We have all heard about the importance of investments and diversifying our financial profiles. Unless you're an expert, though, it's hard to know the best things to invest in right now. Here are some of the best investment moves you can make.
Top 10 Things to Invest In
It's important to note that different investors have unique needs, and because each person's goals are individualized, there is no perfect investment profile that fits everyone. It may be beneficial to speak to an investment advisor or another professional who can help you determine an approach that's tailor-made to you.
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Generally speaking, though, these are the best things to invest in 2021. First, consider high-yield savings accounts. These accounts typically require a higher initial deposit and minimum balance, but they grow faster, which makes them great for protecting against inflation. As of this writing, CNBC reports that the national average APY on savings accounts is 0.07 percent.
You might also wish to invest in government bonds (federal). These can take up to 30 years to fully mature, but they're incredibly stable and dependable. They make great investments for children, as well. Municipal bonds (usually state or local governments) are also a good choice. Like federal government bonds, these can take a long time to mature, but they're also very stable and are often exempt from taxes. The SEC explains that the latter group is used by municipal governments to fund projects like highways and schools.
Additional Investment Vehicles
CDs, or certificate of deposit accounts, are similar to high-yield savings accounts, except that you may be restricted in terms of how much and when you can make withdrawals. That being said, they tend to have slightly higher interest rates.
Short-term corporate bonds, unlike government bonds, usually mature within five years, though the SEC explains that they can take less than three or even up to 10 years to mature. They're relatively low-risk and relatively diverse. You could also choose hedged mutual funds; this type of investment is considered very safe. While they're diverse, you can be confident that your money is being managed in safe investments.
Real estate, especially rental properties, can be a good investment. Purchasing property may require a good deal of cash up-front, especially if you intend to buy something that needs some fixing up. That being said, the eventual payoff can be huge. Some people are able to entirely replace their work income by becoming landlords.
More Investment Options
Index funds, especially S&P 500 or Nasdaq 100 funds, can be a smart investment. Index funds represent an investment in an entire area of stocks, rather than specific stocks individually. In other words, you're betting on an entire portion of the market to do well, which is considered safer. You may need to be patient to weather some ups and downs, though.
Somewhat similar to retirement plans, annuities are long-term investments. They're designed to protect against outliving the rest of your investments.
Finally, there is cryptocurrency. While investing in these can be high risk, you've doubtless heard of the enormous payoffs that early investors have yielded. Many fans of traditional investments have started venturing into cryptocurrency to further diversify their portfolios.
Best Things to Invest
The ultimate goal of investing in anything is to see some kind of return and make money, at least in the long term. But sometimes, investments are just about creating a safety net, security for the future, retirement or protecting against inflation.
If you're hoping to supplement or even replace your income, there are other best things to invest in to make money. Certainly, rental properties are potentially lucrative in the short term, especially if you can buy cheap and rent higher. Look for property in up-and-coming areas or where the population is highly transient, such as a college town.
Stocks can also be a good way to make money more quickly, but you'll need to become something of an expert in an industry or field. That will allow you to stay on the cutting edge of trends and predict good opportunities. Some of the best stock websites for beginners include TD Ameritrade, Fidelity and Robinhood. There are a number of other best investment companies worth a look at, however, and your financial advisor can point you in their direction.