Avoid This Online Danger

One Fool explores sensible and not-so-sensible ways to get richer.

Have you seen our new Fool.co.uk blogs? I think they're a great addition to the Fool site, but from a writer's perspective, there's one problem. The more you write, the more likely you're going to be proven wrong by events at some point. And that's what's happened to me at the end of this rotten British summer.

Last week I wrote a blog post called `The Next Vice President' in which I said I thought that Barack Obama would pick a man called Evan Bayh to be his running mate. Sadly for me, Obama has gone for Joe Biden instead.

My pride is hurt and so is my bank balance. I was stupid enough to place a couple of bets on Bayh.

It wasn't an enormous amount of money but this wasn't my first political bet. Earlier this year I had money on John Edwards being the Democratic candidate and there have been other losing bets as well.

Don't worry I've not made big losses, but I am cross with myself nonetheless. Internet betting is way too easy and I find it way too tempting as a result. For me, it's the biggest online danger and so I'm going to try to restrain myself in future.

Dull

What's more, I'm well aware of much more sensible ways to build wealth -- even if they're a bit dull.

The most obvious, of course, is the stock market. True, UK shares have delivered a disappointing performance over the last ten years but I reckon there's a good chance they'll do better in the ten years to come. Don't forget, history suggests that shares typically generate a return of 6% a year after inflation over the long-term.

And the simplest way to invest in the stock market is via the old Foolish favourite, the index tracker. These funds are simple and cheap and I recommend them!

Duller

That said, the stock market is definitely not risk-free and you do need to be able to tie up your money for at least five years. Otherwise the risk of significant losses is much higher.

So if you want a really safe option, look at savings accounts. Thanks to the credit crunch, banks are finding it harder to get funding from the money markets -- and so are trying to tempt you to stash your cash in high-rate savings accounts.

Right now, there are several savings accounts paying in the region of 6.5%. That's significantly higher than inflation!

I particularly like the Bradford & Bingley Internet Saver Issue 3 which pays out 6.51% AER. You could start the account off with a deposit of just £1. I also like the Kaupthing Edge Savings Account which pays out 6.55% AER. However, your initial deposit must be £100 for this account.

Isas

And don't forget cash isas! These little beauties allow you to invest up to £3600 each year in a savings account and you don't have to pay any tax on the interest you receive. That's especially useful if you're a higher rate taxpayer.

Excitement

I guess one of the reasons I dabble in internet betting is for the thrill. There's nothing thrilling about index trackers or savings accounts, but when it comes to money there's a lot to be said for dullness. Slow and steady normally wins the financial race..

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