So many times we are asked for our thoughts on investing versus saving for convenience. If you have money in a savings account, you will undoubtedly be disappointed in the approximate 1% return available across banks, savings & loans, and credit unions.

The best advice is to focus on paying off debts first. Almost all debts have an interest rate much higher than 1%, which means you’ll get a much better return on your dollar by making an early debt payment. The only catch is that you won’t see that dollar again until the loan is paid off. Paying off debt essentially locks up your dollars, and your returns won’t come until your debt is paid off early. If you have a choice, invest to make more than the amount of interest you are paying on that debt. If it is a credit card with a rate of 6% or more, pay it off! If you have a low-interest mortgage or other debt at 4% or below, it makes sense to invest. Low rates are here for the short term, but not forever.

Other options that allow you to still be able to access your money have other problems. If they’re stable investments, they’re usually pegged in some way to those Federal Reserve rates cited above, meaning you’re not going to get a great return. If they’re risky investments, you’re taking a risk that you’re going to lose some of your balance. We are happy to help you work through the best plan depending on your situation.

The best bet is to keep a healthy emergency fund in a stable, easy-to-access savings account. Then, if you don’t have any debt, start exploring other investments, preferably well diversified low volatility stock and bond investment funds that offer quarterly or monthly income payments and whose principal will grow at a rate greater than the savings rates available today.

There are plenty of ways to invest in a safe income-oriented way. The important thing is to review your needs so a plan can be made that fits your particular circumstances. It’s not the mutual fund or investment plan itself that gives you the highest probability of success – it’s making the plan that fits your particular needs best. Most important is understanding the timeline of income and investment funds so that as the investment market has swings, you are prepared for staying on track with the plan. Being prepared in advance for the risks involved with investments allows you to be well prepared for any turbulent weather along the way. A well diversified and managed investment plan yields big results and allows your money to provide the income and long term gains you deserve.