1. High-yield savings accounts
Before opening a high-yield saving account, you should check many factors. Such as deposit requirements, minimum balance requirements, account fees and interest rates. The increase in earnings compared to the majority of other savings accounts is significant, hence the ”high” part of its name. If you decide to put money into a high-yield savings account, typically you can expect on average 20x more pay than a typical savings account. So, it’s definitely one of the best out there! You can make transfers between accounts simple and quickly which is why many people also choose it. Typically, high-yield savings accounts can be opened from many banks, so check if your current bank allows you to! However, the best interest rates come from online banks.
2. Certificates of deposit
You can take obtain a certificate of deposit at any bank or credit union. Essentially, it means depositing a certain amount of money and leaving it untouched by a predetermined period of time. You and the bank can determine this period together and make an agreement. The bank will provide an interest rate premium upon agreeance and usually, you will gain interest monthly or annually. It gives you fixed returns and is generally much more beneficial than any saving accounts that a bank can offer. Needless to say, the downside is that you can’t access your money until the predetermined date. Well, you can but a withdrawal fee will apply (and they are usually sizeable).
3. Government bond funds
If you invest in a government bond fund, fundamentally you are loaning the government money. Governments usually use them to raise capital and fund new projects and infrastructures. What’s in it for you? well, the government agree on a fixed return interest rate on the loan you’ve leant them. You can both agree beforehand what the periods of time you will receive these interest payments. It’s a win-win for both sides. The length of time that you lend this loan is up to you. It could be for the duration of one year or twenty years. Investors benefit from gaining a fixed income of interest, also known as a ”coupon”.
4. Short-term corporate bond funds
If you invest in a short-term corporate bond fund, you are essentially investing in securities with a maturity period of one to three years. This means that the securities already have high liquidity because they are well established. It also makes it easy to track potential gains from previous records and trends. Needless to say, they are still unpredictable. It’s a higher risk investment because you can also lose a lot of money in a short time. It’s important for investors to funds fluctuations beforehand to ensure it’s a stable and safe investment. And comparing them to other investments will also help maximise profits.
5. Municipal bond funds
Municipal bond funds are great for investors that are focused on maintaining capital whilst also create tax-free income. You’ve probably already guessed by the name, but investing in these bonds means investing in municipal bonds. From different villages towns or cities governed by a council. Many of these bonds objectives can change depending on location. Such as interest rates, duration etc. These bonds are generally much lower at risk than others. They are popular with investors because of their great history. Historically, they have offered reliable interest payments and tax advantages.
6. S&P 500 index funds
The S&P 500 index funds is an index that consists of the 500 largest companies in the U.S. Investing into it means you will own shares of ALL of the 500 stocks within the index. Technically, it tracks and mirrors how the best stocks are performing. Investing in this fund is a very safe investment and is considered a ”passive” form of investment. This is not for investors looking for big financial gains but instead smaller but more guaranteed gains. It mirrors the performance so you are not taking huge financial risks.
7. Dividend stock funds
If you invest in Dividend stock funds, you will have mutual funds investing in different stocks. These stocks will pay a sum of money (dividends) regularly, typically it will be annually but monthly is sometimes an option too. The company will pay this sum to all shareholders out of its profits. Investors can keep this as profit. But many will then reinvest the dividends into more shares of the stock founds. The best thing about this investment is that all investors will get paid despite rough and rocky times in the market. This will never affect your annual or monthly payment. It provides stability rather than huge financial gains.
8. Nasdaq-100 index funds
Similar to the S&P 500 index funds, the Nasdaq-100 index funds look at the top 100 largest non-financial companies on the Nasdaq stock exchange. It mirrors and tracks the performance of them all. They use a weighted modified market capitalization strategy. There is a huge range of companies listed in the Nasdaq-100 index, including big companies like Pepsi, Amazon Activision Blizzard, Apple Inc and Microsoft Corp. It’s a popular choice currently because of its great performance in the past. Last year (2020) it outperformed the broader market. And also provide 2.7% more than the S&P 500 index funds.
9. Rental housing
Rental housing is a great long-term financial investment. It is when an investor purchases a property (with an inital deposit usually 5-10%) and takes out a mortgage. The investor will not live in the property but will rent it to tenants. The owner of the property can charge the tenants whatever amount they wish for rent each month. They can then use this to pay the mortgage each month. And eventually, the property will be paid off and become your own! You can then choose to sell it for financial gain or live in it. However, you need to be careful with this investment and ensure you enter a rental agreement for guaranteed income each month. Periods, where no tenants are occupying it, can become extremely costly for you.
10. Cryptocurrency
And last, but not least, Cryptocurrency! Despite the massive crash, we have all witnessed in 2021, cryptocurrency still remains a good investment. It’s important to educate yourself and do lots of research into each cryptocurrency before investing. You must believe in the project and see it become increasingly successful. Check out our Top 10 Cryptocurrencies in 2021 page for advice on which cryptos to invest in!