Whether you are planning to retire or just want to protect your funds, finding a reliable long-term investment often means comparing a certificate of deposit in different institutions. The frequency of CDs is usually low, and many plans end up following surprisingly close inflation. In other words, a portfolio with modest certificates of deposit may grow in dollars, but not the actual value. It’s better than just burying your money in a hole, because $ 500 will cost significantly less in a few decades. A bottle of coke that once cost nickel can now cost a dollar or more, and it’s not as if the ingredients have gotten much better.
Until you get to the point of comparison of certificates of deposit in different banks and credit unions, it is important to remember the big picture. Not only will inflation reduce the impact of any profits, but withdrawing money earlier will usually mean penalties. If you find that you are stressed by comparing all the details of different options, remember that some things in life are more important.
Invest in time, not just money
If you spend two full weekends just comparing plans online and talking to investors, you’ve already made a significant investment. How many dollars an hour does your free time cost? Assuming you work full time, these hours in the evenings and on weekends are even more valuable. If you had to pay for overtime for hours spent researching and comparing financial opportunities, would the information you receive cost so much money?
It is difficult to “invest” time in a way that seems useful in terms of hourly wages, but “saving” time is more intuitive. If you need a whole portfolio of managed funds, then why not hire a professional? They may charge a high hourly rate, but you also benefit from their many years of training and experience.
Cultivating a wealth of experience
As any advisor will tell you, the best time to start saving is always now – the sooner the better. But earning money for set-aside means either extra hours of work or previous experience in the short term. Sufficient funds can be set aside through small lifestyle adjustments, such as packing lunch and restricting one’s purchases at will, but zealous pinching of pennies can also go too far. If you give up every opportunity to see your favorite band at a concert or trade all your vacation days for extra hours, then you may be overemphasizing savings. In the immortal words of the constant mentor of the Balu Jungle Book, “If you behave the way a bee acts, no, you work too hard.”
The inability to plan for the future is irresponsible, but there is a time when any hobby or project can get out of hand. Remember the general picture and when you find yourself comparing a certificate of deposit in twenty institutions, consider simply hiring a financial advisor. There are better ways to invest your time and money that allow you to enjoy life between now and retirement.