When it comes to planning your future, the choices abound. So, where should you put your money?
While there are a lot of options, many people put off this important step. It’s understandable, as most of us don’t understand investments and the potential risks involved.
Today, we’re going to clear the fog a little and give you some solid investment options that can help to ensure that your future is bright indeed.
Government bonds are a classic, low-risk investment that has always been a great option for beginning investors who want to grow their money without a lot of risk.
So, what is a bond? Well, think of it as an IOU produced by states, municipalities, and the government that is issued with the task of funding important projects—read more here
Essentially, it’s a loan that you are giving the government.
The nice thing about government bonds is that you know that the government certainly isn’t going anywhere. Therefore, what you get in return is a guaranteed rate of interest that accrues. And it is payable when the bond reaches its maturity date.
While the concept of a maturity date means that you have to wait (or incur early withdrawal penalties), this is a great way to earn interest payments to prepare for your future.
Those interest levels will vary based on the risk that is assessed. You can go with low-risk or a little higher, depending on your financial goals and your confidence in the investment.
If you don’t like the sound of government bonds then there is another classic that never gets old and always pays off. We’re talking about high-yield savings accounts, of course.
You aren’t going to get the kind of interest that you would with a riskier investment. But, the payback is that you are guaranteed a specific rate of interest in the long term.
High-yield savings accounts generally require a large deposit to open and you’ll have somewhat limited access to your account.
Consider this…With an average savings account, you earn about .06% APY, compared to a high-yield savings APY that could be up to .40%.
Good things come to those who wait.
Certificates of deposit
Certificates of Deposit, or CDs, are still around—and for good reason!
So, what are they? CDs are certificates that you invest in for agreed-upon blocks of time, such as:
- 5 years
- 1 year
- 6 months
- Or any other given time period.
You don’t have to cash it in when it matures. Instead, as you can take the CD ladder approach and apply your interest to the total. Then, you have it renewed for another block of time.
This builds and accumulates giving you access to even higher levels of interest.
Best of all, CDs are FDIC insured, so you can invest in them without having to worry so much about whether or not they are going to payout. This makes them an excellent addition to any financial portfolio!
Check out more from Clever Girl Finance.
Real estate rental
Real estate is a great investment for those who want to diversify their portfolio and who don’t mind having a little hands-on management involved. While it means dealing with tenants, real estate has always been a fairly reliable source of income as everyone needs a place to live!
If you are the DIY type, then this can also be extremely appealing, as you buy or finance the purchase of properties, upgrade them, and stick them on the market handling maintenance on your own. Even if you don’t, however, you can work out a deal with someone to manage maintenance and your cash prospects are still good.
So, if you don’t mind the additional management aspect of this or intend to delegate it, then real estate investment might be a great fit for you.
S&P 500 index funds
If you are looking for an entry into the stock market, but you aren’t ready to go with the risk of individual stocks, then S&P index funds are a great way to get started.
Just like an index in a book tells you what’s inside, an index fund is representative of many companies.
This lets you invest in a whole lot of companies in one shot.
These companies are diverse and range across many industries. This makes the investments much more solid on the whole and you could earn as much as 10% back on your investment.
These funds may be purchased for your portfolio at very low expense ratios too. So, it’s easy to get started in S&P index funds so you can start reaping these rewards on your own.
Nasdaq 100 index funds
Speaking of index funds, how would you like to invest in not one, but multiple industry tech leaders? When it comes to growing your money, technology is something that you can bank on. Nasdaq 100 index funds let you do just that.
When you invest in a Nasdaq index fund, your fund is invested in practical and stable giants of the tech industry. Examples include Facebook, Microsoft, and Apple…just to name a few. Since the investments are spread throughout many companies, you get to add a wide variety of stock to your portfolio, but you don’t have to worry about the failure of a single one.
This option is a very attractive one. The returns are high and you are essentially investing in technology that you use every day. That said, like any investment, there is certainly risk, but if you target an investment period of 3 to 5 years then your chances of making high returns in exchange for your patience are excellent.
Some final words on investment strategies
So, where should you put your money? The best answer is “more than one place.” In short, diversify your holdings!
The suggestions that we have given today range from risk-free to mildly-risky. If you invest in a little bit of everything, then you have a certain amount of guaranteed income to go with some potentially substantial income.
As the saying goes, don’t put all of your eggs in one basket. This goes doubly so for your nest egg.
Finally, consider a visit to a financial advisor. Even if you don’t feel that you have enough to invest to consider the services of a pro, financial advisors are there to help you grow your money and they work with every income level—read more at this link.
In a single visit, you can often learn about options to grow your money that you’ve never even heard of. So, what are you waiting for? Get started with your financial advisor and use the tips that we’ve shared today to start building capital for your future. You may be able to retire earlier than planned, buy your dream home or an exotic car!
It’s going to be a bright one, indeed!
To read more on topics like this, check out the Money category