Those days when investors could blindly stack their cash in mutual funds are behind us. The returns from mutual fund investments have gone down and various other investment options have emerged that look much better. Many retail investors seem to have ignored this fact and they are still not moving their cash from mutual funds to other areas.
You need to explore innovative options if you don’t want to risk your savings in a mutual fund and still want to keep earning decent returns. For example, community banks offer good returns without high risks. Although there are a number of restrictions on these accounts – you have to make payments of bills online, make a fixed number of purchases using the debit card every month and do a monthly direct deposit or automatic payment – these restrictions should not pose a big problem.
There are various advantages that small community banks offer over large banks. Most of the community banks have very low limits for minimum deposits that are required to open and maintain an account. They also give a personalized feel to banking as you would know almost everyone in the bank and the atmosphere will be more friendly.
Another option that you can explore is credit unions. They give better returns on deposits than banks and lower rates on debts and credit cards. Some of the credit unions that you can join are Connexus Credit Union in Wausau, which has a $5 membership fee, and the National Military Family Association’s Pentagon Federal Credit Union, which has a $20 membership fee for people who are not in the armed forces.
You can also invest in money market deposit accounts that are insured by the Federal Deposit Insurance Corp (FDIC). Savings accounts can also be a good option if you don’t mind getting modest returns as you will be free of all monthly charges. But you cannot write checks from these accounts.
Another good option is certificates of deposit (CDs), where you invest for a fixed period. The interest rates that you’ll earn on such deposits go up when you commit your funds for longer periods. Depending on how much liquidity you would like in your finances, you can choose an appropriate term for a CD.
So if you’re tired of getting poor returns from your mutual fund investments, it is time to take the money out and invest it in these lucrative options.