the experiment begins with HERstory
A "good" saver
I consider myself a good saver and someone who makes smart decisions when it comes to saving money. To boost my savings, I opened a Certificate of Deposit (CD) in 2022 that offered a 3.85% annual percentage yield (APY). I considered it a "smart" move because I was getting a much better interest rate than my high yield savings account. However, a recent conversation with a financial planner also made me realize that "investing" in Certificates of Deposit (CD) may not be the most lucrative investment plan for the long term.
Everyone loves the 80s
The 1980s may bring memories of neon, big hair, and cassette tapes. But certificates of deposit (CD) were also totally epic! According to BankRate, in the 1980s, you could get a one-year CD with over 11% APY. Forty years ago, a CD was a safe and lucrative investment. Thanks to recent interest rate hikes, CDs are a better investment than they just were a few years ago. Even still, since that conversation with a financial planner I was thinking I could possibly earn more.
Inflation
Unfortunately, the inflation we experienced over the past few years was not what I anticipated. Based on the US Inflation Calculator website, the average inflation in 2022 was 8%. I live in Arizona and one report stated that inflation in the Phoenix Metropolitan area in June 2022 was at 12.3%! At this rate, I am losing money that I thought was safely “invested”. When interest rates drop, having money locked into a CD is a huge bonus. However, I didn’t anticipate that just a few months later, I could open a CD at 5.00% APY or I could have left my money in my bank account which now offers 5.25% APY.
My head was spinning
I started to investigate brokerage firms, robo-advisors, mutual funds, index funds, exchange-traded fund (ETFs), individual stocks, and more. There are a ton of firms out there offering amazing opportunities, but which one do I trust with my money? Which firm will give me the best return, particularly if they also charge a fee?
Review some important reminders before investing.
So many choices
I imagined that I was not alone in wondering where to start. I am not a financial planner, I have no financial training, nor am I able to provide investment advice. However, the one thing I can tell you based on all the reading I have done is just start investing. At the same time, that is a big ask when we have limited money to invest. So, now what? I decided to experiment.