Do you prefer to save or invest your hard-earned money? Currently, the national average interest rate for saving accounts is 0.06%. The national average for Certificate of Deposits is 0.19%. (except new money promo rates). The long-term US inflation rate is 3.23%, and from October 2020 to October 2021, the annual inflation rate is a whopping 6.2%!
Why does that matter? even though you see your funds sitting nice and pretty, you lose purchasing power thanks to inflation. So, are you saving money?
Now, if you invest your money, whether it is in real estate, stock market, starting a business, it comes with higher risks. The average return on investment, ROI, for real estate is 8.6%. The average ROI on the stock market is 10%. For small businesses, the ROI varies from 7-15% on average. These are conservative numbers, and many have done much better and much worst.
The preferred choice boils down to the individual appetite risk, knowledge, and access or need for liquidity. If you need access to funds to pay your obligations and have little to nothing left, then you can not save nor invest. For those with extra funds, I would encourage you to find a financial vehicle that will give you a higher return than the long-term inflation rate, at least!
If you choose the business route, contact us so we can help your business grow digitally!
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sources: ycharts
