Where should you invest your money? How can you make money online? You’ve tried to look at other blogs but they never answer what you’re looking for. Well, I found the solution.
Now, I’m not promising you this will be easy. But it will be well worth your time if you are looking for a way to work from home and have financial freedom. The following are safe investments with high returns. They are NOT get-rich-quick schemes or scams. First, let’s begin with how-to then we can go into where-to.
How to Invest
Get an Emergency Fund
Having a fully stocked emergency fund in an accessible savings account is a huge financial priority. You want to have three to six months’ worth of living expenses tucked away. Emergencies happen all the time, and having the capital to deal with them is a necessity. You don’t want to have to tap into your investments to deal with a car repair or a hospital bill. Don’t have an Emergency Fund? Start saving for one with LendingClub Bank’s high-yield savings account.
Pay High-Interest Debt
Other financial priorities could include paying down high-interest debt. If you have a debt that has a higher interest rate than your investment return, you’re losing money each day you carry the debt. So it works in your favor to pay down high-interest debt as soon as possible.
Take Your Age as a Factor
Another significant factor is your age.
- If you’re 30 years old – You’ve got a few decades before you retire. You can play with long-term investments such as stocks that would be too risky for someone on the cusp of retirement. After all, stocks can lose their value quickly, but if you have 30 more years before you need that cash, you can afford to take that gamble.
- If you’re closer to retirement age – you want to focus on maintaining what you’ve already got. Safer, steadier investments — especially where there are dividends involved — are a better choice for you.
Understand What Compound Interest is
Time is on your side. Thanks to compound interest, you are more likely to earn more money the sooner you start investing. Here’s why: Let’s say you’re 25 years old, and you can pull together $5,000 per year to invest. That’s money you may have accumulated from holiday bonuses from your boss and birthday checks. If you were to save $5,000 every year for 40 years, when you’re 65 and ready to retire, you’d have just $200,000. But if you invest that money into something with a 7% annual return, you’ll have made $1,068,048. More than $1 million! If you were to increase your monthly contributions, you’d see even more money when it’s time to retire. While millennials are perfectly poised to take full advantage of compounding, anyone can benefit.
It’s essential to keep in mind that investing comes with a risk, so make sure only to invest money that you know you won’t need in a few months’ time. The stock market can be volatile day-to-day, but you’re more likely to make higher returns in the long run if you invest than if you don’t invest.
Where to Invest
Individual stocks
Buying stocks in individual companies is the riskiest investment option discussed here, but it can also be one of the most rewarding. But before you start making trades, you should consider whether buying a stock makes sense for you. Ask yourself if you are investing for the long-term, which generally means at least five years, and whether you understand the business you are investing in. Stocks are priced every second of the trading day and because of that, people often get drawn into the short-term trading mentality when they own individual stocks.
But a stock is a partial ownership stake in a real business and over time your fortune will rise with that of the underlying company you invested in. If you don’t feel you have the expertise or stomach to ride it out with individual stocks, consider taking the more diversified approach offered by mutual funds or ETFs instead.
High-yield savings accounts
This can be one of the simplest ways to boost the return on your money above what you’re earning in a typical checking account. High-yield savings accounts, which are often opened through an online bank, tend to pay higher interest on average than standard savings accounts while still giving customers regular access to their money.
This can be a great place to park money you’re saving for a purchase in the next couple years or just holding in case of an emergency.
Certificates of deposit (CDs)
CDs are another way to earn additional interest on your savings, but they will tie up your money for longer than a high-yield savings account. You can purchase a CD for different time periods such as six months, one year or even five years, but you typically can’t access the money before the CD matures without paying a penalty.
These are considered extremely safe and if you purchase one through a federally insured bank, you’re covered up to $250,000 per depositor, per ownership category.
401(k) or another workplace retirement plan
This can be one of the simplest ways to get started in investing and comes with some major incentives that could benefit you now and in the future. Most employers offer to match a portion of what you agree to save for retirement out of your regular paycheck. If your employer offers a match and you don’t participate in the plan, you are turning down free money.
In a traditional 401(k), the contributions are made prior to being taxed and grow tax-free until retirement age. Some employers offer Roth 401(k)s, which allow contributions to be made after taxes. If you select this option, you won’t pay taxes on withdrawals during retirement.
These workplace retirement plans are great savings tools because they’re automatic once you’ve made your initial selections and allow you to consistently invest over time. You can even choose to invest in target-date mutual funds, which manage their portfolios based on a specific retirement date. As you get closer to the target date, the fund’s allocation will shift away from riskier assets to account for a shorter investment horizon.
Mutual funds
Mutual funds give investors the opportunity to invest in a basket of stocks or bonds (or other assets) that they might not be able to easily build on their own.
The most popular mutual funds track indexes such as the S&P 500, which is comprised of around 500 of the largest companies in the U.S. Index funds usually come with very low fees for the funds’ investors, and occasionally no fee at all. These low costs help investors keep more of the funds’ returns for themselves and can be a great way to build wealth over time.
