Unlike breathing, investing isn’t meant for every individual. Even though investments are a significant method of growing your long term wealth, it is not the only way of accomplishing your financial goals.
Investing rewards with higher returns compared to other methods, it holds a substantial risk of losing everything, or a significant part of your investments.
If you are not ready for this kind of uncertainty and risk, there are other safer methods you can try out other than the stock market.
Regardless of the type of investor you are, you can apply these methods for long-term savings. They are!
High-Yield Savings Accounts
You will not get any extra money with a checking account in the form of interest. However, a savings account will earn you interest over time. This is a convenient method of growing your balance with minimal effort. A standard savings account makes an average interest of 0.01%, compared to a high-yielding account, which will bring in 1% or 2% in interest.
The high-yield savings account remains better than the conventional accounts, even though the Fed has decreased interest rates.
Most online financial institutions and online banks have complied with the new rates. Depending on the financial institution you settle for, you can bag an annual percentage yield of 2%.
Certificate Of Deposit
This is a savings account that has a secured interest rate and a fixed maturity date. Even though this is a savings account, you cannot access the money, either deposit or withdraw until maturation- that is, the set time frame expires.
The time frames for CDs are dependent on the account holder, meaning it can range from a few months to several years. Typically, the longer you hold the money, the higher the interest.
If you are concerned about dropping interest rates, the account locks in a fixed rate that will last the entire duration. This is regardless of whether the overall interest rates drop in the future.
Your minimum account balance may be your caveat. Some institutions will require thousands of dollars. Check the minimum requirements at your preferred financial institution.
Micro-Investing
Some institutions will round up purchases and add the extra change to your savings. You can earn extra from this little amount through micro-investing.
With services like Acorns, your debit and credit cards are synced. This way, all your purchases round up to the nearest dollar, and the extra changes are driven into exchange-traded fund (ETF) portfolios.
ETFs are similar to stocks in their trading method, but they consist of various securities like bonds, assets, and assets.
Robo-Advisors
Rather than creating and managing your portfolios, you can use Robo-advisors to do it for you.
When creating an account, you fill in several questions about the type of investor you are and when you want to cash out.
These platforms are plenty, and some banks and investing platforms offer them to their customers. Most will require little money upfront, but there are some which don’t, and the fees are a minimal flat rate.
Treasury Securities
This involves investing straight into the government. You buy treasury securities through an online auction in $100 increments. Based on maturity length, there are several types of treasury securities:
Treasury notes- maturities vary from two to ten years, and the interest payments are made bi-annually
Treasury bills- timelines vary from days and a year, and they are sold from their value at a discount
Treasury bonds- Matures in 30 years with interest paid out bi-annually.
