“Invest in yourself” seems to be the mantra of the new
decade. While we are sure you have figured out how to invest in your mental and
physical health as well as your social life, for most beginners out there,
figuring out the best places to invest money may not seem simple. Do not worry,
for we have got you covered. In this list, we have jotted down the best places
where you can invest money for good returns with a relatively low level of
risk:
1. Laddering
Certificates of Deposit: In general, certificates of deposit are offered by
banks and pay a rate of interest higher than savings account. The whole money
is fixed for a particular time period after which it can be withdrawn, with the
interest accrued. Generally considered safe, the only risk with these is that
if the market rates rise in between, you will not be able to take advantage of
it since all your money is locked away in a CD. This is where laddering (that
is investing in CDs of different rates of interest) comes into play. This is a
smarter move rather than placing all your eggs in one basket, considering that
you will be able to take advantage of different rates in different market
conditions.
2. High Yield Savings
Account: This is just an online version of your usual savings account in
your regular brick-and-mortar bank, only that the processing charges are much
lesser, and they pay way more interest, so you stand to gain much more than
your usual savings account deposits. Usually considered one of the safest forms
of investment, these are also very liquid. The only risk attached is similar to
that of CDs: you will not be able to take advantage of rising interest rates if
the market enters inflation in the middle of your investment period.
3. Growth Stock Funds:
If you are a beginner in investment or generally someone who does not feel
confident about analysing stocks of each company individually and then deciding
which one to invest in, this is the best option for you. You have two options
within growth stock funds: let a professional fund manager decide for you which
stocks to buy or buy a pre-selected index of stocks by yourself. Either way,
the return will be the average performance of all stocks, and thus is generally
considered safe. These investments are highly liquid as well- you can easily leave
whenever the market is open for trading.
4. Real Estate:
One of the best options for long term
returns. The gains include not just the increase in capital value of your
property over the years, but also the rental income, should you choose to rent
it out. Add the tax benefits you will get from showing real estate investments,
and you got yourself a winner right here. Only word of caution: do your
research before investing. Do not end up overpaying.
5. Software Companies:
As the world turns to smartphones, smart homes, online shopping and a “smarter”
way of living in general, the relevance of technology, specifically advanced
software applications, is not fading out anytime soon. Thus, it makes sense to buy
stakes in software companies as a form of alternative investment as their
relevance cannot be undermined. If you are feeling a little bold, start with
investing small amounts in promising startups, else stick to the good old big
names.
We hope that after going through this list, you are feeling
a little more confident about planning your own finances. Get started with
jotting down your financial goals for the year, carefully choose the most
feasible options from our list, and invest into a better future!
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