Posted on September 3, 2019 Last Updated: May 18, 2021
By most measures, the United States economy is perking along just fine. Nevertheless, many experts are seeing signs that indicate an economic downturn could begin as soon as 2019. The signs include new cash from tax cuts which are traditionally incompatible with a strong economy; trade wars—the stock market hates tariffs which can eat into company profits; and record debt.
Are there too many warning signs to ignore?
Some economists think so and are even questioning whether the federal government was too slow in raising interest rates which can sometimes help slow down an economy that’s moving too fast.
Simple steps to safeguarding your money
To prepare for a market downturn (not to mention the rising unemployment and inflation that could proceed or follow it) and guard against a loss in the value of your stocks, here are three sleep-better-at-night investment options:
1. Savings and checking accounts
At a very basic level, regular checking or savings deposit accounts through a credit union or bank, like KEMBA Financial Credit Union, will protect your money and insure each of your accounts up to $250,000. Some institutions offer additional coverage such as our own Excess Share Insurance. To be sure, interest rates on deposit accounts tend to look modest when compared to some of the more aggressive (and riskier) common stocks. Then again, the point in checking or savings accounts is less about growth and more about safety and convenient access to your money. It should also be noted that many credit unions, including KEMBA Financial, typically offer higher interest rates for both checking and savings accounts. Conversely, most run-of-the-mill banks offer little or nothing in terms of interest on checking accounts and lower interest rates on savings accounts than those of credit unions.
2. Money Market accounts
A KEMBA money market accounts turn up interest rates on your money without turning down access to it. Money Market accounts are also insured by the federal government for up to $250,000 or more. But, for that higher interest rate, there are some restrictions. For one thing, the government-backed insurance requires that limits be set on the number of transactions and transfers per month. You may also need to maintain a minimum balance, typically $1,000, and there’s a penalty if you let it slip below that minimum. Really, it’s best to think of a Money Market account like a long-term savings account that you won’t touch for a while.
3. Certificates of Deposit
If you’re willing to take a “set-it-and-forget-it” approach to your investment dollars, say for three months or as many as six or seven years, Certificates of Deposit (CDs) offer higher returns than traditional savings or Money Market accounts, and still provide a large measure of safety. Certificates are insured and work like a loan that you make to your bank or credit union. The bank or credit union uses your money for a set period of time and pays you back with interest at the end of that term. If you tap that money before the end of the term, you may pay a penalty.
To learn more about safer investment options, or for current rates on any of KEMBA Financials’ traditional Savings and Money Markets accounts or Certificates of Deposit, contact a Member Service Representative at 614.235.2395, option 4. Deposits at KEMBA are federally insured by NCUA, and Privately Insured by ESI.