Smart Investments That Can Boost Your Earnings

The investment rollercoaster is a wild ride for many venturing into wealth building. It requires strategic thinking, calculated risk-taking, and a bit of luck. Market volatility in the current economic times is pushing many away from making these investment decisions.

But what’s a smart investment that can boost your earnings today? Well, the answer is quite unsatisfying: it depends. Some have found luck wagering at non GamStop gambling sites, others in cryptocurrency, while others have burnt their savings in sketchy pyramid schemes. The main message is that investment isn’t a one-size-fits-all. Focus on your goals and don’t change due to market whims. Here’s our look at investment options working well for others.

Understanding Smart Investment Fundamentals

Financial gurus describe a smart investment as one that aligns with your financial goals and risk tolerance. It could make returns while simultaneously minimising risk. Warren Buffett describes it as one that focuses on the long-term potential rather than short-term market fluctuations.

Let your risk tolerance, time horizon, and financial goals lead your investment strategy. Diversifying your investment portfolio covers you during market volatility while maximising your potential returns.

The time horizon will impact your investment choice. For example, short-term goals under five years call for liquid and stable investments like a high-yield savings account. On the other hand, a long-term objective spans decades to allow for riskier investments that can weather market fluctuations and compound over time.

Financial goals reveal a direct pathway to an investment decision. When planning for your retirement, it’s way different from saving for a house down payment or your children’s education. Therefore, set clear objectives to determine the appropriate investment option.

Smart Investment Options to Look Into

Below are some favourable investment options worth considering when pursuing your wealth-building journey:

Fixed Annuities 

Retirement sounds like a death calling for many. Why? Many of us are unprepared for life after employment. But a fixed annuity is a good option for someone looking to earn guaranteed minimum payments in the future.

These fixed annuities trade present-day payments for guaranteed future payments. It is backed by an insurance company, offering investors a guaranteed stream of income during their retirement.

After signing up for a fixed annuity contract, you’ll contribute money either in a lump sum or small monthly payments (premiums). Upon completion of the accumulation phase, you unlock the distribution phase.

High-Yield Savings Account

Technically, a savings account isn’t an investment. But, if the account continues grossing high rates despite market volatility, it deserves to be crowned as one. It’s typically similar to your normal savings account, only that it offers significantly higher interest rates on deposits.

Additionally, these HYSA are insured by the Federal Deposit Insurance Corporation (FDIC). This means that even if your bank goes bankrupt, you’re insured up to FDIC limits.

We recommend using it as an emergency fund. Here, you’ll increase your emergency savings without the risk of a market crash that’s present in other investments. Alternatively, choose it as an avenue to meet your short-term goals. It can offer a dedicated and convenient way of tracking your progress towards achieving these short-term goals.

Before investing, pay close attention to the interest rates, fees, and deposit requirements of different banking institutions.

Real Estate Investment Trusts (REITs)

Don’t wait to buy real estate; buy real estate and wait! That’s a common saying in the real estate docket. But what if you’re new to these waters? Over the decades, RIETS has provided an accessible entry point into the real estate market without the complexities of property ownership.

REITs are companies that own, operate, or finance income-generating real estate. They trade on major stock exchanges similar to regular stocks. Hence, as an investor, you’re buying shares in a diversified portfolio of properties.

Moreover, REITs typically pay higher dividends compared to other equities due to the cash-generating nature of real estate properties.

Money Market Funds

A low-risk investment option for risk-averse investors is an MMF. The underlying securities in MMFs are short-term in maturity, where these assets are invested in treasury bills, foreign money market instruments, and certificates of deposits.

Due to the short-term maturity of these assets, their underlying value doesn’t fluctuate much due to market volatility. They maintain a stable share price, while interest rates vary depending on the financial institution offering it.

Interest rates on these MMFs fluctuate depending on the Federal Reserve policy changes. These funds tend to reflect high yields, especially with a rising rate environment. Some institutional MMFs often offer better rates than retail versions.

Building Your Investment Portfolio

Successful investing calls for a balance between risk and reward across different asset classes. Maintain a diversified portfolio with desired risk levels to capture gains from outperforming assets. The key to any successful investment story lies in consistency, learning, and patience. The market rewards investors who maintain long-term aspirations despite short-term volatility.