Investing in your future isn't just about opening a 401(K) or hoping your company-provided pension and social security payments will stick around until you retire. In reality, there are hundreds of ways you can invest your money. Some investments can help you realize a quick return on your money while others mature after many years, ensuring a safety net well into your retirement. Researchers are constantly balancing the best type of investments for beginners, intermediate, and seasoned investors based on current market variables and these investments are what they're touting in 2019.
Certificates Of Deposit Are Perfect For Retirees
Certificates of Deposit or CD's are federally ensured time deposits that are issued by banks and offer a higher interest rate than savings accounts. They have specific maturity dates that can range anywhere from weeks to years, although you may not withdraw the money within the agreed upon period without penalty.
With CDs, the bank pays you interest in established intervals and when it has fully matured, you receive your original payment, plus the interest you have earned. According to Bankrate, as of May 2019, you can earn almost up to 3% interest on your investment. These investments are popular among retirees due to their safety and high payouts.
Beginning Investors Can't Go Wrong With Money Market Accounts
Money market accounts are interest-bearing deposit accounts that are insured by the FDIC. These accounts usually gain more interest than most savings accounts, although they require higher minimum balances. They are considered to be wise for emergence savings because they earn higher yields and are relatively liquid.
However, in exchange for higher interest earnings, there are more restrictions when it comes to withdrawals. Bankrate notes these as one of the best options for a beginning investor who need some cash flow or establish an emergency fund.
Municipal Bond Funds Can Be Exempt From Federal, State, And Local Taxes
Municipal bond funds are investments in various municipal bonds that are issued by state and local governments. A plus is that the interest earned is typically exempt from federal income taxes and sometimes state and local taxes as well.
According to the Financial Industry Regulatory Authority (FINRA), municipal bonds can be bought individually through either an exchange-traded fund or a mutual fund. However, it's important to review your options before making a decision. These bonds can help create diversification and can help beginning investors who need cash flow.
Treasury Security Come In All Forms
Treasury securities are issued by the US government as a way for the government to pay its debts and to raise money for projects. Treasury bills or T-bills, are considered one of the safer investments, with a maturity of one year or less and are not interest-bearing. You pay a discounted price and when it matures, the government pays you what they were truly worth.
T-notes, on the other hand, are issued in terms of two, three, five, seven, and ten years, with the holder earning interest every six months on top of the face value. Finally, T-bonds have a 30-year maturity with interest every six months plus the face value at the end.
Government Bond Funds Are Nice For Low-Risk Investors
Government bond funds are mutual funds that invest in debt securities that are issued by the United States government and its agencies. They invest in debt instruments such as treasury notes, treasury bills, treasury bonds, and mortgage-backed securities.
These are issued by government-sponsored enterprises including Fannie Mae and Freddie Mac, among others. Typically government bond funds are best for low-risk investors as well as beginner investors that are in need of some cash flow quickly.
Short-Term Corporate Bond Funds Help Corporations Raise Money
On some occasions, corporations will attempt to make money by distributing bonds to investors. Essentially, you loan the company money and they pay you in interest until the bond matures. These short-term bonds typically have a maturity of one to five years which makes them safer when it comes to interest rates as well as fluctuations as opposed to intermediate or long-term investments.
These short-term corporate bond funds are a wise choice for investors looking for cash flow as well as retirees. They can help to reduce portfolio risk while simultaneously still making a return.
Dividend-Paying Stocks Pay-Off In The Short And Long-Term
You can further ensure your stock market investments by investing in those that pay dividends. Simply put, dividends are a distributed portion of a company's profits that are paid to a company's shareholders. While many publicly traded company's continue to pump their profits back into the business, they also, at their discretion, pay out dividends on part of the company's profits.
This way, not only can you earn through a long-term investment but in short bursts as well. However, it's important to keep in mind that buying stocks, dividend or not is an intermediate to advanced process.
Growth Stocks Are Very Popular But Take Skill To Handle Properly
For the most part, growth stocks are considered to be one aspect of the stock market that has been consistently promising for extended periods of time. They are stocks from continually expanding companies such as Apple and Amazon that never seem to slow down in sales or profits.
However, unlike dividend stocks, they don't often make cash distributions, but offer to reinvest their investor's money to help the company grow, and therefore make the investors even more money. These stocks are extremely popular investments, although it takes a fair amount of research and studying to choose the right ones.
High-Yield Savings Account
At most typical banks, your savings account will accrue interest over time, although it's never by much. However, high-yield bank accounts give you much more money than regular brick-and-mortar banks. Online banks with high-yielding bank accounts can earn you much higher interest also with fewer overhead costs.
According to Bankrate, as of July 2019, there are plenty of online banks that pay well above 2 percent. These banks are also typically FDIC-insured, so you don't have to worry about losing your deposit. You can also add and remove funds at any time.
Rental Housing Can have Huge Payoffs In The Long Run
If you feel prepared for the job and responsibilities of managing your own properties, rental housing can turn out to be an excellent investment. One of the most crucial aspects of this route is to choose the right property or properties first.
