Buying Peace of Mind: Simple Investments That Can Ease Financial Stress

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There’s no way around it. To enjoy the best quality of life possible, you will have to take care of your mental health, and financial stress continues to be a leading cause of adverse mental health effects. Fortunately, by understanding how to deal with financial stress and how financial stress affects your health, there are plenty of steps that individuals can take to safeguard their finances and welfare.

A critical tool that anyone can benefit from is by using investments, but there are often several misconceptions surrounding the term. Yes, the stock market and real estate are great tools, but there are several ways to invest your money, lower debt, and create a stronger financial outlook for yourself.

Purchasing stocks alone can often be an issue due to various barriers to entry, but it also goes against the first rule of investment: diversification. It’s always a great idea to spread risk when investing by doing so through different means.

Overcoming financial issues may mean different things for each individual, but it is often a multi-faceted approach. Learn more about financial stress and mental health, practical ways to overcome financial problems, and where to get started investing in peace of mind.


Less than 40% of adults prepare for their retirement before the age of 30, which can lead to financial stress down the line. It’s important to begin planning for retirement as early as possible to help generate a larger nest egg that can help provide financial security down the line.

This is made possible thanks to compound interest, which is when you earn a return not only on the money you save but also on the interest you’re earning as you go. It’s a powerful financial tool that can help negate the effects of financial stress by growing your account with larger returns over time.

What causes financial stress is often a lack of planning. By creating and maintaining a financial strategy for your retirement, you can enjoy better peace of mind and make your money go longer than you would without taking the proper steps of planning for your retirement. This can be achieved by speaking with a licensed financial advisor, and one of the first steps within the process is to determine which type of retirement account is right for you.

Types of Retirement Accounts

Putting away money for your retirement is crucial, but the account you use will also play a large role in the outcome of your returns. There are different types of retirement accounts available, but the two major types can be broken down into the following:

  • Roth retirement accounts allow you to contribute without first reducing your income with taxes. Known as after-tax contributions, you can withdraw your funds after you are 59 years and 6 months old without having to pay taxes when you take out your money. Your earnings are also tax-free.
  • Traditional retirement accounts are also available and provide tax breaks for those paying into them, known as pre-tax contributions. By doing so, most avoid paying federal income taxes with earnings growing tax-deferred. But when you withdraw your funds, you’ll need to pay income taxes on the money.

Knowing the difference between these two accounts is crucial because not only does this affect your taxes, but your options also depend on your income. Some accounts have income-based contribution limits, which limit your contributions and affect how much you are taxed. There are also future tax planning considerations that can help you pay fewer taxes depending on what you believe your future tax rate to be.

No matter which route you take, there is a lot to consider. Each retirement account is in place to help different types of workers prepare for life after labor. Although age restrictions were removed in 2020, contributing to a retirement account may be restricted based on whether or not you generated income that year. Let’s break down the different accounts available and who fits within each category:


A 401(k)s are retirement plans that your employer sponsors. It’s set up by your employer, and employees can contribute to the funds, which is often done through stocks, ETFs, and other types of mutual funds. Many 401(k)s feature employee matching in which there is a limit in place, but your employer will match your contributions through the year to the limit determined by your account.


A 403(b) account, also known as a tax-sheltered annuity plan (TSA), can be found for teachers working in public schools, as well as tax-exempt organizations, including hospitals, religious organizations, and other non-profits. These plans will provide annuity contracts, an account invested in mutual funds, and a retirement income account as its potential assets.


Remember, you’ll need an employer of some sort and income to enroll in either a 401(k) or 403(b) account, but this can be an issue for self-employed workers. An IRA (individual retirement account) can be set up without an employer and allows you the ability to choose your brokerage so long as you earn income and contribute throughout the tax year. It’s a flexible option that allows a wide range of investment options and can be used to achieve specific retirement goals.


Another great option for preparing for retirement that is available to self-employed employees is the simplified employee pension (SEP) plan. This type of IRA is a great way to overcome financial stress by funding retirement with larger overall contribution limits. These contributions must be employer-based only but can be expensive to contribute towards. However, this may be a great option if you generate a high-income level and can be popular with small business owners. Additional conditions apply.

