This is a topic that is very subjective. I will just list the basics and some alternative options.
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Neville Mohabir
Jan 11, 2021
High-yield savings accounts
Just like a savings account earning pennies at your brick-and-mortar bank, high-yield online savings accounts are accessible vehicles for your cash. With fewer overhead costs, you can typically earn much higher interest rates at online banks. Plus, you can typically access the money by quickly transferring it to your primary bank or maybe even via an ATM. Expect less than 1.00% in 2021.
Certificates of deposit
Certificates of deposit, or CDs, are issued by banks and generally offer a higher interest rate than savings accounts.With a CD, the financial institution pays you interest at regular intervals.Once it matures, you get your original principal back plus any accrued interest. It pays to shop around online for the best rates.
Because of their safety and higher payouts, CDs can be a good choice for retirees who don’t need immediate income and are able to lock up their money for a little bit. But there are many kinds of CDs to fit your needs, and so you can still take advantage of the higher rates on CDs.
S&P 500 index funds
If you want to achieve higher returns than more traditional banking products or bonds, a good alternative is an S&P 500 index fund, though it does come with more volatility. Like nearly any fund, an S&P 500 index fund offers immediate diversification, allowing you to own a piece of all of those companies. The fund includes companies from every industry, making it more resilient than many investments. Over time, the index has returned about 10 percent annually. These funds can be purchased with very low expense ratios (how much the management company charges to run the fund) and they’re some of the best index funds. An S&P 500 index fund is an excellent choice for beginning investors, because it provides broad, diversified exposure to the stock market.
Government bond funds
Government bond funds are mutual funds or ETFs that invest in debt securities issued by the U.S. government and its agencies. The funds invest in debt instruments such as T-bills, T-notes, T-bonds and mortgage-backed securities issued by government-sponsored enterprises such as Fannie Mae and Freddie Mac. These government bond funds are well-suited for the low-risk investor. These funds can also be a good choice for beginning investors and those looking for cash flow.
Peer-to-Peer Lending
Peer-to-peer lending, also known as P2P lending, is a relatively new phenomenon. Online P2P services offer loans for businesses, personal use, or anything else you can imagine. If you join the pool of investors who are willing to loan money to others, then the loan can be funded by you once the borrower qualifies.
There are many P2P lending companies to choose from, including LendingClub, Prosper, and Peerform. There is no bank involved in P2P lending. Your money is typically pooled with other investors’ money, and together you make a loan to the individual asking for funds.
The main risk with P2P lending is that you're loaning to people who may not have been able to get a loan from a bank or otherwise can’t go through traditional loan outlets, which could increase their likelihood of default. However, you can decide the credit rating and other parameters you'll consider for a borrower, and you have the choice to fund or not to fund.
Gold
Gold is widely regarded as a tangible inflation hedge, a liquid asset, and a long-term store of value. Gold is regarded as a great differentiator because of its low correlation with other asset classes, especially stocks.
There are various routes for investors to get exposure to gold, like buying and holding physical gold such as coins or bars, gold exchange-traded funds , gold accounts, or investing indirectly through gold mining stocks or futures and options.
This usually includes buying gold bullion—coins, bars, or other physical forms of gold. Also, it's vital to learn about the factors that govern gold prices when it comes to investing in gold.
Owning Your Own Business
You can use your money to invest in your own business, which has the potential to produce the highest returns of all your investment choices.
Some businesses have very low startup and ongoing costs. These include virtual or online businesses, like teaching, consulting, coaching, and IT support. One way to approach this is to only put part of your money into a business and invest the rest elsewhere.
Another approach is to create a part-time business, something you can do in the evenings and weekends such as DoorDash, Uber and/or Lyft.
Equity Crowdfunding
Startup companies that need money can offer shares of their companies on equity crowdfunding websites. If you invest in a company over an equity crowdfunding site, you own part of it and will be rewarded if the company succeeds.
You can start investing your money in equity crowdfunding with just a few hundred dollars. This means you should consider a variety of stocks, but it also means you can invest in non-stock investment vehicles.
