Investments: Best Bets For Today

There are many options for investors looking for the top investments right now. Here are some of the best investments you can make in 2024:

- High-yield savings accounts: These accounts offer a modest return on your money, with the added benefit of unlimited liquidity.

- Certificates of Deposit (CDs): CDs are time deposit accounts that offer a fixed rate of return over a set period. They are a good option if you're saving for a financial goal, like a home down payment.

- U.S. Treasury Bills, Notes and Bonds: Backed by the full faith and credit of the U.S. government, these securities are considered the lowest-risk investments.

- Series I Savings Bonds: I bonds are U.S. savings bonds that offer a variable interest rate designed to keep up with inflation.

- Treasury Inflation-Protected Securities (TIPS): Like I bonds, TIPS are issued by the U.S. Treasury and are designed to protect your investment from inflation.

- Fixed Annuities: Fixed annuities offer a guaranteed rate of return and are often used for retirement planning.

- Money Market Mutual Funds: These funds invest in short-term, low-risk fixed-income securities. They offer modest returns and plenty of liquidity.

- Investment-Grade Corporate Bonds: These bonds are issued by public companies with strong credit ratings, making them a relatively low-risk investment.

- Stocks: While individual stocks can be risky, investing in a diverse range of stocks can be a good option for those with a higher risk tolerance. Some top stocks to consider right now include Meta Platforms (META), Goldman Sachs (GS), and Walt Disney Co. (DIS).

- Mutual Funds: Mutual funds pool money from multiple investors to invest in stocks, bonds, or other assets. They are a good option for those who want to diversify their investments.

- Index Funds: Index funds aim to provide investment returns that match the performance of a specific market index, like the S&P 500. They tend to be more cost-effective and less volatile than actively managed funds.

- Robo-advisor portfolios: Robo-advisors use algorithms to build and manage investment portfolios based on your goals and risk tolerance. They are a good option for those who want a hands-off approach to investing.

High-yield savings accounts

• High-yield savings accounts are offered by online banks and credit unions, which have lower overhead costs than traditional brick-and-mortar banks, allowing them to offer higher interest rates and lower fees.
• These accounts are liquid, meaning you can add or withdraw money at any time. They are also insured by the Federal Deposit Insurance Corporation (FDIC) for up to $250,000 per depositor, making them a safe option for your funds.
• The interest rates on high-yield savings accounts are variable and can change at any time. The rates tend to follow the federal funds rate set by the Federal Reserve.
• When choosing a high-yield savings account, consider factors such as the opening balance requirement, monthly fees, minimum balance requirement, interest rate, compounding frequency, and access to your funds.
• Some high-yield savings accounts offer additional features such as mobile check deposit, ATM access, and integration with investment platforms.
• It is important to compare the APY (Annual Percentage Yield) when choosing an account, as this represents the total interest you can earn over one year, taking into account compounding interest.
• High-yield savings accounts are a good option for those who want to earn a higher return on their savings and are comfortable with online or mobile banking. They are well-suited for saving for specific goals or building an emergency fund.
• Some drawbacks to consider include the lack of instant access to funds, as transfers between different institutions can take a few days. Additionally, some accounts have withdrawal limits and fees or minimum balance requirements.

Long-term certificates of deposit

When you open a long-term CD, you're committing to keeping your money in the account until the maturity date. This can be beneficial if you want to save for a specific goal, such as a down payment on a house or a new car. It also helps you avoid the temptation of spending, as withdrawing your money early usually incurs a penalty.

The interest rates on CDs are influenced by the Federal Reserve's rate-setting actions. In recent years, the Fed has aggressively raised interest rates to combat record-setting inflation, leading to higher CD rates. When deciding between short-term and long-term CDs, it's important to consider the Fed's plans. If rates are expected to rise, shorter-term CDs may be more favourable, while locking in a long-term rate can be advantageous if rates are predicted to decrease.