Health Savings Accounts (HSAs)

Dealing with financial stress means using all of the tools available, and if there is something everyone can relate to is covering the rising costs of healthcare. Health savings accounts (HSAs) are personal savings accounts that help you offset healthcare costs by saving money and withdrawing it without paying taxes so long as it goes towards the cost of your healthcare. Several types of HSAs or similar accounts are available. Here’s how they breakdown:

Traditional HSAs

A traditional HSA allows you to make contributions while being covered by qualifying high-deductible health plans (HDHPs). Various out-of-pocket medical expenses are covered, including ambulance rides, visits to your doctor, prescription drugs, etc.

For beneficiaries with Original Medicare, traditional HSAs are not available, but Medicare Advantage MSA plans are. By combining a high-deductible Medicare Advantage plan with an MSA, those eligible for Medicare can enjoy the same benefits as those saving through individual or employer-sponsored coverage.

This is an important consideration for Medicare beneficiaries looking to enroll in supplemental coverage on top of their Original Medicare benefits. Medicare Supplement (Medigap) plans are also available and may provide better coverage, but they cannot be enrolled in while you have a Medicare Advantage plan.

It’s also worth noting that Medigap premiums, while consistent and often affordable, can not be paid for with an HSA. However, when searching through Medicare Supplement companies and the different plans available, because your Medigap benefits pick up where Original Medicare benefits end, they can be the best option available for your healthcare and finances.

Flexible Spending Accounts (FSAs)

FSAs are also available and, while similar to HSAs, do have notable differences. An FSA must be used with an employer-established health insurance plan and is owned by your employer rather than you. Therefore, you either use the money or lose it when you leave your place of work.

Furthermore, you’ll typically need to use your funds before the beginning of the next year or risk losing them as well. Other restrictions apply, but they can be beneficial for those without access to an MSA or in need of flexibility, as your funds can be used for healthcare and a host of other expenses.

Health Reimbursement Arrangement (HRA)

An HRA is similar to an HSA in that both are plans aiming to help with the financial burdens of healthcare, but there are notable differences as well. For example, while you can own your HSA, like an FSA, HRAs are owned by your employer rather than you. HRAs also hold no cash value and have tax advantages that help cover healthcare expenses outlined by the Internal Revenue Service (IRS). Employers can also integrate HRAs with FSAs.

Life Insurance

Buying peace of mind goes beyond preparing for financial burdens within your lifetime and extends to what will happen to your loved ones after you’re gone. Funeral expenses alone can run $7,000, $8,000, or even $10,000+ on average, depending on your state, and financial stress can really take a toll when considering the loss of income for some households.

This is where life insurance comes in as a great tool to cope with financial stress. A life insurance policy can differ from carrier to carrier, but each is essentially an insurance policy between the policyholder and carrier in which money is paid as a benefit should the insured person pass away.

Some policies may even provide payment in the event of certain life events involving the death of the insured person, such as becoming ill with a terminal illness. In any case, each policy has a beneficiary, often a loved one or family member, that receives this payment upon the policyholder’s death.

Such tools are available and provide financial assistance to those left behind when someone dies. This can help spouses, partners, children, and others cover the costs of healthcare and funeral expenses and prepare for the lack of income that all become financial burdens during one of the hardest life events anyone can endure.

Unfortunately, for over a decade, studies have shown that the need gap for life insurance continues to grow unfavorably for Americans. This results in 106 million adults in America lacking life insurance or enrolled but with inadequate coverage for their needs. It can also repeat a cycle of financially stressed loved ones. Investing in the right life insurance coverage helps offset the financial burden felt by you and your loved ones and can be done so while simultaneously investing in your health.

Remember, Medicare Supplement plans are available to help you cover healthcare costs, and when comparing Medigap plans, life insurance coverage is a great feature to consider for your benefits. Carriers such as Manhattan Life offer Medicare Supplement plans with attractive coverage options, affordable premiums, and protection through valuable life insurance benefits.

Certificates of Deposit (CDs)

Certificates of deposit (CDs) are not going to return the largest return on your investment, but they will provide some of the safest, most predictable returns making them an attractive way for anyone to subdue financial stress. This is why CDs are especially popular among older adults looking to invest.

