Investing your money
is an important way to build your long-term wealth, but it is not the only method to choose when trying to achieve your . While you may get a higher return on investment in the long run, not everyone wants to risk losing a lot of money.
So what do you do if you want to take the safer route? There are other types of accounts to put your money into that are not as risky as the stock market. Even for the most conservative investors, you have options when it comes to long-term savings.
1. High-yielding savings accounts
A payment account does not usually generate extra money through interest. But a savings account does yield interest, so it's a good way to grow your balance over time with little effort. A regular savings account averages 0.01% interest. A high-yielding savings account – or an account with a higher interest rate compared to regular savings accounts – can yield anywhere from 1% to 2%.
Althoughand many online banks and institutions have followed suit, interest rates for high yield savings accounts are still much better than traditional savings accounts. Depending on the institution you choose, you can get an APY of 2% (annual return).
Although you usually don't earn as much as you would invest, you have no chance of losing money through a. It's an easy starting point if you don't mind slow growth.
2. CD & # 39; s
A certificate of deposit or CD is a long-term savings account with a fixed interest rate and an expiration date. An expiration date means you can't touch the money in the account until it reaches that specific point.
A CD is similar to a savings account in that you cannot lose money. But with a CD you have no access to the money for a certain time. With savings accounts, you can usually deposit and withdraw money whenever you want.
Term lengths for CDs can range from a few months to a few years. Usually, the longer the term, the higher the interest. If you are concerned about a further drop in interest rates, a CD will now lock in a fixed interest rate that will last for the term, even if general interest rates fall later.
A warning may be your minimum account balance. Some accounts require thousands of dollars to get started. If you have enough to meet the minimum requirements, this will not be difficult. But if you only have a few extra dollars, you may not be eligible for a CD. Before you get started with a CD, you should see how much you need for it.
3. Micro investing
A little goes a long way when it comes to investing. Some banks finalize your purchases and deposit the extra change in your savings account. If you want to earn some more, you can trythrough micro-investments.
Services like Acorns are synchronized with your credit and debit cards. Purchases are rounded to the nearest dollar, with the additional change in a portfolio investing in exchange-traded funds or ETFs. ETFs are traded as shares, but consist of a basket of various securities, including stocks, bonds and other assets.
When you think of investing, you could imagine buying individual shares through a broker. But micro investing gives you the chance to make a little bit of extra money without putting all your money in one proverbial basket. ETFs offer you instant diversification, so if there is a loss in one area of your portfolio, you will not be hit hard on your investments.
4. Robo advisors
If you have a little more tolerance, you can try investing through a robo adviser. Robo advisors are passive investment platforms that create and manage an investment portfolio on your behalf.
When creating an account, answer a few questions about the type of investor you are and when you plan to withdraw. There are many different robo advisors to choose from, and some are offered through banks or investment platforms you may already be using. Two of the most popular,require very little money up front to get started (or nothing at all). The fees are a minimum annual fixed rate. And once you get started, everything is usually hands-off for you.
While all investments carry risks, robo-advisors put your money into low-risk ETFs. If you experience a drop in income, don't forget that investing is a journey. Eventually your portfolio will recover and account adjustments can be made.
5. Treasury Securities
Another option is to invest directly in the United States government through Treasury securities. You buy treasury bills online through an auction in increments of $ 100. There are a few different types of treasury bills that vary based on maturity.
- Treasury bill: The terms vary from days to one year. They are sold at a discount on their face value.
- Treasury notes: Maturities range from two to ten years with interest payments every six months.
- Treasury bonds: These expire in 30 years and pay interest every six months.
All Treasury bills are fully backed by the government in trust and credit. You are not only assured of your principal, but also of your interest, as long as you hold them until their due date. Your earnings may not be as high compared to other types of investments, but it is very low risk and still gives you profit potential.