Death benefit. Upon your death, your beneficiary will receive your death benefit.
7. Online brokers.
Using an online platform, you can buy and sell securities, such as stocks and ETF investments, through an online broker. Because online brokers offer a substantial discount over full-service brokerage firms, they are sometimes called discount brokers.
Some popular online brokers include Fidelity Investments, TD Ameritrade, and E*TRADE.
In choosing an online broker, it is essential to take your specific needs and goals into consideration, as well as:
- What kind of investments would you like to trade?
- Service level you require.
- The fees and commissions that are being charged.
- Features and tools available.
- Investing experience
Before choosing an online broker, compare the various brokers side-by-side. Comparing different brokers’ features, fees, and customer reviews is easy with websites like NerdWallet or Bankrate.
Robo-advisors provide investment advice and portfolio management using algorithms and software. Due to their low price and ease of use, they have quickly become popular.
Typically, robo-advisors ask you a series of questions about your financial goals, risk tolerance, and time horizon.
Your personalized investment portfolio is then created based on this information. A portfolio will usually consist of low-cost index funds, which have historically performed better than actively managed funds.
In contrast to traditional financial advisors, robo-advisors generally charge a much lower fee per year. Additionally, they typically have low minimum account balances, making them accessible to all investors.
There are several advantages to using a robo-advisor:
- Low cost. A robo-advisor usually charges a much lower annual fee than a traditional financial advisor.
- Easy to use. A robo-advisor is easy, even if you have no investing experience.
- Personalized advice. Based on your individual needs and goals, robot-advisors create a personalized investment portfolio for you.
- Low minimums. The minimum account balance of a robo-advisor is typically low, making it accessible to all investors.
As a low-cost, easy-to-use investment option, robo-advisors can be a good option for investors.
9. Index funds.
ETFs or mutual funds tracking a specific market index are called index funds, such as the Russell 2000 Index Fund or the S&P 500 Index Fund. Index funds are considered passive investment strategies, meaning they do not attempt to outperform the market. Their goal is to match the performance of the index they track instead.
Over other types of investments, index funds offer several advantages, including:
- Low fees. Actively managed funds typically charge higher fees than index funds. This is because they don’t require a team of professional money managers to select individual stocks.
- Diversification. By investing in a wide variety of stocks, index funds reduce risk. Individual stocks, on the other hand, can be more volatile.
- Transparency. It is easy for investors to see their investments since index funds are transparent. With actively managed funds, this is not always the case.
Investing in index funds is good for beginners, long-term investors, and risk-averse investors. They are a great way to start investing as a way to build a diversified portfolio.
10. Health savings account (HSA).
Generally, health savings accounts (HSA) are tax-advantaged medical savings accounts available to Americans with high-deductible health plans (HDHP). Tax savings and money set aside for future medical expenses are possible with HSAs.
HSAs offer the following benefits:
- Tax advantages. Earnings in an HSA are tax-free, and contributions to the account are deductible. If qualified medical expenses are withdrawn from the account, they are tax-free.
- High contribution limits. HSA contribution limits in 2023 are $3,850 for individuals and $7,750 for families.
- Portability. The HSA account is portable, so you can keep it if your employer or insurance plans change.
- No expiration date. You can keep your HSA funds in the account and use them for future medical expenses because there is no expiration date.
In order to qualify for an HSA, you must meet the following requirements:
- A high-deductible health plan (HDHP) is required.
- You must not be enrolled in Medicare.
- Tax returns filed by others cannot claim you as a dependent.
A financial institution that offers HSAs is a good place to open an account if you are eligible for one. HSA contributions can be made through payroll deductions or directly into the account.
11. Life insurance.
Having life insurance can protect your loved ones from financial ruin if you pass away unexpectedly. Beneficiaries can receive a lump sum from life insurance policies to cover funeral costs, debts, and other expenses.
Life insurance comes in a variety of forms:
- Term life insurance. There are several types of term insurance, such as 10, 20, and 30-year policies. Term life insurance typically has lower premiums than other types of life insurance, but the coverage ends at the end of the term.
- Whole life insurance. This type of insurance covers you for the rest of your life. The premiums are higher than term life insurance, but the coverage never expires. You can also borrow against or withdraw the cash value of whole life insurance.
- Universal life insurance. This type of insurance combines the benefits of term and whole life insurance. In addition to providing coverage for a specific period of time, you can also make premium payments and invest to increase the cash value.
- Variable life insurance. Like universal life insurance, the cash value is invested in stocks and bonds. A death benefit and the amount of cash value you receive can depend on the performance of these investments.
