So, I’m a little in love with Worthy Bonds, and I want everyone I know to sign up for their services using my link so we both get a free $10 bond, but I’ve realized – this means I need to convince you to buy even $10 worth of bonds.
First, Manage Debt
The first few financial priorities are likely the same for most of us: pay off debt (student loans, I’m looking at you), save up at least a few months of living expenses, then worry about more complex goals like investment, real estate, and eventual retirement.
In fact, some of my favorite people have financially… pessimistic… outlooks: I‘ll never pay off my student debt, so anything beyond that is hopeless.
You should focus on getting out of debt, especially if any of it is high-interest. You should focus on spending less than you bring in. (The two basic approaches to this are spend less, or earn more.)
But once you can breathe, once you’re spending less than you make each month, you should expand your goals to include 3-6 months of emergency living expenses.
This needs to be highly liquid, or easy to get to in case of emergency. Perhaps a savings account.
The very best banks–generally online savings accounts–offer around 1% interest, these days. My preferred bank, Ally, is currently around 1.1%, but emails me with every change. Checking accounts are even worse, generally earning under 1% per year.
The reason that even 1.3% interest kind of, well, sucks is inflation: if money decreases in value every year, money stuffed under the mattress will be perpetually worth less. If inflation averages around 3%, then we need an interest rate to at least match that, or our money is deflating.
The stock market averages around 7% over the long-term, after inflation. But that means some years stocks earn 10%, and some years they earn 1%–before inflation. Stocks are the best choice for money that you won’t need for decades, but what about money you’re saving for 5-10 years from now?
Enter Certificates of Deposit. Agree that you won’t withdraw your money (unless possibly with hefty fines) for a certain period of time, and earn higher interest.
Wait, no: Ally is currently offering a 5 year CD at 1.15% annual interest. That’s still below inflation.
Let’s Try Bonds
Enter bonds? Government bonds are currently paying around 2-4% interest, depending on the length of time to maturity. I’ll admit I don’t entirely understand how or where to buy government bonds, but as I learn, I’ll share.
Worthy Capital, the company who issues Worthy Bonds, is currently offering 5% interest, and has no plans to ever change that amount. Come hell or high water, excepting the company going under, 5%.
That’s incredible, in this day and age.
They offer loans to small businesses, local businesses (well, local to someone!), and charge more than 5%. Therefore, they can pay out 5% calculated daily and still profit.
Technically, a Worthy Bond is a 3 year bond. However, the company makes it possible to cash out at any point, without any fees. The simplicity is just one more reason I’m in love with this company.