High-yield savings accounts
Just like a savings account earning pennies at your brick-and-mortar bank, high-yield online savings accounts are accessible vehicles for your cash. With fewer overhead costs, you can typically earn much higher interest rates at online banks. Plus, you can typically access the money by quickly transferring it to your primary bank or maybe even via an ATM. Expect less than 1.00% in 2021.
Certificates of deposit
Certificates of deposit, or CDs, are issued by banks and generally offer a higher interest rate than savings accounts.With a CD, the financial institution pays you interest at regular intervals.Once it matures, you get your original principal back plus any accrued interest. It pays to shop around online for the best rates.
Because of their safety and higher payouts, CDs can be a good choice for retirees who don’t need immediate income and are able to lock up their money for a little bit. But there are many kinds of CDs to fit your needs, and so you can still take advantage of the higher rates on CDs.
S&P 500 index funds
If you want to achieve higher returns than more traditional banking products or bonds, a good alternative is an S&P 500 index fund, though it does come with more volatility. Like nearly any fund, an S&P 500 index fund offers immediate diversification, allowing you to own a piece of all of those companies. The fund includes companies from every industry, making it more resilient than many investments. Over time, the index has returned about 10 percent annually. These funds can be purchased with very low expense ratios (how much the management company charges to run the fund) and they’re some of the best index funds. An S&P 500 index fund is an excellent choice for beginning investors, because it provides broad, diversified exposure to the stock market.
Government bond funds
Government bond funds are mutual funds or ETFs that invest in debt securities issued by the U.S. government and its agencies. The funds invest in debt instruments such as T-bills, T-notes, T-bonds and mortgage-backed securities issued by government-sponsored enterprises such as Fannie Mae and Freddie Mac. These government bond funds are well-suited for the low-risk investor. These funds can also be a good choice for beginning investors and those looking for cash flow.
Peer-to-Peer Lending
Peer-to-peer lending, also known as P2P lending, is a relatively new phenomenon. Online P2P services offer loans for businesses, personal use, or anything else you can imagine. If you join the pool of investors who are willing to loan money to others, then the loan can be funded by you once the borrower qualifies.
There are many P2P lending companies to choose from, including LendingClub, Prosper, and Peerform. There is no bank involved in P2P lending. Your money is typically pooled with other investors’ money, and together you make a loan to the individual asking for funds.
The main risk with P2P lending is that you're loaning to people who may not have been able to get a loan from a bank or otherwise can’t go through traditional loan outlets, which could increase their likelihood of default. However, you can decide the credit rating and other parameters you'll consider for a borrower, and you have the choice to fund or not to fund.
Gold
Gold is widely regarded as a tangible inflation hedge, a liquid asset, and a long-term store of value. Gold is regarded as a great differentiator because of its low correlation with other asset classes, especially stocks.
There are various routes for investors to get exposure to gold, like buying and holding physical gold such as coins or bars, gold exchange-traded funds , gold accounts, or investing indirectly through gold mining stocks or futures and options.
This usually includes buying gold bullion—coins, bars, or other physical forms of gold. Also, it's vital to learn about the factors that govern gold prices when it comes to investing in gold.
Owning Your Own Business
You can use your money to invest in your own business, which has the potential to produce the highest returns of all your investment choices.
Some businesses have very low startup and ongoing costs. These include virtual or online businesses, like teaching, consulting, coaching, and IT support. One way to approach this is to only put part of your money into a business and invest the rest elsewhere.
Another approach is to create a part-time business, something you can do in the evenings and weekends such as DoorDash, Uber and/or Lyft.
Equity Crowdfunding
Startup companies that need money can offer shares of their companies on equity crowdfunding websites. If you invest in a company over an equity crowdfunding site, you own part of it and will be rewarded if the company succeeds.
You can start investing your money in equity crowdfunding with just a few hundred dollars. This means you should consider a variety of stocks, but it also means you can invest in non-stock investment vehicles.