Depending on your circumstances, you will need different amounts of life insurance. It is vital to consider your income, debts, and the needs of your dependents. It is possible to determine your life insurance needs with the assistance of a financial advisor.
12. Disability insurance.
When you are disabled and unable to work, disability insurance can provide income replacement. If you cannot work, this can help you pay your bills instead of relying on loans or lines of credit.
The two basic types of disability insurance are short-term and long-term. In both cases, you receive a benefit equivalent to 50% to 80% of your income. Those funds can be used for living expenses, loan repayments, or even savings.
13. Homeowners insurance.
Fire, theft, and natural disasters are all covered losses under homeowner’s insurance. If you do this, you can save thousands of dollars on repairs or replacements.
The following factors should be considered when shopping for homeowners insurance:
- Coverage limits. If your home is damaged or destroyed, ensure you have enough coverage to rebuild it.
- Deductibles. Lower premiums are associated with higher deductibles. A claim, however, will cost you more.
- Type of policy. Homeowners insurance policies come in different types, such as HO-3 and HO-4. Your needs and budget will determine the type of policy you choose.
- Financial strength of the company. It is important to choose a company that has a solid financial standing so that they can pay your claims if you need to.
Insurance agents, comparison websites, and insurance companies directly can provide homeowners insurance quotes. For the best policy, compare quotes from multiple insurers.
14. Auto insurance.
An auto insurance policy can protect you from financial losses in the event of an accident or other covered event. As a result, you can save thousands of dollars on repairs or replacements, medical expenses, and lost wages.
The most common types of auto insurance coverage are:
- Liability insurance. You are covered for those costs if you cause injuries or property damage to others in an accident. In most states, it is the most basic form of auto insurance.
- Collision insurance. Regardless of who caused the accident, this covers damage to your own vehicle.
- Comprehensive insurance. Your vehicle is insured against damage caused by events other than collisions, such as theft, vandalism, and fire.
- Uninsured/underinsured motorist coverage. When an uninsured or underinsured driver hits you, this covers your injuries.
- Medical payments coverage. In an accident, your medical expenses will be covered regardless of fault.
- Rental reimbursement. After an accident, this covers the cost of renting a car.
Depending on your individual circumstances and financial situation, you will need different amounts of auto insurance. You should speak with an insurance agent to determine the right coverage for you.
15. Long-term care insurance.
A long-term care insurance policy can help pay for nursing home or assisted living care. Doing this can relieve your loved ones of the financial burden of caring for you.
Long-term care insurance comes in a variety of forms. The most common policy type is the traditional policy. These policies pay a daily benefit for a certain period of time, such as three years or five years. Typically, the benefit amount is set at the time of purchase, and it does not increase over time.
16. Real estate.
Over time, real estate investing can help you build wealth. There’s the potential for high returns, tax benefits, and passive income. Because it provides income and shelter, it can also help protect your investments from volatility.
You should research and understand the risks before investing since it’s complex.
Investing in real estate can be done in a few ways:
- Buy a rental property. It’s the traditional way to invest in real estate. You buy a house and rent it out. You can cover your mortgage and other expenses with rent payments and maybe even make money.
- Flip a house. An investor buys a property, fixes it up, and then sells it for a profit. The risk is higher, but it can be more profitable if you’re successful.
- Invest in real estate investment trusts (REITs). Real estate investment trusts own and operate income-producing property. REITs let you own small pieces of the company’s properties.
- Invest in real estate crowdfunding. It’s like investing in real estate without actually buying a house. There are crowdfunding platforms for real estate, like Fundrise, or you can invest in individual projects.
Your financial goals, risk tolerance, and time horizon will determine the type of real estate investment you should make. Beginners should start with a small investment and learn as they go if they’re new to real estate investing.
17. Credit cards with rewards.
You can save money on everyday purchases using a credit card with rewards. Travel, merchandise, and statement credits can be redeemed for rewards points or cash back on many credit cards.
The following factors should be taken into consideration when choosing a credit card:
- Rewards. How would you like to be rewarded? Do you prefer cash back, travel points, or miles?
- Annual fee. Depending on the credit card, there may be an annual fee.
- Welcome bonus. After spending a certain amount on your credit card in the first few months of opening your account, you may qualify for a welcome bonus.
- Interest rate. If you don’t pay your credit card balance in full monthly, you will pay an interest rate on your debt.
- Fees. Credit cards also have fees associated with late payments and foreign transactions.
Before applying for a credit card, make sure you read the terms and conditions. You’ll better understand the card’s rewards, fees, and other features if you do this.
