Let me also add one more thing that is certain .. "inflation". Things just keep getting expensive!!. Inflation is a hidden monster that eats away at your savings and investments. If you are conservative with your money its not going to grow fast enough to keep up with inflation. Savings and checking accounts offer low interest rates and although your money is safe it just doesn't grow fast enough.
Investing in stocks and mutual funds through 401K and IRA may make your money grow, but those are long term investment plans for your retirement and your money is kinda locked in and cannot be withdrawn without penalties, also your money can go down in value as these are after all stocks & bonds controlled by the free market and general economic conditions.
What you need is an investment vehicle where your money does not go down in value and its not locked in and grows at a rate that factors in inflation. Enter TIPS.
TIPS stands for Treasury Inflation Protected Securities. These are securities sponsored by the US Dept. of Treasury (aka Government). You can buy and sell them in the open market and the value of these securities is indexed against the inflation index so that when there is inflation, the principal goes up and when there is deflation (very rare), it goes down and the best part is that if your principal goes down in value, the US govt will give you back your original principal. You can never lose money this way. Your money is not locked in unlike traditional savings bonds, 401Ks and IRAs (which have a maturity date). You get paid interest twice a year with TIPS and you get paid interest on the inflation adjusted principal.
Some might say that TIPS are like CDs, high interest savings but they are not. CDs lock you in. High interest saving accounts expect you to have a minimum balance maintained, plus none of these are adjusted for inflation.
