Global economies are still recovering from the ill effects of the coronavirus pandemic that left many struggling to get an income. Also, with inflation running rampant and skyrocketing interest rates, many people will find themselves in a tough situation if they don’t take immediate measures.
One of the best ways to navigate this financial turmoil is to invest in vehicles with higher returns. When the term investing is mentioned, many may think of only the New York Stock Exchange or imagine it as something for the wealthier. However, when done appropriately, investing is one of the best ways to grow your income. You don’t have to worry about your income, career, or age. Most investments are accessible to almost anyone.
Everyone wants to have maximum returns on every investment, and when inflation is rising, high returns are necessary. So, which are the best investments with high returns? It’s important to note that investment involves the risk of loss. The idea here is to have a mix of high-return, safer and riskier ones. Remember that the lower the risk, the lower the returns.
6 Best Investments
1. Certificates of deposit
If you have savings and want to earn some growth, investing in certificates of deposit (CDs) is a viable option. Certificates of deposit are issued by banks and offer a higher interest rate than most savings accounts. They also have FDIC insurance cover, making them the best option for risk-averse investors.
CDs have specific maturity dates, ranging from six months to five years. So, you should invest an amount that you will not need to use in the foreseeable future. It’s important to note that you will likely pay a fee when you get your money out of CD before maturity.
2. High-yield savings accounts
Although they may not keep pace with inflation, high yield accounts will earn you interest on your liquid cash. An online savings account earns more interest than your brick-and-mortar savings account. High yield savings are almost no risk accounts since they are FDIC-insured.
These savings accounts range around 0.6% returns. While this may not be much, it’s one of the excellent ways to invest the cash you need to access quickly, such as your emergency or vacation fund.
3. Index Funds
This investment tracks a variety of indexes in general returns and composition. Various index funds specialize in specified industries or sectors, exposing you to different areas of interest. For instance, you may invest in an index fund that tracks the Nasdaq-100 or others.
Index funds are also easy to access and have a low expense ratio and high diversity. Such features allow you to diversify your investment portfolio. In addition, you can invest in indexes trading as mutual funds or exchange-traded funds (ETFs). However, it’s more volatile than most other investments, such as I-bonds.
4. Dividend Stocks
When you invest in a company and become a shareholder, the cash sums you are paid out of the profits are called dividends. You get this reward for owning or investing in a company’s stock. If you are looking for a stress-free investment this year, consider buying dividend stocks.
It’s also a way of minimizing the effects or impact of inflation. Dividend stocks allow you to earn the small sums paid out while benefiting from the long-term rise in prices. Moreover, you can reinvest your dividends back, boosting your investment portfolio.
Still, experts recommend investing in dividend stocks from companies with a history of regularly paying and increasing the payout. This investment approach helps you avoid unstable companies and risks.
5. Real Estate
Generally, many people think real estate involves just buying or selling property and land or owning rent-generating property. However, there are many other investing methods in real estate without owning such property.
One common way of investing without owning properties is through real investment trusts (REITs). These REITs are companies that own income-generating properties but allow you to invest and earn regular dividends. You can invest in REITs on the public stock market, mainly online or in private markets.
The other way is through real estate crowdfunding platforms. Over the last few years, it has become increasingly popular. Investors pool money and invest it in real estate projects to generate income from rent or resale. Please note that some crowdfunding platforms are only available for accredited investors, while others don’t have many restrictions if you decide to invest in them.
Real estate, however, is highly illiquid, so you may need to have a solid and healthy portfolio before investing. It’s also a good investment for the money you may not need to access quickly since real estate is primarily a long-term venture.
6. Exchange-traded funds
ETFs or exchange-traded funds are similar to mutual funds. This is where they pool investor money and invest in a collection of securities as a single diversified investment. However, the difference arises in how they are sold.
The investment type is suitable for long-term investors who don’t meet the minimum investment requirements for a mutual fund portfolio. This is because the share price of an ETF may be lower than the mutual fund’s minimum.
One main advantage of ETFs is their availability through discount brokerages. They also have ticker symbols like the regular stocks.
While a timely and well-researched investment may bring the desired returns, you still need to be highly cautious and keep researching to avoid risking your money. You can focus on promising stocks or investments overlooked mainly by mainstream markets, as Steve Stuggerud indicates.