18. Student loan refinance.
A student loan refinance involves taking out a new loan to repay your previous student loan. In this case, you could save money on interest over time if you can get a lower interest rate on the new loan. If you choose to extend your repayment term, your monthly payments may be reduced. However, you will pay more interest on the loan if you choose a more extended repayment period.
When refinancing your student loans, you should consider the following:
- Your credit score. Generally, the better your credit score, the lower your interest rate.
- Your debt-to-income ratio. This is the amount of money you spend on debt payments each month. You may also qualify for a lower interest rate if your debt-to-income ratio is lower.
- The amount of your student loan debt. Even with a lower interest rate, the more debt you have, the higher your monthly payments will be.
- Your desired repayment term. To reduce your monthly payments, you can choose a shorter repayment term or a longer repayment term.
- Your financial goals. Would you like to save money on interest? Are you looking for a faster repayment method? Is it both?
In order to compare student loan refinance offers from different lenders, you will need to consider these factors. Before making a decision, compare the interest rate, fees, and repayment terms of each offer.
19. Mortgage refinance.
Refinancing your mortgage means replacing your existing loan with a new one. You can do this to lower your interest rate, shorten your loan term, or get cash out.
Before refinancing your mortgage, consider these factors:
- Your current mortgage interest rate.
- Refinancing closing costs.
- Your new mortgage term.
- The amount you pay each month.
- The overall state of your finances.
It’s important to compare rates from multiple lenders and get pre-approved before refinancing your mortgage. Additionally, you should know that refinancing can incur several thousand dollars in closing costs.
20. Debt consolidation loan.
Debt consolidation loans combine several high-interest loans into a single loan with a fixed monthly payment that you can repay over time. By doing this, you can save money on interest, simplify your finances, and get out of debt more quickly.
Debt consolidation loans should be carefully considered before you take them out. An excellent way to find the best deal is to compare rates and terms from different lenders.
The following tips will help you get a debt consolidation loan:
- Get pre-approved for a loan before you start shopping. This will determine your interest rate and the amount of money you can borrow.
- Compare rates and terms from different lenders. Choosing a debt consolidation loan requires comparing rates and terms from multiple lenders.
- Make sure you can afford the monthly payments. You should be able to afford the monthly payments for your debt consolidation loan.
- Be prepared to make changes to your spending habits. Changing your spending habits is the key to getting out of debt. You may need to reduce unnecessary expenses or increase your income to achieve this.
Researching and understanding all the risks associated with debt consolidation loans is essential. Some people may benefit from debt consolidation loans, but not everyone is a good candidate.
21. Credit monitoring service.
A credit monitoring service tracks any changes in your credit report, such as new accounts opened, inquiries, or changes to your credit score. As a result of these services, you can also be alerted to possible fraud, such as someone trying to open an account in your name.
Credit monitoring has the following benefits:
- Early fraud detection. By monitoring your credit, you can detect fraud earlier, giving you a head start on taking steps to protect your credit and identity.
- Peace of mind. When you are concerned about identity theft, you can feel at ease knowing your credit is being monitored.
- Credit score insights. In addition to providing access to your credit score, some credit monitoring services also give you information about how to improve it.
To make the right choice, you should compare several different credit monitoring services before making a decision. Pricing, features offered, and company reputation are all essential factors to consider.
22. Budgeting software.
This software can help you track your income and expenses to make better financial decisions.
It is important to consider your needs and budget when choosing a budgeting software program. YNAB is a useful option if you want a budgeting app that has a lot of features. A free, easy-to-use budgeting software program like Mint is a great choice if you want to keep track of your budget. Goodbudget is an envelope budgeting software program that uses zero-based budgeting.
Use your budgeting software consistently, no matter what you choose. Budgeting software helps you reach your financial goals by helping you stay on track and being more accurate as you use it.
When choosing budgeting software, consider the following factors:
- Ease of use. You should be able to use and understand the budgeting software easily.
- Features. It should include the needed features, such as tracking expenses, creating budgets, and setting financial goals.
- Compatibility. Your budgeting software should be compatible with your devices and financial institutions.
- Price. You should be able to afford the budgeting software program.
23. 529 plan.
529 plans are tax-advantaged savings plans that encourage savings for future education costs. A state, agency, or educational institution sponsors a Section 529 plan.
529 plans fall into two categories:
- The money you invest in education savings plans can be invested in various investment options, including mutual funds and exchange-traded funds. You can withdraw tax-free earnings if you use them to pay for qualified education expenses, and investment earnings grow tax-deferred.