They offer predictable financial returns even when the economy isn’t as easy to anticipate. But like all investments, there are pros and cons when placing your money in CDs which are important to consider before investing.

While CDs from banks and credit unions with insurance from the federal government are a safe investment, don’t expect to make a fortune. The Federal Deposit Insurance Corp. will protect as much as $250,000 per depositor, per insured bank, and per ownership category on your investment.

This includes the returns you will receive, which for CDs are better than traditional savings accounts. However, if you’re looking for better returns, you’ll need to take on more risk. For that reason, many seniors enjoy the comfortable returns found in CDs rather than the larger returns that can coincide with larger ebbs and flows within the stock market.

These factors also mean that your returns are going to be predictable, which is great for planning. The rate that your CD provides will remain consistent during its duration, as opposed to other investments, such as stocks which may rise or fall heavily depending on the year.

Though CDs act in a similar manner, you’ll also find that there are several different types with varying terms or time periods. This is a great feature that, once again, helps with financial planning, especially with older demographics.

It’s important to review and compare your CD options before investing to better understand your rate of return, terms and conditions, possible withdrawal penalties, etc. The fact that CDs aren’t the most liquid asset can be an issue for investors that may even create a loss, only adding to their financial stress.

Furthermore, rather than peace of mind, during periods of high inflation, you may actually end up losing purchasing power because the rate of inflation surpasses your rate of return.

There are additional important factors to consider, including the lower yield investors might find when looking to reinvest after their initial terms and taxes eating away at potential gains. Nevertheless, there are plenty of options to fit a variety of investment strategies and portfolios.

Types of CDs

When using CDs as an investment tool, you won’t get much peace of mind unless you understand and choose the right kind for your needs. As always, it’s best to speak with a financial professional, but take a closer look at the several options available so that you can make an informed decision:

Traditional CDs

Using traditional CDs means making a deposit once according to your financial institution’s specifications. You’ll keep it with them for a prescribed period earning a fixed rate of interest, after which you can either cash out to enjoy your earnings or continue on by rolling it over into a new term.

It’s important to understand that with a traditional CD, there can be penalties for withdrawing your money before the term is finished. Therefore, you will have to either have to wait or risk losing your potential returns if not ultimately taking a loss.

Jumbo CDs

If you’re looking to invest a larger amount of money, jumbo CDs can be an attractive option. Although the deposit required is often larger than traditional CDs, so to are the returns. The conditions of these CDs may vary, though, as not every jumbo CD requires the same size deposit nor produces the same amount of interest.

Bump-up CDs

When using a bump-up CD, you don’t have to worry about missing out on better APYs in the future. If you put your money into the CD, but interest rates rise during your term, you’ll be able to enjoy these increased rates for the rest of your term.

While this move is allowed, you can only do it once during your CD’s term. It’s also worth noting that while increases are nice, they often offer lower rates, to begin with, than traditional CDs.

Step-up CDs

A step-up CD is similar to a bump-up CD, but rather than asking your bank to increase your rate, it’s automatically applied. While an attractive option, again, you’re looking at the risk of earning less interest than traditional CDs, and they are not available everywhere.

Callable CDs

The good thing about having a callable CD is that there is a chance to earn more interest. The bad thing is exactly what you’d expect. There is more of a risk using this method, and it stems from the fact that whoever issues you the CD can “call it back” before maturity. This means you could also lose out on interest if rates fall and be forced to either pursue other options or remain to earn interest at a lower rate in the aftermath.

Brokered CDs

Financial peace of mind doesn’t just mean making more money but also easing the process of doing so. For some, a brokered CD can help. Rather than purchase through a bank, you’ll get the CD from your brokerage firm, allowing you to enjoy higher rates in many cases and consolidate all of your CDs in one place.

You enjoy getter liquidity as these CDs are traded similarly to bonds, but there are risks. Particularly, if you fail to hold onto your CD until it’s mature, you won’t guarantee to get back your principal investment or the interest. It’s also important to read the terms and conditions as some can be called back, and not every firm insures your CD through the FDIC.