While long-term CDs offer the benefit of higher interest rates, there are some drawbacks to consider. Your money is locked in, and if interest rates rise during the term, you could miss out on higher returns. Additionally, inflation can erode the value of your money over time.

Overall, long-term CDs are a solid investment choice if you're seeking a safe and predictable option with modest returns. They are ideal for those who want to save for specific goals and can commit to keeping their money invested for an extended period. However, it's important to weigh the benefits against the limitations and carefully consider your financial goals and risk tolerance.

Long-term corporate bond funds

Corporate bond funds concentrate on investment-grade bonds issued by corporations in US dollars, which tend to have more credit risk than government or agency-backed bonds. They are a good option for investors who want a diversified portfolio of bonds without having to analyse and buy individual bonds. They are also good for individual investors who don't have enough money to buy a single bond, which usually costs around $1,000, whereas bond ETFs can often be purchased for less than $100.

While bonds can fluctuate, a bond fund will remain relatively stable, though it may move in response to movements in the prevailing interest rate. Government issuers, especially the federal government, are considered quite safe, while the riskiness of corporate issuers can vary. A bond can be one of the safer investments, and bonds become even safer as part of a fund. Because a fund might own hundreds of bond types, across many different issuers, it diversifies its holdings and lessens the impact on the portfolio of any one bond defaulting.

The return on a bond or bond fund is typically much less than it would be on a stock fund, perhaps 4 to 5% annually but less on government bonds. It's also much less risky.

• 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

When choosing a dividend stock fund, it is important to consider the fund's investment strategy, such as dividend income or dividend growth. Dividend income funds focus on high dividend yields, while dividend growth funds invest in companies that consistently increase their dividends over time. It is also crucial to assess the fund's diversification, turnover, and fees to ensure it aligns with your investment goals and risk tolerance.

Overall, dividend stock funds offer a reliable and convenient investment option for those seeking regular income and stability.

Value stock funds

Vanguard Value Index Fund Admiral Shares (VVIAX)

With over $143 billion in assets as of October 2022, this fund is one of the market's largest and most successful value funds. It employs a long-term buy-and-hold approach, investing in stocks that make up the CRSP U.S. Large-Cap Value Index. The fund has low turnover and an expense ratio of 0.05%, which is among the lowest in its category. It has returned 10.48% over the last 10 years and 7.06% over the last five years. The minimum investment in the fund is $3,000, and it is also available as an ETF with the ticker VTV.

Vanguard Selected Value Fund (VASVX)

The Vanguard Selected Value Fund is an actively managed fund targeting undervalued companies in the mid-cap range, making it an ideal satellite holding for a portfolio. As of October 2022, the fund had invested its $5.7 billion of assets in 129 stocks, including up to 5.0% in non-U.S. companies. The fund managers employ a long-term buy-and-hold approach, and its expense ratio is considered low at 0.32%. This fund also requires a minimum investment of $3,000.

Vanguard Small-Cap Value Index Fund Admiral Shares (VSIAX)

This fund captures the small-cap range of stocks, offering even greater upside potential. It has more than $45.2 billion in assets spread across 888 holdings as of October 2022. Its expense ratio of 0.07% is considered extremely low. The fund requires a minimum deposit of $3,000 but is also available as an ETF, trading under the ticker VBR.

Fidelity New Millennium (FMILX)

This fund is one of the 20 highest-rated value mutual funds by TheStreet Quant Ratings. It seeks capital appreciation by investing primarily in common stocks.

ClearBridge Large Cap Value Fund

This fund seeks long-term capital appreciation as its primary investment objective, with current income as a secondary objective. It normally invests at least 80% of its net assets in a diversified portfolio of equity securities of large capitalisation companies.

BNY Mellon Dynamic Value Fund

This fund seeks capital appreciation by normally investing at least 80% of its net assets in equity securities of companies that are considered to be undervalued.

Frequently asked questions