No doubt, you have heard investment professionals say, "Invest for the long term." But for many, having quick access to cash to pay bills and other unexpected events with little or no loss in principal seems like a smarter option.

A few years back when banks were only paying around one to two percent it made more sense to keep your money under the mattress. Today, with more Banks competing for deposits some are willing and do pay higher interest rates for your cash. We have provided some ideas for placing your cash where it is safe, and where you can have access to it easily and the returns aren't bad either.

Bank certificates of deposits (CDs)

Banks are in business to make money they take in deposits and pay relatively low rates and then lend them out for longer periods of time and charge higher rates. When you purchase a CD, you invest in a fixed amount of money for a fixed period of time – one month, three months, six months, a year, five years etc. In return, the issuing bank pays you interest at regular periods.

If you cash in your CD before the end of the fixed period, known as the maturity date, you'll probably lose some of the interest that you would have earned, so before you tie up your money in a CD make sure you know what and how much those charges are.

Money Market Mutual Fund

There are some local brokerage/investment houses that offer money market funds. Money Market funds are a type of mutual fund with very easy access to your money (usually on a weekly basis) and they offer a higher rate than the savings and or CDs.

Mutual funds are a popular investment for many types of investors because they offer a convenient, cost-effective and easy way to invest in the financial markets. The idea behind a mutual fund is simple: Many people pool their money in a fund, which invests in various securities. The overall risk is reduced through diversification and active management by professional money managers

There is one distinction between the bank deposits and mutual funds. Banks are required by law to have a certain amount of insurance on their deposits, but investment management companies are not. Meaning that you can recover some or all of your money if the Bank fails, this is not the case with investment houses.

Other Alternatives

If you do not need to access your money immediately, but you need to feel confident that you aren't putting it at serious risk and you also want to make a decent return consider the following options;

Bonds

In one word a bond can be defined as a loan. Bonds are considered to be one of the safest forms of investing. When the company or entity offering the bond (usually referred to as the issuer) wants to raise money, they offer bonds and they are then contractually obligated to not only pay back the principal amount borrowed, but also as a reward for lending your money, you will also receive interest payments, twice per year. In the Bahamas, the Government is usually the biggest issuer of Bonds. Call the Central Bank for more information.

A Bond Fund

Bond or income funds invest in the bonds of governments and corporations. They operate the same as a money market fund but the time frame for you to be able to get your funds is longer, normally a month, however the return paid on a bond fund is higher as well. Before you invest in any mutual fund be sure to read the prospectus. A prospectus is a legal document that details the fund's investment objective and policies. It also outlines the risks, expenses and fees associated with investing in the fund.

Please send questions and or comments to info@cfal.

com.