Invest Now: Where To Put Your Money

Smart investing is about making the right choices to meet your specific needs and help you achieve your future financial goals. With so many investment opportunities available, it's easy to pick a financial product that may not be suitable for you.

- High-yield savings accounts: These accounts pay interest on your cash balance, providing a safe and accessible vehicle for your money. They are ideal for those who need access to cash in the near future or want to avoid the risk of losing their investment.

- Long-term certificates of deposit (CDs): CDs are issued by banks and offer a higher interest rate than savings accounts, making them a good choice for those seeking higher returns while maintaining safety.

- Long-term corporate bond funds: These funds invest in bonds issued by corporations, offering higher yields than government bonds and providing cash flow and reduced portfolio risk.

- Dividend stock funds: Dividend stocks are portions of a company's profit paid out to shareholders, providing a cash payout and potential for long-term capital appreciation.

- Value stock funds: These funds invest in stocks that are more bargain-priced, offering the potential for higher returns as valuations rise.

- Small-cap stock funds: Investing in small-cap stocks allows you to get in on the ground floor of companies with strong growth prospects, such as Amazon once was.

- Real estate investment trusts (REITs): REITs enable small investors to own a piece of the real estate market, offering regular income streams, diversification, and potential for long-term capital appreciation.

- S&P 500 index funds: These funds are based on a broad index of large American companies, providing diversified exposure to the stock market and potentially higher returns than more traditional investments.

- Robo-advisor investment managers: Robo-advisors automatically manage your investments based on your risk tolerance and goals, taking the emotion out of investing during uncertain times.

- International stock funds: Diversifying into international stock funds can reduce portfolio volatility and provide higher, risk-adjusted returns, especially during periods of uncertainty.

High-yield savings accounts

While these accounts are considered safe, there is a risk of losing purchasing power over time due to inflation if the interest rates are too low. Therefore, it is important to look for accounts with competitive rates. For example, the national average savings account rate is 0.45%, so any rate above that would be considered above-average.

• UFB Direct: 5.25% APY, no minimum deposit requirement, and zero monthly fees.
• Credit Karma Money Save: 5.10% APY, no minimum deposit requirement, and no monthly maintenance fees.
• My Banking Direct: 5.55% APY, $500 minimum opening deposit, no monthly fee, and only $1 needed to earn the APY.
• BrioDirect High-Yield Savings Account: 5.30% APY, $5,000 minimum opening deposit, $25 minimum balance to earn the stated APY, no monthly fee, and interest compounded daily.

Long-term certificates of deposit

When considering a long-term CD, it's important to keep in mind that you won't be able to access your money without incurring early withdrawal penalties. These penalties can be equal to some or all of the interest earned, so it's crucial to ensure that you won't need the funds during the term of the CD.

Long-term CDs are particularly attractive when interest rates are expected to fall. By locking in your money at a higher rate, you can continue earning higher returns even as rates decline. This makes long-term CDs a good option in the current economic climate, as analysts predict that the Federal Reserve will cut rates at least once before the end of the year.

When choosing a long-term CD, look for competitive interest rates and consider the minimum deposit requirements. Some banks may also offer special promotional rates or features like bump-up CDs, which allow you to raise your rate during the maturity term. Additionally, online banks tend to offer higher rates than traditional brick-and-mortar banks, so it's worth comparing options to find the best deal.

Overall, long-term CDs are a smart investment choice if you're looking for a safe and reliable way to grow your money over time. They offer higher returns than savings accounts and provide peace of mind with FDIC insurance. Just remember to consider your financial goals and ensure that you won't need access to the funds during the CD term.

