Are you looking for ways to earn extra income? Investing can offer an alternative income source, get you out of a financial crisis, or even fund your retirement. Moreover, investing also enhances your wealth’s growth, increasing your buying power and helping you meet your financial objectives.
Although investing can boost your wealth, you must also balance between risks involved and potential gains. With assistance like My Money Sorted, you can know if you are in a financial position to undertake the project.
You need to have sufficient emergency funds and maintain manageable debt levels. The following are the top investment options you can consider.
Top Investment For Your Money Today
1. High-Yield Savings Accounts
These accounts usually pay interest based on cash balances. Since high-yield savings accounts have fewer overhead costs, they enable investors to earn higher interest rates.
Besides, you can access your cash by transferring them to your usual bank or even using an ATM. Therefore, this investment platform is convenient for people who want to access their cash soon. It works best for risk-averse investors afraid of not getting their cash back.
2. Certificates Of Deposit (CDs)
CDs are almost similar to savings accounts. Since most are FDIC insured, the risk of a loss is minimal. When you invest in a certificate of deposit, you are given a time horizon, which may be from one month up to ten years.
Although you can withdraw your money from some CDs without facing the consequences, a penalty is usually paid if you access your money before its term ends.
Although this makes CDs less worthy for emergency savings or funds, the investment usually has a higher rate of return due to the loss of easy access.
Before investing in a certificate of deposit, first, ask yourself whether you may need the money before its maturity date. Secondly, know whether your interest rate with the CD is the same or higher than high-yield saving accounts. In this case, you should invest with the CD if you are getting a higher return.
3. Short-Term Government Bond Funds
These are ETFs or mutual funds that invest in debt securities that the government of the United States and its agencies issue. Similar to short-term CDs, there are minimal risks involved in these funds when interest rates increase.
Short-term government bonds are convenient for new investors and individuals who need cash flow. They also favor risk-averse investors. However, changes in interest rates may cause fluctuation of some types of funds, including long-term bonds.
4. Dividend-Paying Stocks
Although stocks are not secure like government debts, or saving accounts, they are usually safer than high-fliers like futures and options.
Since dividend stocks pay cash dividends that reduce their volatility, they are viewed to be safer than high-growth stocks. Although dividend stocks may fluctuate according to the market, they do not fail to fall as long as the market is depressed. Basically, dividend-paying stocks are viewed as less risky than non-paying ones.
5. Fixed Annuities
An annuity is an agreement usually made with an insurance firm whereby the firm pays a specific income level after a certain period. In this case, you are required to pay an upfront payment. Annuities are structured in various ways.
For instance, they can pay after a fixed period of twenty years or even after the investor’s death. You can opt to deposit a lump sum and receive your payout immediately or pay it for a certain period and instruct the annuity to start paying out after a specific period, for example, after retiring.
So, why consider investing in a fixed annuity? This investment can offer you an assured return and income, providing greater financial security, particularly when you are no longer working.
It also enables you to nurture your earnings on a tax-deferred basis. Besides, fixed annuities do not limit the amount to contribute. Annuities also have other benefits like minimum guaranteed payouts or death benefits based on your contract.
6. Series I Bonds
The treasury of the United States is the body responsible for issuing bonds to investors. One of the popular bonds issued today is the Series I bond, which enhances protection against inflation.
By investing in this bond, you will receive a base interest rate and also a component according to the inflation rate. The payout usually increases with inflation, while the interest rate also falls when inflation does so.
Similar to government-issued debt, these bonds are good for risk-averse people who prefer not to run away from any default risk. Series I bonds are also attractive for investors who want to safeguard their investment from inflation.
Unfortunately, the limit of purchasing a series I bond is $10,000 in a calendar year. However, you can request an extra $5,000 in your yearly tax refund for the purchase of the bond.
7. S&P 500 Index Funds
If you want to earn higher returns than conventional banking bonds or products, one of the investment vehicles to consider is S&P 500 index funds. However, these investments are more volatile.
They are usually based on approximately five hundred biggest companies in the United States. Hence, the funds are based on the biggest companies globally. Examples of prominent member companies in the index are Berkshire and Amazon.
Like other funds, an S&P 500 index fund provides immediate diversification, making you an owner of a fraction of the companies. The fund entails companies from various sectors; hence it is more resilient than many ventures.
For some time, the index has returned approximately 10% annually. You can purchase these funds with very low-cost ratios, which is the amount charged by the management firm to operate the fund. An S&P 500 index fund is suitable for start-up investors since it offers diversified and broad exposure to the stock market.
8. AAA-Rated Corporate Bonds
Corporate bonds are debt mechanisms used by businesses to raise cash. Purchasing these bonds is typically a way of loaning your cash to the issuing company, whereby the company agrees to pay you frequent interest payments.
After the maturity of the bond, the company firm pays you back the principal. These bonds get letter grades from self-regulating rating agencies, which usually indicate the bond-issuing company’s financial position and credit history.
Investments usually have some risks. Fortunately, low-risk investments, as indicated above, are typically worth your money. However, low-risks investments generally yield low returns. Therefore, the investment may cost you money if they fail to keep up with inflation long-term.
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