Stocks had their best July in more than 80 years as the Fed raised interest rates again last month.
And after better-than-forecasted job growth numbers came out on Friday, expect more rate hikes in the near future as the Fed keeps working to reduce inflation without slowing the economy down too much.
What this means for your money: Interest rate hikes increase the amount you’re charged to borrow money (like from a credit card). Sometimes, the amount of interest you can earn from a savings account goes up, too.
Deciding how to save and invest your money? Let’s dig deeper.
Which person do you think will have the best returns in 30 years?
Two hypothetical people have committed to putting $150 a week aside for their futures.
The Investor puts $150 a week into the stock market for 30 years.
The Saver deposits their $150 a week into a savings account for 30 years.
Answer: The Investor is projected to perform the best — in 30 years, assuming 8% annual returns, they could have over $900,000.
The Saver could end up with about $240,000, assuming an average 0.07% APY (annual percentage yield, aka annual rate of return).
The stock market won’t return 8% every year — some years, it could return more, and some less. But historically, it’s provided significantly higher returns than savings accounts over time.
Savings accounts are great for a rainy day, when you need money fast. Consider setting a savings goal of at least 3 months’ salary. Allocate some of your monthly budget to savings until you reach your goal. Simultaneously, allocate money to investing for the long-term, so you don’t lose time in the market you can’t get back.
A Recurring Investment makes it easy. Invest money every day, week, or month, without even thinking about it.
This material has been presented for informational and educational purposes only. The views expressed in the articles above are generalized and may not be appropriate for all investors. The information contained in this article should not be construed as, and may not be used in connection with, an offer to sell, or a solicitation of an offer to buy or hold, an interest in any security or investment product. There is no guarantee that past performance will recur or result in a positive outcome. Carefully consider your financial situation, including investment objective, time horizon, risk tolerance, and fees prior to making any investment decisions. No level of diversification or asset allocation can ensure profits or guarantee against losses. Article contributors are not affiliated with Acorns Advisers, LLC. and do not provide investment advice to Acorns’ clients. Acorns is not engaged in rendering tax, legal or accounting advice. Please consult a qualified professional for this type of service.