Liquid CDs

Liquid CDs are also known as no-penalty CDs and will allow you to take your money out without a penalty before the end of its term. Again, you should expect lower APYs than traditional CDs, but they still often offer more interest than traditional savings accounts. Also, while this option keeps your money more liquid, there are still guidelines that apply and vary from institution to institution. Be sure to understand your liquid CD’s terms and conditions before investing.

Add-on CDs

Most of the CDs you’ll find won’t let investors add money during its term, but add-on CDs are the exception. You’ll need to read the terms and conditions of your CD, though. The amount you’re allowed to add will vary depending on who you are banking with.

Zero-coupon CD

Zero-coupon CDs provide a different approach to receiving a return on your investment at the maturity of your CD. Instead of receiving interest payments during the CD’s term, you receive the face value and interest at the CD’s maturity. Because of this, zero-coupon options are typically seen as better options for long-term investors.

However, just because you don’t “see” the money doesn’t mean you aren’t paying taxes on it. You are required to declare your interest as income for your taxes each year and pay because of it. As your CD matures, the interest grows, as does your tax bill.


Protection up to $250,000 from the FDIC, a great option of guaranteed returns, and diversification with even less risk are what you’ll find in an IRA CD. They might not be the best option for younger investments as the returns you can expect aren’t great, but they are a popular choice with older investors who won’t need their money until they are aged 59 years and 6 months old to avoid paying taxes.


Bonds are essentially loans from investors issued to borrowers, in which borrowers use the money for their needs while repaying the loan with interest back during the life of the debt security. Their value can change over time, and they are tools that provide a great way to raise money. Purchasing bonds can be a great way to overcome financial stress due to their predictability for returns.

Many investors use them as a way of diversifying their portfolios, and this is especially true with seniors. When you invest in a bond, you’re normally paid back twice a year via interest and then returned your principal investment once it matures. It’s a great way to fight against both inflation and volatile markets while receiving returns.

Using bonds as an investment tool is a safe practice, but that doesn’t mean they come without any risks at all. For example, there are times in which issuers miss paying on time due to credit, interest rate fluctuations that can affect your bond’s value, the risk of being stuck with your bond due to a lack of buying interest, inflationary risks, and more.

Regardless of the financial climate and risk factors in place at the time, bonds remain an attractive option for older investors. A core reason for this is the risk of volatility that comes from other forms of investment. Rather than risk a larger loss for a marginal gain, those with sizeable nest eggs forgoes the stress and risk by investing in the predictability of a bond.

As you age, it becomes more and more difficult to overcome market downturns and financial crises. Bonds help older investors avoid this obstacle. It’s also possible that bonds may even rise for the investor during times of economic downturn, but the factors that go into these events are numerous and more exceptions than the rule.

Types of Bonds

As laid out by the SEC, investors have many different types of bonds to choose from. Understanding each can help you on your financial journey:

Corporate Bonds

A corporate bond comes from either a private or public corporation. They are also registered with the U. S. Securities and Exchange Commission (SEC), or at least they should be, which helps prevent fraud. They can be verified in the SEC’s EDGAR system.

Two important types of corporate bonds available are Investment-grade Bonds featuring less credit risk and lower interest yield, and High-yield Bonds, which can produce higher rates of interest but come with a higher level of risk for bondholders. The best option for you will depend on your level of risk tolerance,

Municipal Bonds

Also known as “munis,” these bonds come from states, cities, counties, and other government entities as a vehicle of investment. Within this category, there are several different types, including:

  • General Obligation Bonds– not secured by assets but rather by the issuer’s “full faith and credit” of the issuer. In this case, the government pays by using taxpayer money.
  • Revenue Bonds-. instead of taxes, a revenue bond comes from money created by specified projects. However, for those that are non-recourse, if revenue is no longer being generated, bondholders can’t lay claim to the revenue source.
  • Conduit Bonds– municipal bonds issued on behalf of private entities by the government.
    While each presents a low amount of risk, there is still some. Your bond could default, the interest rate is often not great against inflation, and your bond’s price can fall. But there are great tax benefits on both the federal and sometimes state level that can be attractive to bondholders going this route.