ETFs
Exchange-traded funds, or ETFs, are similar to mutual funds in that they hold a basket of securities, but they trade throughout the day in the same way a stock would. ETFs do not come with the same minimum investment requirements as mutual funds, which typically come in at a few thousand dollars. ETFs can be purchased for the cost of one share plus any fees or commissions associated with the purchase, though you can get started with even less if your broker allows fractional share investing.
Both ETFs and mutual funds are ideal assets to hold in tax-advantaged accounts like 401(k)s and IRAs.
Mutual funds
Mutual funds are similar to ETFs; both package dozens or hundreds of individual securities into one investment. Mutual funds differ from ETFs in how they are priced and sold. ETFs work like individual stocks. When the market is open, their prices change in real-time and you can trade them as often as you want. Mutual funds are priced just once a day and there may be limits on how frequently you can trade them. Sophisticated investors will have reasons for preferring one over the other but, in general, ETFs are easier to trade for new investors.
Bonds
Buying individual bonds is an advanced investing strategy. You can add bonds to your portfolio with a bond index fund (either an ETF or mutual fund). If you invest in a robo-advisor or diversified fund, that will include bond exposure according to the product’s goals and risk profile.
Real estate investing
Real estate can be a great investment, too. To be clear, you shouldn’t consider your primary residence an investment. Real estate investments refer to apartments or commercial buildings that you own and then lease. Although most real estate appreciates over years and decades, the power of real estate investing lies in the cash flow from tenants.
If you can charge more rent than you pay in mortgage, taxes and maintenance, owning real estate can create income you can put in your pocket or reinvest.
Learning how to invest in real estate is a much larger topic that we can cover here, but there are ways to get started quickly on a modest budget. Fundrise and Roofstock are two real estate investment platforms that crowdsource investment opportunities. You can invest as little as $5,000 alongside other investors and share in the profits coming from large, multi-unit apartments or office buildings.
These investments are not without risk, and the companies’ fees eat into returns. But they may be attractive if you want to add real estate exposure to your portfolio without taking on the work and expense of buying and managing properties yourself.
Advanced investments
What if you want to make a bet on the stock of a company you love? Or try to ride the latest /r/wallstreetbets meme stock to the moon?
Over the last few years, stockbrokers have eliminated trading fees and made it easy to buy fractional shares of stock. In the past, if a stock cost $500 per share you would need to have $500 in order to buy one share. You might also be charged a commission of $5 each time you bought or sold stock.
Today, you can invest as little as a few dollars in any stock without paying a commission. If you have $50, you can buy one-tenth of a share of that $500 stock.
Research shows that the very best way to invest is to buy index funds and hold onto them for decades. This strategy beats even the smartest Wall Street traders nearly every time. It’s also painfully boring.
This is how I suggest you invest most of your money. But it’s fine to set aside 5% or 10% of your money to “play” with by making more frequent trades. I do it myself. It allows you to have fun and learn by making more frequent trades without jeopardizing your wealth. The beauty of diversification is that you can benefit from any stocks that do well, but a few losing stocks won’t bankrupt you. If you pick your own stocks and pick wrong, it’s quite possible to lose most of your hard-earned money.
Investment Apps
Invstr – Best investment app for learning about investing
Invstr is what you get when you mix learning, real-life investing and community into an app that’s designed to give beginning investors a way to get into stocks, especially if you like games. The app combines a fantasy stock game, where you can assist in managing a $200 billion virtual portfolio, with access to investors’ thoughts on stocks and other investments.
The fantasy game gives you $1 million in virtual money, and you can use the app’s social network and news feed to source ideas. The month’s top performers win real cash, too. And if you want to turn some of those fantasy picks into real-life stakes, you can buy fractional shares and whole shares commission-free in the app. The app will even give new users $5 when they open and fund an account. Invstr has also started offering commission-free trading in cryptocurrencies.
Reasons to get this app: You want to learn from an investing community, hear why they like certain stocks and play a fun fantasy game.
Wealthbase – Best investment app for beginners
Wealthbase is a newer entrant into the world of stock market games, and it may be the most user-friendly investing app out there for having fun and picking stocks. You can set up games with friends to last however long you want — a few weeks, days, even just until the end of the day.
Two things set Wealthbase apart in the stock simulator world: first, the app marries social media with stock picking. You’ll see a feed of stocks your friends are picking, with daily updates of who’s winning, and you can engage in a little friendly “trash talk.” Second, the app runs very smoothly — no delays to load, no hiccups. Even if you’re not a huge stock-picker, you’ll have fun here. And you can trade crypto in the simulation as well.
You can access Wealthbase on the web or via mobile app.
Reasons to get this app: You like picking stocks and playing games in a social environment with friends and colleagues.
