What Makes Your Savings Secure?

Many people think of "secure saving" as simply making sure to use an institution that is FDIC secured and trustworthy.  Unfortunately there is much more to making your savings secure than simply protecting them from fraud or default.  There are many forces at play in having a secure savings plan and protection from loss is only one of them.

The Power of Inflation

Inflation is a particularly relevant concern right now.  Unprecedented measures have been used by not only the United States government, but governments all over the world, to combat the financial crisis.  While the outcomes of these measures are far from certain, it is very realistic to think that inflation could be a very real threat.  Even if it isn't today it very well could become so in the future.

When we think about "security" we worry about the actual loss of our funds, but we also have to be concerned about inflation eating into the value of our money.  If we are only earning one percent on our savings, while inflation is decreasing that same money at a rate of three percent per year, we're actually losing money, despite the fact that the number of dollars in our account is going up.

Many Other Concerns

Besides inflation, there are many other reasons to be concerned about your money.  If you are not getting the highest rates on your savings around you're simply letting money go out the window.  You need to be aware of the opportunities you have with your money and not let them pass you buy.  Earning three percent on your money when you could be earning five percent is leaving money on the table.

In the end, education is the key component of making your savings plan sound and secure.  With interest rates historically low and a bewildering array of options, it makes sense to know all the possibilities.  Make sure you know everything you could be doing with your money and that you're picking the right options for your level of risk.