How do I Safely Invest My Money?

Invest safely and your money stacks up over time.

Invest safely and your money stacks up over time.

Investing your money, also known as asset allocation, should begin with assessing your tolerance for risk. Some people weather the ups and downs of the stock market or have no problem purchasing real estate in an unsure economy. However, if you want to invest your money more safely, you have several options beyond stuffing dollar bills under your mattress. Remember that you should not invest any money if you still carry high-interest debt, because the interest you pay most likely exceeds any interest you would earn on your investment.

Study your financial records to determine your budget for safely investing. Once you know your income and expenses, you can set up an automatic withdrawal from your checking account to place in the investment vehicle of your choice.

Establish a savings account. Over the long term, funneling money into an account fully insured by the FDIC or NFCU constitutes your safest investment. Research credit unions, local banks and Internet banks to locate a high-interest savings account or a money market account. Note that accounts that yield higher interest may have minimum balance and transaction restrictions.

Add a tiered certificate of deposit savings plan to your investment portfolio. In a shaky interest rate environment, your best hedge against losing money on a CD with low interest is to invest in a few different types. For example, you might place 1/3 of your money in a one-year CD, 1/3 in a six-month CD and another 1/3 in a three-month CD. When your CDs mature, you can seek out the new highest CD rates and terms for reinvestment.

Diversify your investment portfolio. You pay for keeping all your money in extremely safe vehicles. The low interest you earn means that you most likely will ultimately lose money when you account for inflation. Hedge against this by setting aside a small amount of money, such as $25 or $50 per month for a slightly riskier investment, such as your workplace's 401(k) and retirement accounts that offer tax benefits and employer-matching.

Open a money market mutual fund to absorb any extra income that you can eventually liquidate for a house payment or other major purchase. Money market mutual funds do not have FDIC insurance, but they invest in cash-like vehicles that carry little risk, such as treasury bills and bonds.


  • Track your income, spending, savings, interest and capital gains using a budget spreadsheet or an online budgeting worksheet.


  • Avoid checking your investments too frequently, which can make you obsess over every market fluctuation.

About the Author

Nina Makofsky has been a professional writer for more than 20 years. She specializes in art, pop culture, education, travel and theater. She currently serves as a Mexican correspondent for "Aishti Magazine," covering everything from folk art to urban trends. She holds a Bachelor of Arts in English from Mills College.

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