While a great many people today try to save money for their retirement or for a rainy day, there can be a great amount of variations that people use to save their money. Because current interest rates are low, traditional bank savings accounts often provide little interest benefits for people in today’s economy. Because of this, it is important to look at better ways to make money on a person’s savings.
While most people like to have their money always secure, often the best way to have money make money is not through a bank account but through investing the money in a higher profit investment market. While some forms of investing can be quite risky such as buying unknown stocks, there are other forms of investing that can prove to provide a sound avenue for investing cash for a decent return.
The typical savings account, while a secured place for money only offers a nominal percentage of interest on savings, usually under 2% annual return. This is true even on CD’s (Certificate of Deposit’s). Because of the low return rate, it makes bank savings accounts a poor place to place investment or retirement money. That is why sound investing is a far better strategy for earning money on savings and retirement funds.
Types of Investment
For people who have a little extra money to invest, there are many great investments out there that can help a person prepare for retirement or build a great financial reserve. While many people invest in real estate, stocks, bonds and trading options, there is another great investment opportunity for people known as forex trading.
What Is Forex Trading.
Forex trading is a unique form of trading different forms of currency. This can include the trading of foreign currency for the American dollar or vice versa. This can include investing in precious metals such as gold and silver. The basic idea of Forex trading is to buy a foreign currency or precious metal at a lower rate and then sell it at a higher rate when its value goes up. This is quite similar to investing in stocks.
How The Profits Work
As an example, the Canadian dollar is usually valued less than the American dollar. However, the rate of exchange value on the Canadian dollar can rise or fall. If a person exchanges $100 U.S. dollars for Canadian dollars today they would get $125 in Canadian money at a .7996 per U.S. Dollar exchange. But if a person had bought $100 dollar’s worth of Canadian money in May of 2017 when the rate was 0.72 per dollar, they could have bought $139 dollar’s worth of Canadian money. That means for every $100 dollars invested a person would be able to trade in their $139 Canadian money today and get $111.00 U.S. Dollars. That is a profit of 11% in five months. If the person had invested $1000 U.S. Dollars they would have made a $110.00 profit in five months.
In contrast, when looking for a return on investment with a high rate bank CD for 6 months, a person can currently yield a 1.62% interest gain. That means for the person who bought into the foreign currency from the Canadian dollar achieved a 9.38% interest yield over putting their money in a CD for 6 months.
When analyzing currency data, it can seem as if it would be difficult to understand how the fluctuation works in trading currencies. However, the basic exchange rate overview makes understanding it rather simple. Forex trading is much like the stock market when it comes to gains and losses. The rates change throughout the day and they do have charts that show the highs and lows of the currency based on the day, the week, the month and the year.