Top 9 Investments You Can Make Right Now!
- Corgen White
- Aug 4, 2021
- 7 min read
Updated: Aug 5, 2021
So you have some money left over, and you are smart. You know that you need to find a way to make your money, make more money. However you are a bit overwhelmed by all the choices of different investment types. But fear not, for I have compiled a short article that weighs the differences between investment choices vs each other. This will let you find most of the basic information you need so you can determine which investment you would like to research more and act upon.
This list is in order from lowest risk/lowest reward to highest risk/highest reward. The lower risk options are the least likely to make you significant money (without high invested capital) but the most likely to give you consistent minimal returns.
Alright, so let’s get into this list to help you achieve your financial goals!
Pay down high interest debt
So while this isn’t necessarily an investment by traditional means- if you have high interest debt you should pay it off first. So that you can have more money to invest in the long run. This is one of the few times where it’s 0 risk yet has good reward.
If you have high interest debt it will be really hard to be able to invest since it will basically steal away any money you make from your investments.
So step 1 will be make sure you don't have any high interest debt that's bogging you down financially.
2. High Interest Savings Account
A high interest savings account isn’t really an investment. Despite what many people may think. It is also not as safe as many people may think. There are not many high interest savings accounts left that can match the annual returns of even the S&P 500.
The only reason I would invest in a HYSA (high yield savings account) is because its just plug and play. Meaning no research or brain power required to get one up and running and to continuously invest.
However with this ease of use comes the issue of it won't make you much money, the rates of these accounts tend to decrease over time. And many of them don't even match up to the inflation rate (USD is currently 5.4%). The highest ones you can really get right now are around .60%. Which is terrible for the growth of capital. You are actually losing almost 5% of your income each year by doing this.
TL;DR: don't.
3. 401k
A 401k is a tax-advantaged retirement investment account that is used for delaying taxes on your income. The money made with a 401k account is not taxed until it is withdrawn at retirement age (59 ½).
It lets workers make contributions to their 401k through automatic payroll withholding, and their employers can match some or all of those contributions.
This let’s you avoid taxes on this income while you are (probably) in a higher tax bracket during your working years, until you drop tax brackets when you retire. Therefore paying less tax on that income.
Use a 401k if you think you will be making less money when you are retired than when you are working.
(401k’s are best utilized when you are younger than older)
4. Roth IRA
A Roth IRA is similar to a 401k, in the fact that it is also a tax-advantaged retirement account. However you want to use a Roth IRA over a 401k if you think you will be making more money/in a higher tax bracket when you reach retirement age vs working age.
It taxes the income you put into it, however you do not pay taxes for any capital growth on this income. Therefore when you can pull it out at retirement age you will be able to do so without paying any tax on the money.
This is ideal for if you would be at a hire taxable income, since you won't lose a good portion of the money to taxes.
A Roth IRA vs a 401k is purely based on whether or not you will be making money while retired (via investments, businesses, etc.) and how much you think you will be making. If you are making more then than now- then get a Roth, if vice versa then go with a 401k.
5. Precious Commodities (gold, oil, silver )
These are awesome (100% biased). Basically you can but oil, silver, gold, and any other precious commodities such as these under the premise that they will always go up as the supply is limited.
These precious metals and resources are limited in nature. Which means that the price will inevitably go up over time as they are used more. It also lets you have something physical which I find appealing. Meaning you buy an ingot of gold, and you have an ingot of gold to show. Rather than investing in accounts that make digital money.
For example gold prices dip and shoot up but over the past 20 years the price is up over 577%. And silver is up 505% over the same time period.
(source: https://goldprice.org/gold-price-history.html)
These investments are 100000% long term. You won’t see much immediate return usually, however as shown over a long period of time you will get a net gain. And I would consider it very un-risky.
6. REIT
So you like the idea of real estate investing, but you either- A. Don’t have the capital, or B. Don’t want to do the work that real estate requires. Then a REIT is perfect for you.
A REIT, or Real Estate Investment Trust, is a group of people who pile together investors' money to invest, usually in commercial real estate. The investors are then paid out via dividends. - Very similar to the stock market but instead in the real estate market.
A REIT will give you steady returns on your money, but there is always the chance that the company tanks/real estate market crashes, so it does have decent risk to it- putting it here at number 6.
7. Stocks
The stock market. An intimidating foe in the investment world at first glance. A big monster of mystery that everybody loves to talk about.
However the fact of the matter is the stock market isn’t actually that complicated for the average investor. Just to get our facts straight- by Stock market investing I'm not talking about day trading, swing trading etc. I'm talking about long term buy and hold strategies.
So the first major plus of the stock market is that these index funds are historically giving out a return of about 10% (S&P 500 index fund is used as the benchmark usually). This means that investing $1000 dollars into the stock market will yield about a return of 100 dollars yearly.
Index funds are my personal favorite way to invest into the stock market because they don’t require you to research individual companies. And there are index funds for almost every significant market. For example if you think tech companies are gonna blow up in the next 10-40 years then perhaps a tech index fund such as FDN is your way to go.
These allow you to quickly diversify your income across many different companies.
(For more information on how to get started with stocks go check out our other post here)
8. Real Estate
I am most definitely biased with this one. I love the idea of real estate and I practice it in my own life. Real estate is property consisting of land or buildings. So acreage, a house, or office buildings are all real estate.
Real estate has its ups and downs but if you understand how humans work you can connect the dots and realize that all people need a home, most businesses need an office, most stores need a storefront, etc.
Real estate does have a decent barrier to entry as you need to understand some basic laws surrounding owning and renting property in your area. The other few barriers are credit score, and cost of down payment.
But don’t be worried! It’s definitely worth it to research real estate. It has some of the best long term returns and you can pretty much put everything on auto run by hiring property managers etc.
Real estate rental properties offer good return on the investment, and have tax advantages. Which is basically a double whammy on giving you returns. 100% you should look into getting yourself some rental properties for yourself.
9. Business
Now business is a broad, huge term. But the best possible returns you can get is by investing in building a business. However, a business will also have the highest chance of failure. But my personal philosophy is if you aren't putting your money at risk then you are being the most risky you can be- by not trying to build up your capital.
So a business can be anything you want. A good way to start is look at what skills you innately have and see if you can’t build something on the back of that. If you can’t think of any skills then go and invest in learning one first!
Now if you do have a skill you can try starting a scalable small business (if it's not scalable then you will have created a job and not an investment.). Or you can go the content creator route and grow a following on YouTube for example. Each video you make on YouTube is a mini investment that has the potential to make passive income for as long as YouTube and your channel last.
So yes a business is a huge potential risk to lose all your initial investment, but it's the only investment that can potentially make you “rich.”
This is the end of the Top 9 Investments You Can Make Right Now list, I hope you made it without your brain exploding! There are obviously more than just these 9 different types of investments so go and do your own research. I hope this article has at the very least helped pique your interest as to the different types of investments. So you can go and achieve your own financial goals. And can go and achieve your own financial goals.
Subscribe to this blog down below (at the bottom of the page) so you can be notified when I drop another investment/financial article for you to learn from. Thank you, for reading.
(Disclaimer: I am not a financial advisor any and all investment information here should be considered for entertainment purposes, and shouldn't be acted on without consulting with a financial advisor.)
Comments