High-Risk Investment Options: Exploring The Most Volatile Choices

High-risk investments are those that offer the potential for high returns in a short period of time. However, they also come with a high chance of loss. While there is no guaranteed way to double your money with any investment, some high-risk investments that have paid off include investing in options, initial public offerings (IPOs), foreign emerging markets, and high-yield or junk bonds.

Some of the most common high-risk investments include:

- Annuities

- Corporate bonds

- Preferred stock

- Dividend stock

- Mutual funds and exchange-traded funds (ETFs)

- Initial public offerings (IPOs)

- Foreign emerging markets

- Real estate investment trusts (REITs)

- Currency trading

- Penny stocks

High-yield savings accounts

• SoFi Checking and Savings: Earn up to 3.80% APY with no minimum balance requirements.
• American Express High Yield Savings Account: Earn 3.80% APY with no minimum balance requirements.
• CIT Bank Platinum Savings: Earn 4.30% APY on balances of $5,000 or more.
• Openbank High Yield Savings: Earn 4.75% APY with a minimum balance of $500.
• Barclays Tiered Savings Account: Earn 4.25% APY with no minimum balance requirements.
• Capital One 360 Performance Savings: Earn 3.70% APY with no minimum balance requirements.
• Axos ONE Savings: Earn 4.86% APY with no minimum balance requirements.
• Forbright Bank Growth Savings: Earn 4.25% APY with no minimum balance requirements.
• UFB Portfolio Savings: Earn 4.01% APY with no minimum balance requirements.
• Discover Online Savings: Earn 3.75% APY with no minimum balance requirements.
• Marcus by Goldman Sachs Online Savings Account: Earn 3.90% APY with no minimum balance requirements.

Money market funds

A money market fund may invest in the following types of debt-based financial instruments:

• Bankers' Acceptances (BA): Short-term debt guaranteed by a commercial bank
• Certificates of deposit (CDs): Bank-issued savings certificates with short-term maturity
• Commercial paper: Unsecured short-term corporate debt
• Repurchase agreements (Repo): Short-term government securities
• US Treasuries: Short-term government debt issues

Returns from these instruments are dependent on the applicable market interest rates, and therefore, the overall returns from the money market funds are also dependent on interest rates.

• Government: Invest 99.5% or more of the fund's total assets in cash, US government securities, or repurchase agreements collateralized by government securities
• Municipal: Invest primarily in municipal bonds, meaning the yield is typically exempt from federal income taxes
• Prime: Invest in a variety of taxable short-term corporate and bank debt securities, as well as commercial paper and repos, among other securities

Certificates of deposit (CDs)

When you open a CD, you agree to leave your funds deposited for a specified term, such as three months, six months, or even several years. In return, you receive a higher interest rate than you would with a regular savings account. However, if you withdraw your funds before the maturity date, you will be charged an early withdrawal penalty.

CDs are well-suited for investors who don't need immediate access to their funds and are looking for relatively higher, guaranteed returns over a specific period. They offer a safe and conservative investment option, although the potential for growth is typically lower than with stocks and bonds.

It's important to note that CDs are subject to interest rate risk, which means that if interest rates rise after you have locked in your money at a lower rate, you may earn less than if you had invested in a different type of account. Additionally, there is inflation risk, where the rate at which you earn money through a CD could be lower than the rate of inflation.

Overall, CDs are a stable and predictable investment option that can provide a guaranteed return if held to maturity. They are suitable for those seeking a relatively safe investment with a fixed interest rate and are willing to keep their funds invested for the specified term.

Corporate bonds

When a company issues corporate bonds, it takes on debt that it must repay with interest at a future date. The company uses the funds raised from issuing the bonds to finance its operations and growth initiatives. Investors who purchase these bonds are essentially lending money to the company and become creditors.

It is important for investors to carefully assess the creditworthiness of the issuing company before investing in corporate bonds. Factors such as the company's financial health, business stability, and credit rating can provide insights into the level of risk associated with the investment. Diversifying one's portfolio by investing in a variety of corporate bonds across different industries can also help mitigate risk.

Dividend-paying stocks

Dividends are typically paid out by larger, more mature companies that return capital to shareholders in the form of dividends. Smaller and growing companies tend to reinvest their earnings back into the business. Dividends are never guaranteed, and some companies may lower or suspend dividend payments in response to earnings losses.

When investing in dividend-paying stocks, it is important to evaluate the safety of the dividend. Dividend yields over 4% should be carefully scrutinized, and those over 10% are considered risky. A high dividend yield can indicate that the payout is unsustainable or that the company is going into debt to pay dividends.

There are two main ways to invest in dividend-paying stocks: through funds, such as index funds or exchange-traded funds (ETFs), that hold dividend stocks, or by purchasing individual dividend stocks. Funds offer instant diversification, while investing in individual dividend stocks allows investors to build a custom portfolio that may offer a higher yield.

When evaluating dividend-paying stocks, investors should consider the dividend yield, payout ratio, and the company's ability to maintain dividend payments. The dividend yield should be compared to that of similar companies, as a much higher dividend yield could be a red flag. The payout ratio indicates the percentage of the company's income that goes towards dividends, and a ratio above 80% could mean that the company is putting too large a percentage of its income into dividend payments.

• Altria Group Inc: Dividend yield of 7.5%, annual dividend of $4.08
• Dow: Dividend yield of 6.8%, annual dividend of $2.80
• Pfizer: Dividend yield of 6.7%, annual dividend of $1.68
• Verizon Communications: Dividend yield of 6.5%, annual dividend of $2.71
• Ford Motor Co: Dividend yield of 5.8%, annual dividend of $0.60

Frequently asked questions