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THE global recession took many by surprise. Besides the United States, countries like Greece, Spain, and even China were hit by the downward spiral.
For months, people watched and worried that several countries would go bankrupt, while others fretted over cultural revolutions in some parts of the world.
Even now, with icon Nelson Mandela resting in a hospital, the thought that his death could cause the rocking of South Africa's economy is a possibility. For many in the country, Mandela is more than just a figurehead of a peaceful democracy.
He is 'tata', their father and a leader to their people; even outside South Africa, Mandela's illness has had an effect. US President Barack Obama even visited the country with hopes of speaking to the man, whose health has been up and down for the last few weeks.
No-touch savings accounts
Perhaps now is the time to start investing - however, not in just stocks and bonds, but in certificates of deposit (CDs), which are primed to make recovery after a rocky 2012 fiscal year.
There's a reason CDs are still considered one of the best low risk investments around the world. They are special investment accounts. Think of them as no-touch savings accounts.
No-touch because, unlike a bank's savings account, you will get penalised for touching money in a CD when you aren't supposed to. The way CDs work is you put a certain amount of money into the account and then set up how long you want it to stay there.
This can be anywhere from a few months to 20 years, should you so choose.
A CD matures when it reaches the end of the account cycle, that is the time you set for it to stay in your account.
Depending on the current CD rates, you might want to set a shorter or longer time for it to be locked into your account.
So let's say you learn about Discover Bank's current CD rates; you like them and the interest they would accrue, so you sign up. You drop in about $5 000 and set it for two-and-a-half years.
Then the recession hit. Maybe you already had a savings account that you blew through, using it to supplement the ongoing bills or other expenses. Maybe, heaven forbid, there was a major emergency; there's been a lot of turbulent storms and calamities in the world for the last few years and it is always very important to be prepared for such events.
A CD could be a great way to cover yourself should the worst happen. The one thing you shouldn't do is keep pulling money out every time you need it.
As mentioned, there are consequences if you pull out your money before it matures; sometimes you get penalised by a hefty fee, or maybe you get some of the interest you've gained taken away from you.
But could the current CD rates actually help people recover in this 'recovery' time?
They could, if used right. Again, just like a savings account, CDs are most often used to set aside money for big purchases, such as a house or holiday or university fees.
But they can also be used to, say, get someone out of debt or at least make some of the debt subside. It's not a cure-all by any means, but if you had money in a CD and you now have $3 000 in debt, theoretically you could use the CD money to pay off debts to that amount and put the rest in a savings account.
And that's how CDs will help - it's really about the savings mentality. Before the recession, a good portion of people had savings accounts; after the recession, no one did because we all dipped into ours in order to stave off creditors or pay bills.
But with savings or investments that will help in keeping our money for bigger and better days, our confidence grows and we're more likely to want to buy things. Buying things helps the economy and when we have a thriving economy, we have growth.
And with a growing economy, consumers begin to spend, businesses begin to hire, and job seekers get to diversify and improve their employment options.
- Fin24
*This guest post is by freelance writer Sara Stringer, who most often writes about personal finance.
For months, people watched and worried that several countries would go bankrupt, while others fretted over cultural revolutions in some parts of the world.
Even now, with icon Nelson Mandela resting in a hospital, the thought that his death could cause the rocking of South Africa's economy is a possibility. For many in the country, Mandela is more than just a figurehead of a peaceful democracy.
He is 'tata', their father and a leader to their people; even outside South Africa, Mandela's illness has had an effect. US President Barack Obama even visited the country with hopes of speaking to the man, whose health has been up and down for the last few weeks.
No-touch savings accounts
Perhaps now is the time to start investing - however, not in just stocks and bonds, but in certificates of deposit (CDs), which are primed to make recovery after a rocky 2012 fiscal year.
There's a reason CDs are still considered one of the best low risk investments around the world. They are special investment accounts. Think of them as no-touch savings accounts.
No-touch because, unlike a bank's savings account, you will get penalised for touching money in a CD when you aren't supposed to. The way CDs work is you put a certain amount of money into the account and then set up how long you want it to stay there.
This can be anywhere from a few months to 20 years, should you so choose.
A CD matures when it reaches the end of the account cycle, that is the time you set for it to stay in your account.
Depending on the current CD rates, you might want to set a shorter or longer time for it to be locked into your account.
So let's say you learn about Discover Bank's current CD rates; you like them and the interest they would accrue, so you sign up. You drop in about $5 000 and set it for two-and-a-half years.
Then the recession hit. Maybe you already had a savings account that you blew through, using it to supplement the ongoing bills or other expenses. Maybe, heaven forbid, there was a major emergency; there's been a lot of turbulent storms and calamities in the world for the last few years and it is always very important to be prepared for such events.
A CD could be a great way to cover yourself should the worst happen. The one thing you shouldn't do is keep pulling money out every time you need it.
As mentioned, there are consequences if you pull out your money before it matures; sometimes you get penalised by a hefty fee, or maybe you get some of the interest you've gained taken away from you.
But could the current CD rates actually help people recover in this 'recovery' time?
They could, if used right. Again, just like a savings account, CDs are most often used to set aside money for big purchases, such as a house or holiday or university fees.
But they can also be used to, say, get someone out of debt or at least make some of the debt subside. It's not a cure-all by any means, but if you had money in a CD and you now have $3 000 in debt, theoretically you could use the CD money to pay off debts to that amount and put the rest in a savings account.
And that's how CDs will help - it's really about the savings mentality. Before the recession, a good portion of people had savings accounts; after the recession, no one did because we all dipped into ours in order to stave off creditors or pay bills.
But with savings or investments that will help in keeping our money for bigger and better days, our confidence grows and we're more likely to want to buy things. Buying things helps the economy and when we have a thriving economy, we have growth.
And with a growing economy, consumers begin to spend, businesses begin to hire, and job seekers get to diversify and improve their employment options.
- Fin24
*This guest post is by freelance writer Sara Stringer, who most often writes about personal finance.
