Oh, dear. What does it mean when there are police officers poking sticks into the ground in your back yard? In the case of a New Jersey woman, it means she's not the world's best investor.
It seems that the woman arrived at her local police station to report that some money she'd buried in her yard had been stolen. It wasn't a small sum, either -- it was $50,000. Officers were dispatched to see whether by any chance it was still there, and it was. She had simply forgotten where she'd buried it in 2001. (It seems that squirrels also forget where they bury their treasure.)
If this woman had learned more about how to manage her money, she'd probably have been in better shape, and surely less embarrassed. Here are some things she may be wishing she'd known:
- Parking money in your yard or under your bed will actually cause you to become less rich over time. That's because inflation is usually at work, making our dollars weaker as the years go by. If you sock away $15,000, enough to buy a decent new car, it might be able to buy you only half a decent new car in 10 or 20 years. If you find a dollar in the coat pocket of your long-departed grandpa, that dollar might have been able to buy him a nice, full meal at a diner. Today it will barely cover a bagel at many eateries.
- It is important to save money for a rainy day, but the best places for that should pay some interest -- ideally enough to cover the effects of inflation and then some. Our Savings Center offers much more guidance on this, including some special interest rates for Fools.
- If her $50,000 wasn't money she'd need within a few years, she might have considered investing it for the long run in stocks. If she'd been invested in Dell (NASDAQ:DELL) since 2001, she'd have increased the value of her holding by about 40% ($50,000 would have become $70,000). If she'd plunked it into the Washington Post Co. (NYSE:WPO), it would have grown by 60%. Of course, not all investments always go up. Over the same period, shares of KrispyKreme Doughnuts (NYSE:KKD) dropped by at least 50%.
If you've got money you need to put to work, look into long-term investing in the stock market. Our Broker Center can help you learn what to look for in a good brokerage as you get started.
Instead of planting money in your back yard, try some lovely flower bulbs. They can reward you year after year, and it will be hard to forget where you planted them.
Longtime Fool contributor Selena Maranjian owns shares of the Washington Post Co.
