I have a few savings bonds from my childhood that I’m not sure what to do with. I’m tempted to invest, especially with the Gamestop news recently, or do I plan that epic vacation I want? What’s best? —Heidi, 36, RI What a great gift to have gotten in childhood! Based on your age, the interest you’ve earned on those was probably pretty good. Savings bonds issued in the mid-1990s were paying about 4 to 6 percent interest—quite a bit more than newly issued savings bonds are paying right now. That’s a good reminder of how interest rates can shift over time, and helps illustrate why it’s a good idea to spread the money you invest across a diverse mix of stocks and bonds, including both corporate and government bonds. I’m so glad you asked about investing in the stock market! As I write about in my new book, “Think Like a Breadwinner,” research shows that women tend to invest less and later than men do in the market, which means we may miss out on a lot of potential growth. Most women are not taught how to invest and build wealth—or even given the message of how critical it is for us to do so. While we may be encouraged to save a little for a rainy day (or a future vacation) and some for retirement, that leaves out all the decades in between. RELATED: Is Pandemic Parenting Stealing Your Joy? Fully Charged Life Author Meaghan Murphy Has Advice That became clear to me in my early 30s, and it completely transformed the way I approached managing my money. Within a few years, I’d taken steps to significantly increase my salary and had saved and invested enough to put down most of the down payment on our home and to feel confident that we could afford to have and raise a second child. Within a decade, my husband and I reached a seven-figure net worth. In my book, I share my story and lessons learned, alongside those of more than 100 women I interviewed, plus insights I’ve gained as a longtime financial journalist, co-author of two other personal finance books and Chief Education Officer at the saving and investing app Acorns. Investing for those mid-term goals is so important. The more you’re able to invest and grow your money, the more choices you have in the future. There’s nothing wrong with using some of the money from those savings bonds for an epic vacation. But one of the greatest gifts you can give yourself is to invest at least some of the money so that it can grow even more and allow you to afford more of what you want in the future, too. Rather than trying to guess what the next Gamestop may be (and keep in mind that it’s well below the highs it hit earlier this year), a better bet is usually to invest in index funds that capture much of the market—like an S&P 500 index fund, for example. That allows you to gain exposure to hundreds of companies so you’re not too dependent on the future of any one particular stock. On average, over the last nearly 100 years, the S&P 500, which is often used as a proxy for the stock market, has returned about 10 percent per year or about 7 to 7.5 percent after inflation. (That is an average: some years the market has gone down and others it’s gone up more—last year, the index was up about 16%.) With that kind of average return, you could potentially double your initial investment in under a decade! And that could pay for a lot more epic vacations. Next, read inspiring life quotes.