Just remember, you'll be in charge of either financing or buying it along with maintaining it and dealing with the tenants. Although it might seem like a loss at first, over time, you'll begin to see developing cash flow. The amount of time this takes depends on your previous financial situation.
Growth Stock Funds Help Diversify Your Investments
For those who don't want the stress of dealing with individual growth stocks, another option is buying a fund of growth stocks. This can be done both as a beginner investor or even advanced individuals that are looking to diversify their portfolios. To do so, most investors hire fund managers who select safe and profitable growth stocks for their clients.
Funds allow investors to diversify their portfolio so they don't have to fully risk their investment on a single stock which may turn out to perform poorly. Instead of all in, it's an average which usually has solid results.
S&P 500 Index Funds Allows You To Have A Piece Of All The Best
An S&P 500 index fund is another option opposed to a single growth stock or even growth stock funds. The fund is based on the 500 largest American companies which allow for immediate diversification, essentially owning a small piece of each of the companies.
In addition, many of the companies are from different industries which can act as a cushion if one industry's market appears to be struggling. An A&P 500 index fund is regarded as one of the least-risky forms of stock investment, which makes it perfect for beginners.
REITs Are Another Form Of Real Estate Investing
REIT stands for real estate investment trust which is a company that owns and manages real estate. These real estate trusts don't have to pay taxes as long as they pay their income as dividends to their shareholders. This is a fine route for people who want to own real estate without actually managing the properties or dealing with tenants.
Many people who find this form of investment attractive include retirees or others that want a more hands-off experience. REITs also usually allow their investors to pick the kind they like whether it's housing, hotels, retail, and more.
Nasdaq 100 Index Fund Gives You Access To The Best Tech Companies
Mostly for those interested in investing technology, an index fund based on the Nasdaq 100 allows investors to have access to the best tech companies in the world without being forced to choose only one. Much like an S&P 500 index fund, a Nasdaq 100 fund allows for diversification without having to risk your portfolio on one company's success.
The best Nasdaq 100 funds also have low expense ratios, making it cheap to have access to the best tech companies out there. Once again, this is a smart choice for new investors.
Industry-Specific Index Funds Lets You Tap Into One Particular Area Of Business
if you're interested in one particular industry to invest your money, but don't know where to start or which companies to choose, an industry-specific index fund is perfect for you. These kinds of funds provide access to various companies in an industry that is narrowed enough to not be overwhelming.
This way, you don't have to choose one or two companies, and if the industry does well, your investment most likely will too. These funds are popular among all different kinds of investors whether they want diversification or have become interested in a specific industry.
Peer-To-Peer Lending Isn't For The Faint Of Heart But Can Be Very Rewarding
Peer-to-peer lending, also known as P2P lending is usually done through websites and is a way to connect investors with trusted consumers in need of a loan. Basically, the investors are now the consumer's bank, giving a small percentage of multiple borrower's loans. Investors buy these notes from customers and then receive money monthly from the borrower in both loan repayment and interest.
P2P lending is usually cheaper than most established banks although it could be risky if a borrower defaults on a loan. Usually, the only people who invest in something like this are skilled in finances and wealthy.
A Roth IRA Can Prepare You For Retirement
A Roth IRA (Individual Retirement Account) is a type of retirement plan that is not taxed upon distribution. This is because you add to your Roth with after-tax-income, rather than opting for tax reduction for contributions for other retirement plans. This means you will have access to your earnings whenever you want which can be incredibly useful.
Investing in a Roth is a great way to help save for your retirement because short-term-wise you'll be able to withdraw funds, and even have higher rates of return due to access to other types of investments such as mutual funds and bonds.
Cash Back Rewards Offers Are Simple But Effective
Although it may not be the most extreme or lucrative form of investment, it's important to not Beauregard cash back reward offers. Credit card expert Holly Johnson with Good Financial Cents claims that "credit card rewards can offer epic returns with almost no effort on your part."
They're a great way to earn some extra cash or rewards in a relatively short amount of time. Of course, credit card cash back and rewards offers differ from card-to-card, which is why it's key to take the time to decide which one is best for you.
Online Checking Accounts Are About As Simple As They Come
An online checking account is perfect for short-term investment needs. They have all the same benefits of online savings account except there's more liquidity, considering you can withdraw an unlimited amount (given there's money in it.) There's also little to no worries when it comes to interest rates, and even if there are rates, they're so low it's not even noticeable.
They're convenient because just about anyone can get one, you can have access to money at all times, and there's a risk-free return even though the interest rates are low. On top of that, you never lose on your principal unless your deposit exceeds the FDIC coverage of $250,000.
Treasury Inflation Protected Securities Can Help Defend Against The Unexpected
Treasury inflation-protected securities, otherwise known as TIPS, are government bonds that are linked to inflation. Although the interest rate on TIPS is fixed, the value of the security rises in accordance with inflation, which is measured through the Consumer Price Index. This helps protect investors from the negative effects of prices rising, which can be unavoidable at times.
TIPS are considered low-risk investments since they are backed by the government and come in maturities of five, 10, and 30 years. In the end, your initial investment will be worth as much as when you first invested, however, there will be bonus interest on top of it.