Investing money is an important way to build your long-term wealth, but it is not the only method you can choose when you are trying to meet your financial goals. While you can get a higher return on investment in the long run, not everyone is willing to risk losing a lot of money.
So what do you do if you want a safer road? There are other types of accounts that you can use to keep money that is not risky such as the stock market. Even for the most conservative investors, you have the opportunity to save in the long run.
Investing isn’t for everyone. If you want to grow your wealth in the long term, here are some other ways to save.
High Yield Savings Account
Current accounts do not usually generate additional money through interest. However, savings accounts provide interest, so you can increase your balance over time with minimal effort. The average interest rate for an ordinary savings account is 0.01%. A high-yield savings account – or an account with a higher interest rate than a regular savings account – can generate returns of 1% to 2%.
Even though the Fed is cutting interest rates and many banks and online institutions have followed suit, interest rates on high-yield savings accounts are still much better than traditional savings accounts. Depending on the institution you choose, you can get an annual return of 2% or APY.
Even though you usually don’t make as much as you would invest, there is no chance of losing money to a high-yield savings account. This is an easy place to start if you’re not against slow growth.
A certificate of payment or CD is long-term savings account with a fixed interest rate and a due date. The maturity date means that you won’t be able to touch the money in your account until it reaches a certain point.
A CD is similar to a savings account where you can’t afford to lose money. However, with CDs, you don’t have access to money for a certain period. Savings accounts usually allow you to deposit and withdraw funds whenever you want.
The duration of the CD can vary from a few months to several years. Usually, the longer the period, the higher the flowering rate. If you fear that interest rates will fall further, the CD will set a fixed rate that will last for that period – even if general interest rates fall later.
The explanation can be your minimum account balance. Some accounts require thousands of dollars to get started. If you have enough money to meet the minimum requirements, it won’t be difficult. However, if you only have a little extra cash, you may not be able to qualify for the CD. Before you start with a CD, do some research to see how much you need to qualify for.
A little take a long time to invest. Some banks will collect your purchases and make additional changes to your savings account. If you want to earn more, you can try micro-investment modifying your backup.
Services like Acorns sync with your credit and debit cards. Purchases are rounded off to the nearest dollar with an additional change in the portfolio invested in an exchange-traded fund or ETF. ETFs are traded like stocks but are made up of a basket of various securities, including stocks, bonds, and other assets.
When you are thinking about investing, you can imagine buying individual stocks through a broker. However, micro-investing allows you to make more money without putting all your money in one proverbial basket. ETFs, give you instant diversification. So if there are losses in any area of your portfolio, you won’t see a big hit to your investment.
If you have a little more tolerance then you should try investing through Robo advisors. Robo Advisor is a passive investment platform that creates and manages an investment portfolio on your behalf.
When you create an account, you answer several questions about your type of investor and when you want to obtain cash. There are many Robo-advisors to choose from, and some are offered through banks or investment platforms that you can already take advantage of. Two of the most popular, Betterment and Wealthfront, cost very little money to get started (or not at all). This fee is a fixed minimum annual price. And once you start, it’s all about you.
Even though all investments come with risks, Robo advisors invest your money in low-risk ETFs. When you experience a decline in profits, remember that investing is a journey. Eventually, your portfolio will recover, and account adjustments can be made.
Treasury securities (Government bonds)
Another option is to invest directly in the US government through government bonds. You buy government bonds online art auction in increments of $ 100. There are different types of treasury securities, which vary depending on their maturity.
- Treasury bills: Conditions vary from day to year. They are sold at a discount of their face value.
- Treasury notes: Maturities vary between two and ten years, with interest payments being made every six months.
- Treasury bonds: They mature after 30 years and bear interest every six months.
All government securities are fully backed by government trust and credit. You guarantee not only your principal payment but your interest as well, as long as you keep it until the due date. Your returns may not be as high as other types of investments, but it is very low risk and still offers you potential returns.