International stock funds

• Fidelity International Index Fund (FSPSX): This fund has a track record dating back to November 1997 and is tax-efficient, with a low 3% portfolio turnover rate. It offers a low 0.035% expense ratio with no minimum required investment.
• Vanguard Total International Stock ETF (VXUS): This ETF tracks both developed and emerging markets and currently spans more than 8,600 international equities weighted by market capitalization. It has a minimal turnover of 3.9%, improving tax efficiency, and charges a 0.08% expense ratio.
• IShares Core MSCI EAFE ETF (IEFA): This ETF focuses solely on developed markets and is currently one of the largest in the iShares lineup, with over $117 billion in assets under management. It has a low 0.07% expense ratio and is easy to trade, with a 30-day median bid-ask spread of just 0.01%.
• IShares Core MSCI Emerging Markets ETF (IEMG): This ETF tracks emerging markets and is part of iShares' "core" ETF lineup, providing investors with low-cost, broadly diversified portfolio building blocks. It has over $79 billion in assets under management and charges a 0.09% expense ratio.
• Schwab Fundamental International Small Company Index Fund (SFILX): This fund tracks the Russell RAFI Developed ex-US Small Company Index and selects stocks based on fundamental factors, including size and valuation. It has a higher expense ratio of 0.39% but has outperformed the MSCI EAFE Index over the past 15 years.
• KraneShares CSI China Internet ETF (KWEB): This ETF offers exposure to Chinese internet tech stocks, which have been outperforming the S&P 500 and Nasdaq Composite. It has a 0.69% expense ratio, and its top holdings include Tencent, Alibaba, and Meituan.
• Emerging Markets Internet & Ecommerce ETF (EMQQ): This unique ETF allows investors to bet on the potential growth of digitalization and internet consumption in emerging markets such as China, India, Brazil, and Mexico. It charges a 0.86% expense ratio.

Robo-advisor investment manager

Robo-advisor accounts are a good option for those who want to take the emotion out of investing. Rather than trying to manage your own portfolio, a robo-advisor will keep you on track with your predetermined investment plan.

Betterment

Betterment is one of the pioneers of the robo-advisor approach to investing. It offers a competitive annual fee of 0.25% of your balance, and there’s no minimum balance requirement. Betterment also provides alternative portfolios, including one focused on environmental, social and governance (ESG) factors. The platform provides automatic tax-loss harvesting as well as a tax-coordinated portfolio option.

SoFi Automated Investing

SoFi Automated Investing is a great choice if you're primarily focused on limiting fees. There’s no annual advisory fee, and your portfolio is made up of ETFs that generally charge low expense ratios. SoFi also gives you access to real-life professionals. The only potential downside is that SoFi's ETFs are very small in terms of total assets, relatively young and untested, and in a few cases overpriced in terms of expense ratios.

Vanguard Digital Advisor

Vanguard Digital Advisor is a good option if you're just starting out in your career or you want a simple tool. It has a low annual net advisory fee of no more than 0.20% of your managed account balance, and your portfolio is stocked with ultra-inexpensive Vanguard ETFs. The major downside is the $3,000 minimum balance requirement.

Vanguard Personal Advisor Services

Vanguard Personal Advisor Services is a good choice if you need a robo-advisor to manage a relatively sizable chunk of cash and want access to human financial advisors. It has a low account minimum of $50,000 and a competitive advisory fee of 0.30%. Your portfolio will be made up of low-cost Vanguard funds that mirror your risk tolerance.

Wealthfront

Wealthfront is a sophisticated saving and investing platform with relatively low fees and powerful financial planning tools. It has a $500 account minimum and your portfolio will be made up of ETFs ranging through several asset classes. Wealthfront really shines when it comes to financial planning features. Its Path tool creates a 360-degree view of your current financial situation and helps you meet your savings goals. Its Autopilot tool automatically distributes your paycheck to different financial accounts.

Dividend stock funds

When choosing a dividend stock fund, it is important to assess your investment goals, risk tolerance, and financial situation. Additionally, consider the fund's characteristics, such as the number of stocks held, asset allocation, turnover, and fees. A well-constructed dividend fund should offer broad diversification, low fees, and controlled risks.

Frequently asked questions