Invest More Now?

There are many factors to consider when deciding whether to invest more right now. These include your risk tolerance, time horizon, knowledge of investing, financial situation, and the amount you can invest. Here are some key points to consider:

- Risk tolerance: How much risk are you comfortable with? If you are a conservative investor or nearing retirement, you may want to allocate a larger portion of your portfolio to lower-risk investments such as savings accounts, CDs, or bonds. If you have a higher risk tolerance and a longer time horizon, you may be more comfortable investing in stocks or other higher-risk, higher-return options.

- Time horizon: If you need the money in the short term, it is generally advisable to stick with safer investments such as savings accounts, CDs, or bonds. If you have a longer time horizon, you can consider investing in stocks or other volatile investments, as you will have more time to ride out any market ups and downs.

- Knowledge of investing: Investing in the stock market requires more knowledge and research than investing in safer options like savings accounts or CDs. If you are new to investing, consider starting with lower-risk investments or using tools like index funds or robo-advisors to help you get started.

- Financial situation: Make sure you are in a stable financial position before investing more. This means having manageable debt levels, an adequate emergency fund, and the ability to withstand market fluctuations without needing to access your invested money.

- Amount you can invest: If you have a larger amount to invest, it may be worth investing in higher-risk, higher-return options. However, if you are starting with a smaller amount, it may be more feasible to stick with lower-risk investments or use tools like ETFs or mutual funds that require less upfront capital.

Ultimately, the decision of whether to invest more right now depends on your personal financial situation, goals, and risk tolerance. It is always a good idea to consult with a qualified financial professional before making any investment decisions.

High-yield savings accounts

• Interest rates: High-yield savings accounts offer much higher interest rates than traditional savings accounts, with rates currently ranging from around 4.5% to 5.5% APY. These rates are significantly higher than the national average savings account rate, which is currently around 0.45%.
• Liquidity: High-yield savings accounts are liquid, meaning you can add or withdraw money at any time, just like with a traditional savings account. This makes them a good option for short-term savings or emergency funds.
• FDIC insurance: High-yield savings accounts are typically insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000 per depositor, so your money is safe even if the bank fails.
• Minimum balance requirements: Many high-yield savings accounts have no minimum balance requirements to open or maintain an account, making them accessible to all types of savers. However, some accounts may require a minimum balance to earn the highest interest rates.
• Fees: High-yield savings accounts typically have low or no monthly maintenance fees, and some may even waive fees if you maintain a certain minimum balance. However, there may be fees for things like excess transactions or wire transfers.
• Online accessibility: Many high-yield savings accounts are offered by online banks, so you may not have access to physical branches. However, online banks often provide easy account management through mobile apps or websites.
• Transfer limits: Some high-yield savings accounts may have transfer limits, such as a maximum of six transactions per month, and you may incur fees for exceeding these limits.

Overall, high-yield savings accounts are a great option for those looking to grow their savings faster without taking on the risks of investing. They offer higher interest rates, easy accessibility, and FDIC insurance, making them a safe and flexible choice for savers.

Long-term certificates of deposit

CDs generally offer higher interest rates than savings accounts, making them attractive for those seeking higher returns. The longer the term of the CD, the higher the interest rate offered. This makes long-term CDs a good option when you expect rates to fall, allowing you to keep your money earning higher rates for an extended period.

When considering a long-term CD, it is important to keep in mind the early withdrawal penalties. CDs usually come with significant early withdrawal fees, so it is crucial to ensure that you are comfortable with the term length and will not need to access the funds before maturity.

Some banks offer specialty CDs, such as bump-up or no-penalty CDs, which provide more flexibility. Bump-up CDs allow you to raise your interest rate if rates increase during the term, while no-penalty CDs let you withdraw your money without incurring a penalty.

When choosing a long-term CD, it is recommended to compare options at different banks and credit unions to find the highest interest rates. Online banks tend to offer more competitive rates than traditional brick-and-mortar banks. Additionally, look for CDs that compound interest daily, as this will maximize your earnings.

Long-term CDs are well-suited for investors who are certain they won't need to withdraw their money for an extended period and are seeking higher returns than those offered by savings accounts. They provide a guaranteed rate of return and are considered a safe investment option.

Long-term corporate bond funds

Investment-grade long-term bond funds often reward investors with higher returns than government and municipal bond funds. But the greater rewards come with some added risk.

You can buy and sell corporate bond funds with any broker that allows you to trade ETFs or mutual funds. Most brokers allow you to trade ETFs for no commission, whereas many brokers may require a commission or a minimum purchase to buy a mutual fund.

• SPDR® Portfolio Long Term Corp Bd ETF
• IShares 10+ Year Invmt Grd Corp Bd ETF
• Vanguard Long-Term Corporate Bd ETF
• Invesco Taxable Municipal Bond ETF
• IShares Core 10+ Year USD Bond ETF
• Vanguard Long-Term Bond ETF
• FlexShares Crdt-Scrd US Lng Corp Bd ETF

Dividend stock funds

There are two main types of dividend stock funds: those that invest in high-dividend stocks, and those that invest in dividend-growth stocks.

High-dividend stocks typically come from more mature businesses that pay out profits to shareholders rather than reinvesting them. These stocks tend to have high yields but also carry more risk. They are often found in the financials, energy, utilities, and industrials sectors. High-dividend stocks can be vulnerable during economic slowdowns and may be influenced by rising interest rates.

Dividend-growth stocks, on the other hand, don't usually have high yields but are generally financially healthy companies that have consistently raised their dividends over time. These stocks exhibit resilience during market downturns and economic slowdowns.

When choosing a dividend stock fund, it's important to understand which type of stocks the fund invests in. This information can be found in a Morningstar fund or ETF report.

• BlackRock Equity Dividend MADVX
• Capital Group Dividend Value ETF CGDV
• ClearBridge Dividend Strategy LCBOX
• Columbia Dividend Income CDIRX
• Fidelity High Dividend ETF FDVV
• FlexShares Quality Dividend ETF QDF
• Franklin U.S. Low Volatility High Dividend ETF LVHD
• Invesco Diversified Dividend LCEYX
• Vanguard Dividend Appreciation ETF VIG
• Vanguard High Dividend Yield ETF VYM

Value stock funds

Value stocks tend to perform better when interest rates are rising and growth stocks become less attractive. Many value stock funds also pay dividends, which is an additional attraction for investors seeking current income.

When considering investing in value stock funds, it is important to remember that they are not insured by the government, and there is always the risk of losing money due to fluctuations in value. However, by investing in a diversified portfolio of value stocks, investors can potentially achieve higher returns over the long term.

Frequently asked questions