Wealthfront – Best investment app for sophisticated portfolio management
Wealthfront is one of the largest independent robo-advisors, and for a small fee it can manage your money, whether that’s in a taxable account or an IRA. Wealthfront uses low-cost ETFs to construct your portfolio and takes into account how much risk you want to take as well as when you’ll need the money. As you deposit money, Wealthfront will add it to your portfolio and keep your account balanced and on target toward your goal.
Wealthfront’s management fee runs 0.25 percent annually, which is the industry standard. It’s an eminently reasonable price for the features on offer, including automated tax-loss harvesting, which effectively covers the annual fee for many clients, says the company. Wealthfront also brings an attractive cash management account (even if you don’t sign up for the investment account), and you’ll receive a competitive interest rate, early access to direct-deposited paychecks and a debit card – all without a monthly fee.
Reasons to get this app: All you’ll need to do is add money to the account and Wealthfront manages your portfolio to reach your goal. The cash management account is cool, too. As a Bankrate user, get $5,000 managed for free when you open a Wealthfront investment account.
Minimum balance required: $500
Fees: Management fee of 0.25 percent of assets annually
Acorns – Best investment app for savers
Acorns is one of the older of the new breed of finance apps, but it remains one of the most popular, because of how easy it is to use. You really don’t have to pay much attention once you’ve set up the app. Link a debit or credit card to your account, and Acorns will round up the total on purchases to the next dollar and invest that difference into one of a few ETF portfolios.
The cost is a modest $1 per month for Acorns Lite, though the company offers other features. If you want to take a step up, you can move to Acorns Personal, which is bundled with Lite, for $3 per month. This tier offers an individual retirement account (IRA), and you’ll be able to open one of three versions: the traditional, Roth or an SEP. You can even roll over an existing 401(k) or IRA.
Acorns chooses your portfolio based on the targeted time until your retirement (calculated as age 59 ½), becoming more conservative as you near that age, a timing that may not be appropriate for all investors. This tier offers an FDIC-protected checking account, too, with no additional fees and fee-free access to thousands of ATMs.
And for a total of $5 per month, you can add Acorns Family, which includes the features of the first two tiers as well as investment accounts for children.
Reasons to get this app: You like getting automatic investments while you’re spending without worrying about it. You like retirement investing without the hassle.
Minimum balance required: $0 for savings account
Fees: $1, $3, or $5 per month depending on the service tier
Betterment – Best investment app for socially responsible investing
Betterment is one of the (relatively) new wave of robo-advisors, and it’s one of the largest and most popular. The app provides professionally managed portfolios using a selection of ETFs and is calibrated against your own risk tolerance. Betterment can create socially responsible portfolios, including those that focus on climate change or social impact. If you’re willing to stomach a little more risk, the app can find you investments with a potentially higher return over the long run. If you need a safer portfolio, Betterment can do that, too. You can set up Betterment and then kick back while the pros do the rest of the work.
Betterment charges a much smaller price than you’d pay for a traditional financial advisor. The management fee for the basic account amounts to 0.25 percent — a competitive rate in the robo-advisor world, or $25 annually for every $10,000 you have invested. But you’ll have to pay extra for the ETFs that Betterment invests in, as you would at any robo-advisor. The app lets you set goals to invest for, such as a safety net or retirement, and there’s no account minimum.
Reasons to get this app: You like having a professionally managed portfolio for a low cost.
Minimum balance required: $0 for digital service
Fees: Management fee of 0.25 percent of assets annually for digital service
Robinhood – Best investment app for smooth trading
Robinhood is the app to have if you like a smooth interface and avoiding trading commissions.
The app allows you to trade stocks, ETFs, options and cryptocurrency all for free, and you’ll be able to do it in a slick mobile interface that makes smooth work of it all. The stripped-down app is simple to navigate, and after a while you’ll move from screen to screen intuitively as you trade the market. But you’ll have to know what you want to invest in, since there’s no advising here.
You can access a stock’s page from a search bar at the top of the screen, and pull up charts and vital statistics. Also useful is a feed that aggregates stories from news and investing sites, so that you keep on top of what’s going on. After you’ve decided what you want to trade and enter the number of shares to buy or sell, swipe up and the order is on its way.
Another great feature of the app is instant delivery of the first $1,000 of any funds you deposit to the account, so you can start trading immediately. If you’re a member of Robinhood Gold, a premium tier, you’ll have instant deposits on higher amounts, up to $50,000. (Here’s Bankrate’s full review.)
Reasons to get this app: You like trading stocks (and options and cryptocurrency) for free and having a simple way to follow the market.
Minimum balance required: $0
Fees: No commissions for stock, ETF, options or crypto trades
Conclusion
Before you start, you must have an investor mindset. To get there, it might take some time. We all want to invest, but the reason most of us don’t is that we just aren’t ready to look at money differently. It’s not really about money or understanding finances, although that does help. But more importantly, it’s realizing you are playing a game called “money.”