Treasury Securities

U.S. Treasury Securities come from none other than the U.S. Department of the Treasury. Acting on behalf of the federal government, treasury bonds are safe options and popular with investments. They can be presented in various forms, such as:

  • Treasury Bills (T-Bills) offer short-term investment options with maturity coming in as short as a few days or as long as one year.
  • Treasury Notes last much longer and don’t reach maturity with a maximum term of ten years.
  • Treasury Bonds are for long-term investors. You receive interest paid every six months, but the security won’t mature until 30 years in most cases.
  • Treasury Inflation-Protected Securities (TIPS) have their value affected based on the Consumer Price Index. Maturity can be reached in either five, ten, or 30 years with interest paid every six months.

The various options available from the U.S. Treasury all have their own benefits in terms of returns. While TIPS may produce higher returns, treasury bonds often do as TIPS are tied to what happens during the time period of the CPI when you invest. Both are popular with younger investors.

On the other hand, T-bills are great options for older investors looking to protect their money and receive their interest at a faster, more frequent rate. Similarly, notes from the U.S. Treasury can be attractive for those searching for more mid-term investment instruments.

High-yield Savings Accounts

A high-yield savings account can be a tool used on a path to financial peace of mind because they are easy to obtain and provide many financial benefits. Investing can come with its own sets of hurdles and risks, including having enough funding to get started in the first place, the financial stress that comes with the ebbs and flows in the market, the knowledge or money to pay someone with financial knowledge to manage your account, and more.

But a high-yield savings account is a simpler solution. Rather than national interest rates found in standard savings accounts, a high-yield savings account will provide much larger returns on the money you save. There are also features of each account to consider, including:

  • The annual percentage yield (APY) dictates how much interest you’ll receive when using a high-yield savings account.
  • Depending on the financial institution you use, there are fees that may be applied to your account as well as requirements. You can avoid certain fees if you meet the financial institution’s requirement threshold, so ensuring that you can meet these restrictions can help you save even more.

Each financial institution will have its own unique features and benefits regarding the accounts, and it’s important to shop around before trusting anyone with your money. Additionally, just as with anything, while a high-yield savings account can make a great addition to your financial portfolio, there are pros and cons of using one:


  • High-yield savings accounts make for great emergency funds. Investing can make it difficult to use your money when needed as it is tied to the market and can fluctuate, but a high-yield savings account allows you more options and liquidity for your funds.
  • Not all financial goals are long-term, and if you are looking to reach short-term goals quicker, then a high-yield savings account is a great method of doing so.
  • Recessions are a financial burden Americans have come to know all too well over the last several years. Placing your money in a high-yield savings account can help you fight against inflation, maintain a liquid financial resource, and avoid drastic dips that come when investing in money markets.
  • The Federal Deposit Insurance Corp. (FDIC) protects up to $250,000 of your money just as it would through traditional savings accounts. This means if your bank fails to provide you with funds, you’re protected up to a quarter million dollars.


  • Though great for short-term financial goals and better interest than traditional savings accounts, they are still unable to compete with the overall averages seen through other investment tools.
  • Because your account can’t compete with other financial investing methods, inflation threatens your finances in the long run.
  • The requirements of certain banks, including the amount of your initial deposit, monthly fees, balance minimums, and withdrawal guidelines, may add to your financial stress rather than take away from them.
  • Accessing your funds can also add to your financial stress. Some accounts can take several days on top of the withdrawal limits you may face each month.

The Correlation of Financial Stress and Mental Health

Financial stress and depression continue to produce unfortunate trends among American adults. Many different studies show that suicide due to financial stress is quite common and is, in fact, one of the leading causes of this untimely fate.

Both experiencing suicidal thoughts due to financial stress or acting on said ideation is bad enough, but in general, an overwhelming majority of Americans also suffer from anxiety and other negative mental health effects due to their finances.

Financial stress statistics point to a variety of groups feeling such pressures even more so than other groups who experience fewer issues with money. This includes negative mental effects for younger generations, women, people of color, single individuals, and those without employment.

While this reality is grim, thankfully, there are ways to receive help coping with financial stress by making informed financial decisions. Seeking professional help from mental health experts is also a great way to become empowered with the tools to overcome such sources of stress.

As you can see above, buying peace of mind can come in many different forms and for many different reasons. Barriers to entry exist, but with the right planning and knowledge, overcoming financial stress and economic hardships can be achieved.

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