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One of the most stressful financial scenarios facing people today is the prospect of saving for a house or college. Both purchases require lots of flexibility in your bank account and years of savings to hit your goals. 

Rather than squirreling away your cash in a savings account, you might have better results reaching those financial goals with bonds. From higher returns to more liquidity in investing, there are so many benefits of investing in bonds.

What’s there to know about the process of using bonds to save for a down payment on a house (or put money away for college)? Here’s a crash course on how Worthy bonds can help you achieve the life you want to live. 

Why Use Bonds for Long-Term Goals? 

When most people think of investing, their minds jump to the stock market. However, bonds may be the better option for a long-term savings goal – and for good reason! 

Everyone should have a savings account to cover a few months’ living expenses and provide a buffer against emergencies. But the interest you earn can’t really be considered “investing,” and parking all your cash in a savings account just won’t grow the way you need it to. While you might feel like your money is safely tucked away in savings, those returns don’t usually outpace inflation (which means you’re actually losing money over time).

Stocks may not be the ideal answer for college or a down payment, either. Consider the risk of putting your money into a volatile stock market. What would you do if the market crashed right as you were preparing to make the move to pay for your first home or college education? Those losses are only realized if you sell, so you’re left with a choice: sell at a loss for the sake of your timeframe, or push off your plans and wait for the market to recover. 

With private corporate bonds, you never have to worry about the market conditions. Instead, bonds allow you to enjoy consistent returns over time and recoup your initial investment. Your money is there when you’re ready to make a big purchase, especially if you look for demand bonds like Worthy bonds. Plus, bonds return better interest rates than a typical savings account, helping your funds outpace inflation and grow your nest egg in a way that savings alone can’t offer. 

How to Save for a House or College Using Bonds

Are you ready to take a deep dive into how you can start saving for a house or college using this savvy investment move? Here are three top tips to help you make the most of your bonds. 

Look for the Best Rates

The amount of money you can earn in interest directly depends on the rates a particular bond offers. Every bond is different and there are lots of variations between the types of bonds such as Treasury or corporate bonds. You should also look for high-yield bonds that feature competitive rates and compound interest instead of simple interest to grow your initial investment. 

Worthy bonds are a higher return option compared to Treasury bonds. While Treasury bonds are extremely secure, they often come with substantially lower rates and far-off maturity dates. If you want to earn more, we are proud to offer 7.0% Fixed APY on Worthy bonds. This is far higher than you could earn than even the best high-yield savings accounts!

Consider Maturity Date

Some bonds lock you into a maturity date. This means that your money is tied up until your bond reaches that date, making it inaccessible (or requiring you to sell at a discount) when it comes time to pay for college or a down payment on a house. You’ll have to make an educated guess on the number of years that stand between you and when you will need that money so that you can choose a bond with a maturity date that aligns with your goals. 

The alternative is to look for demand bonds like Worthy bonds. You can sell them at any time, but it’s better to hold onto them for longer periods when you can. The longer you hold a Worthy bond, the more interest it accrues. 

The liquidity and stability of bonds are one of the best parts of using them to save for a down payment or college education. 

Set up Recurring Bond Purchases

Investing in bonds isn’t necessarily a one-time thing. Most people who are serious about using this method to save for a major purchase (or their own retirement!) will grow their stash of bonds over time. Worthy has a system worked out to help you do this without requiring you to lift a finger through our Roundup feature. 

How can you stash away spare change to build your savings? Think of it this way: You spent $13.49 on dinner at the Thai restaurant down the street. Worthy will round up your bill to $14.00 and put the additional $0.51 toward a new bond purchase. Once you reach $10.00 in “spare change” roundups, you’ll automatically purchase another 7% interest-earning Worthy bond!

Chances are you won’t miss that money and you’ll have a greater head start on your savings. 

Invest in your future every time you buy a latte, a new sweater, or gas for your car. It’s one of the simplest and easiest ways to build your savings without affecting your lifestyle

Pave the Road to Success with Worthy Bonds

Use our calculator to see how Worthy bonds can help you reach your goals of saving for a house or college. All you have to do is plug in your initial investment, any bonds you intend to auto-purchase, and how long you plan to hold them. Let us do the rest of the heavy lifting to see the impact on your plans to buy a house or pay for college. 

If you’re ready to start investing today, sign up for Worthy and buy your first bond for just $10!

Dara Albright
Post by Dara Albright
March 11, 2024
Dara Albright is a fintech pundit with distinct expertise in digital and decentralized finance. She possesses a distinguished 32-year career in financial services encompassing IPO execution, investment banking, trading, corporate communications, financial conference production as well as institutional and retail sales. She is the host of the Decent Millionaire podcast, an episodic podcast series that helps people discover the unprecedented wealth creating potential of decentralization, web3 & Participate2Earn Economics, and is the co-founder of DWealth Education, a learn-2-earn EdTech platform designed to bridge digital asset literacy gaps in corporate, government and academic sectors. Albright serves on multiple boards including Worthy Financial, a scaling fintech enterprise and ICAN (Investor Choice Advocates Network), a nonprofit public interest litigation organization serving as a legal advocate and voice for small investors and entrepreneurs.