Investing in diversified options like stocks, real estate, and savings accounts can secure your financial future with varying levels of risk and return.
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Received a large sum of money? Or, have you saved a large sum of money and are now wondering how to make it grow? Here’s a tip – investing your money wisely can not only secure your financial future, but also build your wealth.
However, there are now multiple investment options. Which investment method guarantees the lowest risk and highest return for your future? Here are 5 best places to invest.
High-Yield Savings Accounts/CDs
No one wants to save money in a high-risk environment, so the best investment options for beginners are through high-yield savings accounts and certificates of deposit, or CDs. They won’t offer the most maximized returns, but you’ll take on a little risk because they offer higher returns than a typical savings account. As for CDs, this type of investment locks the money into an investment for a certain period of time. The longer the CD is, the higher the interest it will generate because the funds have limited access.
These options are best suited for short-term savings goals or emergency funds without the risk of market fluctuations.
Stock Market
Now, if you are more adventurous, perhaps one of the most popular places to invest is the stock market. Investopedia states that the stock market offers the potential for high returns over the long term. In fact, those who invest their money in the stock market benefit from rising share prices, dividends, and ownership of successful businesses by purchasing shares in publicly traded companies.
However, please note that since the stock market often fluctuates, there may be more volatility in the short term, but the long-term growth potential is there.
Real Estate
If you don’t want to let your money sit around and wait for the market to make a decision for you, investing in real estate is another excellent way to build wealth over time. Real estate is one of the best investments that provides a higher, more stable cash flow, which can often be achieved through rental income. Some would even say it’s passive income that you can earn while sitting at home. On top of that, there’s the potential for real estate values to appreciate, which according to VCPost, are getting higher right now.
Some popular options include residential properties and commercial properties.
Mutual Funds / ETFs
Let’s say you’re looking for high and stable returns right now, and the market is booming, so you’re ready to invest your money in mutual funds or exchange-traded funds. With both, you can cycle your money into different bonds, stocks, and other such assets without having to choose each one individually.
To explain better, in mutual funds, experts choose which assets to include, while in ETFs, the tracking of a specific index is done automatically. The only difference is that mutual funds amount to a higher investment because there are professionals involved. However, Fidelity Investments reports that both options help diversify your investments, thereby reducing risk and making investing easier for beginners or those who prefer a simpler way of investing.
Please note that there are no set rules for finding the best places to invest. However, the best investment strategy depends on your financial goals, the amount of risk you want to take, and the time frame. If you are unsure of the environment and have extra money, then consulting a financial advisor is a must. However, the best advice is to be patient and watch your investments grow over time.