(3) Cash Investments
It is the best retirement investment options with very low levels of risk to the invested money. Cash investments are short-term obligations, usually less than 90 days. It provides low returns in the form of interest payments.
This is one of the safe & secure investment option that is often FDIC (Federal Deposit Insurance Corporation)-insured. The FDIC was originally created in 1933 to insure public deposits in U.S. against bank failure.
It is usually done to maintain public confidence in banking sector as well as to encourage overall stability in financial system. Generally, cash investments are easy to redeem & provide small return to the owner.
You just need to approach FDIC-insured banks along with necessary documents. Once you open a cash investment account of your choice, you can start receiving interest against your deposited retirement funds.
Some of the best cash investment options include:
(a) Certificate of Deposits (CDs)
It is FDIC-insured best retirement investment options that pays a specified rate of interest over a defined period of time. The bank will repay your principal amount at maturity date. It may range from 1 month to 5 years. But, on early withdrawal, you have to pay some penalty.
(b) Guaranteed Investment Contracts (GICs)
It is a form of insurance contracts without FDIC-insurance that guarantees fixed or floating interest rate for set period of time along with repayment of principal amount. It is a popular investment option for 401 (k) plans.
(c) Money Market Deposit Accounts (MMDAs)
It is FDIC-insured savings account with a competitive rate of interest for maintaining larger-than-normal deposits. However, it is having higher minimum balance & some restrictions on the number of transactions allowed per month.
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