- Prepaid tuition plans allow you to purchase credits or units at today’s prices at participating colleges and universities. No matter how much tuition increases in the future, the value of the credits or units will remain the same.
In general, 529 plans are a great way to save for college. In addition to offering significant tax benefits, they can be used to pay for a wide range of education expenses.
A 529 plan can be a good investment for your future, but you should compare the different plans offered by different states and institutions before opening one. In addition to considering investment options, fees, and state tax benefits, you should also consider the fees associated with the plan.
24. Flexible spending account (FSA).
FSAs are tax-advantaged accounts that enable you to set aside money before taxes to cover qualified medical expenses. You can use FSA money for qualified expenses, but you will lose it if you don’t.
FSA contribution limits for 2023 are $3,850 for individuals and $7,750 for families. A FSA can be set up through your employer, and contributions are taken out of your paycheck before taxes are deducted. By contributing to your FSA, you won’t have to pay taxes on the money you earn.
Using a flexible spending account (FSA) to pay for health care can be a great way to save money. FSAs can help you cover deductibles and copayments if you have a high-deductible health plan. You can also save money on prescription drugs and over-the-counter medications if you have a low-deductible health plan.
25. Home Equity Line of Credit (HELOC).
A home equity line of credit (HELOC) uses the equity in your home as collateral for a loan. A home’s equity differs between its appraised value and mortgage payment.
HELOCs are revolving credit lines that allow you to borrow money as needed. When you begin making principal and interest payments on a loan, you usually only have to pay interest for the first ten years.
The following are some of the uses for HELOCs:
- Home improvements.
- Consolidation of debt.
- Education expenses.
- Medical expenses.
- Retirement expenses.
The following are some advantages of HELOCs over other types of loans:
- A lower interest rate than credit cards or personal loans.
- Having the ability to borrow money when needed.
- Interest that is tax deductible (subject to certain conditions).
You should carefully consider your financial situation before taking out a home equity line of credit and make sure you understand its terms. Comparing offers from different lenders can also help you get the best deal.
Many financial products can save you money. Researching and choosing the right products for your needs can save thousands of dollars over time.
Here are a few additional tips for saving money with financial products:
- Make sure you compare interest rates and fees before choosing a financial product.
- Be sure to read the fine print to ensure you understand everything.
- You should only use financial products that you understand and are appropriate for you.
- Don’t rush into saving. Be patient and disciplined.
If you follow these tips, financial products can help you reach your goals and save money.
What is a financial product?
A financial product is an instrument that enables people to:
- Invest in stocks and other securities
- Obtain money through credit cards, loans, or bonds
- Put money in a term deposit to save
Financial products are designed to help buyers and sellers make money. Also, they circulate liquidity and spread risk.
What are some common types of financial products?
Among the most common types of financial products are:
- Bank accounts. Savings and checking accounts allow you to deposit and withdraw money, as well as earn interest.
- Credit cards. With a credit card, you can borrow money to pay for goods and services.
- Loans. Many different purchases, such as a home, car, or education, can be financed with loans.
- Investments. Over time, investments can help you grow your money. Stocks, bonds, and mutual funds are some of the most common types of investments.
- Insurance. In the event of an accident or illness, insurance can protect you from financial loss.
How do I choose the right financial products for me?
A financial product should be chosen based on your unique needs and goals. For instance, saving money for a down payment on a house may require choosing an account with a high-interest rate. A diversified portfolio is a good choice if you are investing for retirement.
You should also compare the different financial products available before making a decision. Considering factors such as fees, interest rates, and terms is crucial. To ensure that you understand all of the terms and conditions of the product, you should also read the fine print.
What are some common financial product scams?
In the world of financial products, there are several common scams, including:
- Investment scams. High returns are often promised in these scams with little or no risk. However, no investment is risk-free. Don’t believe anyone who promises you a guaranteed return.
- Ponzi schemes. In Ponzi schemes, investors are paid from new investors’ money. Ultimately, these schemes fail when there aren’t enough new investors to repay the old ones.
- Identity theft. Financial fraud can result from identity theft, such as opening new accounts or taking out loans in your name. Keep a close eye on your credit reports, and don’t give out any personal information to anyone.
Where can I get more information about financial products?
You can obtain financial products from many sources, including banks, credit unions, brokerage houses, and insurance companies. Also, you can visit the websites of government agencies and financial institutions, talk to a financial advisor, or read books and articles about finance.
Featured Image Credit: Photo by Karolina Grabowska; Pexels; Thank you!
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