If you’re still searching for an investment opportunity, you have plenty of company. Most of the population is not sure where to channel their cash and less than 26% of people actually engaged in any kind of financial market activities in the year 2023. There are many offshore options – but as is often the case, it’s just about having a little knowledge.
Read on to find out more!
Table of Contents
- Cryptocurrency
- Why choose cryptocurrency?
- Mutual Funds and EFTs
- Why Choose Mutual Funds and EFTs?
- High-Yield Savings Accounts
- Why Choose High-Yield Savings Accounts?
- Certificates of Deposit
- Why Choose CDs?
- Bonds
- Why Choose Bonds?
- 401(K)
- Why Choose a 401(K)
- Real Estate Investment Trusts (REITs)
- Why Choose Real Estate Investment Trusts (REITs)?
- Individual Stocks
- Why Choose Individual Stocks?
- Options Trading
- Why Choose Options Trading?
Cryptocurrency
This is one high-risk, potentially high-reward option. Cryptocurrency is great and still immensely popular. But as always, it is better to have a clue as to how it works or have someone who knows what they’re doing. For instance, the Bitcoin price live (found on sites such as Binance, Forbes, CNN, Bloomberg, etc.) changes nearly every five seconds; it can be intimidating for someone new.
The current situation is that Ripple and Solana seem to be the most lucrative investment options, but that depends on upcoming factors like political party changes.
Crypto is popular for people who want to day trade – buy and sell in the same trading window – and holders. Holding crypto for longer periods can be a smart option too but as with everything, it’s not without risk.
Why choose cryptocurrency?
- Prospects offering high returns
- Portfolio diversification into a new asset class
- Hedge against inflation or economic uncertainty
Mutual Funds and ETFs
Mutual funds and EFTs are perfect if you need more time to prepare to purchase individual shares of stock or individual bonds. Like crypto, stocks are volatile and sometimes don’t go as you want them to.
These two alternatives are the easiest way to broaden your investment horizons and acquire multiple assets without selecting single investments.
The best part is that mutual funds are managed accounts. You grant an institution trusteeship of the index. EFTs are typically managed individually, but you find a company that will invest for you.
Both alternatives are good as the investors achieve diversification, which hypothetically reduces risk. Investors who want medium- to long-term capital growth should consider mutual funds and ETFs as great alternatives.
Why choose mutual funds and ETFs?
- Portfolio diversification
- Mutual funds are professionally managed, and ETFs typically have lower costs.
- Can meet different investment goals
High-Yield Savings Accounts
High-yield savings accounts are a safe option for people unsure if an investment is worth it or individuals who want to secure their cash.
The issue is that people put their money in standard savings accounts with less-than-favorable interest rates—gone are the good old days when banks gave decent interest on savings.
Still, high-yield savings accounts work well. Online banks usually have high-yield accounts, and as the government insures them, there are no fears of losing deposits. There are typically restrictions like how many times you can withdraw money, but we wouldn’t say that’s a negative.
Why choose high-yield savings accounts?
- Safe and insured by the FDIC
- Liquidity for short-term goals and emergency funds
- Higher returns than standard savings accounts.
Certificates of Deposit (CDs)
Certificates of deposit (CDs) can be a good option if you’re confident you don’t need your money returned quickly.
CDs operate like savings accounts but with a specified period during which your funds are restricted—it can last for months up to several years. Banks grant you a fixed interest rate for this specific period, which means you get the money you were expecting when the time limit finishes.
The unfortunate aspect about CDs is that they are locked in, and most times, you don’t have access to your money even if you beg for it.
Why choose CDs?
- Fixed interest rates
- FDIC insured
- Ideal for goals with a time limit—mortgage down payment, wedding, etc.
Bonds
Bonds have little potential for appreciation, but investors love them to diversify their portfolios.
You lend a certain amount to a state or a company in exchange for their regular interest payments, called a coupon payment. You don’t always get big payouts, but you will get some—it’s like a raffle.
Most of these bonds are marketed as less volatile than stocks, for example, generalizing that they appeal to investors who want confidence in their investments. Bonds come in different forms—government and corporate bonds are two examples we’ve just mentioned. They’re a popular investment for people nearing retirement or who have retired and want consistent returns, no matter how big they are.
Why choose bonds?
- Steady, predictable income
- The risks involved are less compared to stocks.
- Balances a more aggressive stock portfolio.
401k
How about a long-term investment in your future? 401(k) plans are a sure and easy way to get investment returns. This retirement plan is employer-sponsored, and when you take on a 401(k) plan, the company you work for removes a percentage of your paychecks and puts it into an account where it is invested in ventures like mutual funds and ETFs. Over time, as you contribute to your 401 (k), your investment will grow and could eventually become tax-free.
One added incentive attached to this work retirement plan is that some employers can choose to match your contributions. Your employer can decide to match your contribution on a dollar-for-dollar basis each time you invest in your account or match a certain percentage of your investment.
Why choose 401(k)?
- Some 401(k) plans qualify you for tax-free withdrawals during retirement.
- Allows you to roll over your investment balance when you change jobs.
- Assured returns on investment down the line.
Real Estate Investment Trusts (REITs)
REITs are quite similar to mutual funds. The companies that manage these trusts need investments to build and operate real estate assets–that’s where investors come in.
In this mutualistic relationship, everybody wins. On one end, these companies can create income-generating properties for lease through shareholders’ investments. For the investors, these ventures offer an opportunity to gain income through real estate dividends without bearing the brunt of the rigorous processes that go into real estate.
You can expect competitive returns long-term with REITs. REIT companies must disburse around 90% of their income to shareholders, meaning your returns are guaranteed under normal circumstances. Plus, REITs are quite liquid and easily acquired on stock exchanges compared to direct real estate investments.
Why Choose Real Estate Investment Trusts (REITs)?
- A steady stream of income is assured.
- Helps diversify your real estate asset portfolio.
- In some regions, taxes on REIT dividends are at a lower rate.
Individual Stocks
With individual stocks, you’re purchasing shares of a specific company. This investment is more risky; the returns you expect on your assets depend on the company’s ability to thrive in an ever-competitive world.
Before you purchase company stocks, you need to properly understand the business’s services and potential for growth.
Growth is not always linear and quick; there will be ups and downs, especially if you’re investing in a new business. This is why individual stocks aren’t always favorable for short-term trading, and you need to be sure your investment plans are long-term.
Why Choose Individual Stocks?
- Individual Stocks are high-risk but hold the potential for high returns.
- Complete control covers your investment.
- Some companies offer dividends to shareholders.
Options Trade
Another way to invest your money would be through options. An option gives you the right to buy or sell a stock at a specific price within a duration.
For call options, you can purchase a certain asset for a fixed price and make returns when the stock price rises. Put options let you sell a stock or asset at a specific price. Here, to make a profit, you’re betting on the stock’s cost to reduce, increasing your put option when you sell.
The potential for losses in options trading tends to be quite high because action needs to be taken. The underlying asset must move under the specified time limit, or the option can expire. The value of the underlying assets after the expiration of the option is usually decided among investors.
Why Choose Option Trade?
- Can deliver massive returns over short-term periods
- Allows investors to control larger positions with smaller investments
- It helps protect existing investments from potential losses
Conclusion
Selecting the best investment options can be difficult—sometimes, it can feel like a minefield of high- and low-risk options.
There are more options than the ones we’ve mentioned. Now is a good time to find which investment works for you and put your money somewhere other than a standard savings account, as most people do. Make your money go further!
