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Indexed Interest

Getting the highest gain without the risk of loss

Investing allows your money to grow over time and helps you build wealth. It involves putting your money into assets like stocks, bonds, real estate, or mutual funds, IRAs and annuities with the expectation of earning a return.

Assess your risk tolerance before investing. This refers to how comfortable you are with the potential fluctuations in the value of your investments. Younger investors may be able to take on more risk, while those nearing retirement may prefer more conservative investments.

Diversification involves spreading your investments across different asset classes to reduce risk. By not putting all your eggs in one basket, you protect yourself against significant losses if one investment performs poorly.

Consistent investing, such as through dollar-cost averaging, helps reduce the impact of market volatility. By investing a fixed amount regularly, you buy more shares when prices are low and fewer shares when prices are high.

Investment interest is typically tied to the stock markets and money can grow in three ways.

Fixed – Safe known return rate, offered by banks. This is the lowest performing option (1-4% APY) that is not able to keep up with inflation, but it is predictable. 80% of the people have their money here.

Variable – Volatile method that involves stock market speculation and caries a notable risk for the value of the investment. Best used for long term investments that rely on long term trends that typically have a good potential for growth. 15% of the population have some money here. Remember that in 2008 there was a market crash caused by a collapse in the U.S. housing market that resulted in an average 42% loss, would have been a bad time to be drawing retirement income. It took America 8 years to recuperate the loses.

Indexed – A strategy where money is protected from losses during a stock market downturn. Protected by a “floor” that ensures the investment value never goes down. 5% of Americans (mostly the wealthy) put money here. Warren Buffett (wealthy American investor and philanthropist) is a huge advocate of indexes instruments.

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