Investments: Where People Put Their Money Now

People invest in a variety of things, including stocks, ETFs, mutual funds, bonds, CDs, real estate, and more. The best approach for an individual depends on their risk tolerance, the amount of money they have to invest, their time horizon, and other factors.

Some of the best investments for 2024 include:

- High-yield savings accounts

- Certificates of deposit (CDs)

- Dividend stocks

- Value stocks

- Small-cap stocks

- Robo-advisor portfolios

- Exchange-traded funds (ETFs)

- Real estate

- Alternative assets

High-yield savings accounts

UFB Direct High Yield Savings

UFB Direct is an online division of FDIC-insured Axos Bank. Its Secure Savings account pays an excellent 5.25% APY. There is no monthly fee, no minimum balance requirements, and all balance tiers earn the top rate. You also get a complimentary ATM card that you can use at 91,000 ATMs nationwide.

Laurel Road High Yield Savings

Laurel Road is an FDIC-insured digital banking platform owned by KeyBank. Its High Yield Savings provides a competitive 5.15% APY with no monthly account fees or balance requirements. There is no minimum deposit needed to open the account. If you link your savings account to your Laurel Road checking account, it can provide some overdraft protection.

Varo Savings Account

The Varo Savings Account offers an APY of 3.00% APY, but you can earn 5.00% APY on balances up to $5,000 if you meet some requirements. To qualify for the 5.00% APY, you’ll need to have a Varo Bank Account and receive direct deposits of at least $1,000 per month. You’ll also need to end each month with a positive balance in both your Varo Bank Account and Savings Account.

LendingClub Bank High-Yield Savings

LendingClub’s High-Yield Savings account offers a winning combination of no monthly fees and a strong 5.00% APY on your entire balance. You need $100 to open an account, but there’s no minimum required balance after that. You can access your money at over 37,000 MoneyPass or SUM ATMs for no charge using LendingClub’s free ATM card.

Bask Bank Interest Savings Account

With the Bask Bank Interest Savings Account, you can earn 5.10% APY with no monthly account fees. It doesn’t have a minimum balance or deposit requirement; however, you must deposit at least a penny within 15 business days of opening the account. Bask Bank doesn’t offer a debit or ATM card with its accounts, so customers must rely on electronic transfers to access their money.

TAB Bank High Yield Savings

TAB Bank’s High Yield Savings earns 5.27% APY—the best rate on our list. All balances receive the promotional APY, and no minimum deposit is required to open the account. Although TAB Bank doesn’t charge for monthly maintenance on its High Yield Savings, there are other fees to watch out for, including outgoing wire transfers, stop payments, overdrafts, and paper statements.

Long-term certificates of deposit

CDs are issued by banks and generally offer a higher interest rate than savings accounts. They are considered safe investments because they are insured by the Federal Deposit Insurance Corporation (FDIC) for up to $250,000 per depositor, per account ownership type, and per financial institution. This means that your investment is protected even if the bank fails.

When you open a CD, you agree to keep your money in the account for a specified period, known as the term or maturity period. Common term lengths include one, three, and five years. During this time, your money will earn interest, which is paid out to you at regular intervals. Once the CD matures, you will receive your original principal back, along with any accrued interest.

It's important to note that CDs have early withdrawal penalties, so you'll want to be sure you won't need the money before committing to a CD. Additionally, CDs carry reinvestment risk, which means that if interest rates fall, you may earn less when you reinvest your principal and interest in new CDs with lower rates.

When considering a long-term CD, it's a good idea to shop around for the best rates and compare the minimum deposit requirements. Online banks tend to offer higher rates than traditional banks, but it's still worth considering a variety of options to find the best fit for your needs.

Overall, long-term CDs can be an excellent choice for those seeking a safe, fixed-rate investment with competitive interest rates.

Dividend stocks

There are several benefits to investing in dividend stocks. Firstly, they offer the potential for dual financial gains. Investors can benefit from regular dividend payments and any increase in the stock's price. Secondly, dividends can act as a buffer against market fluctuations and inflation, helping to protect the value of your investment.

However, there are also some downsides to consider. During booming market periods, dividend stocks might underperform as these companies may allocate more funds towards dividend payments rather than business growth. Additionally, dividends are not guaranteed and can be cut if a company faces financial challenges.

When investing in dividend stocks, it is essential to carefully select companies with a solid history of dividend increases rather than those with the highest current yield, as this could be a sign of upcoming financial troubles. By choosing companies with a consistent track record of dividend payments and stable financial performance, investors can mitigate risks and maximize the benefits of this investment strategy.

Overall, dividend stocks are a great option for investors seeking stable returns, regular income, and a more cautious approach to investing. By conducting thorough research and carefully selecting companies, investors can enhance their portfolio and achieve their financial goals.

Value stocks

Value stock funds are generally safer than other kinds of stock funds because of their bargain price, but they are still composed of stocks, so they will fluctuate more than safer investments such as short-term bonds. They are also not insured by the government.

Value stock funds come in two major types: ETFs (exchange-traded funds) or mutual funds. ETFs are usually available commission-free and without a minimum purchase requirement at most major online brokers. Mutual funds may require a minimum purchase, and online brokers may charge a commission to trade them, although the best brokers for mutual funds offer thousands without a transaction fee.

When investing in value stocks, it's important to keep in mind that no single ratio provides a complete picture of a stock's value. Combining multiple financial ratios and other financial metrics can offer a more comprehensive assessment. Here are some of the key ratios to consider:

• Price-to-Book (P/B) Ratio: This ratio compares a company's market value to its book value, which is the worth of its assets if they were liquidated. A low P/B ratio, typically below 1.0, suggests that the stock may be undervalued. However, a low ratio could also indicate problems with the company's assets. It's important to compare P/B ratios within the same industry, as different sectors have different "normal" P/B values.
• Price-to-Earnings (P/E) Ratio: The P/E ratio is calculated by dividing a stock's price by its earnings per share (EPS). It indicates how much investors are willing to pay for a dollar of the company's earnings. A high P/E ratio suggests that investors expect significant growth, while a low P/E ratio suggests that the stock may be undervalued. Again, it's important to compare P/E ratios within the same industry, as different sectors have varying growth rates and market conditions.
• Price-to-Earnings Growth (PEG) Ratio: The PEG ratio takes the P/E ratio and factors in the company's expected growth rate. It provides a more precise assessment of the financial value of a stock. A PEG ratio below 1.0 suggests that the stock is relatively undervalued.
• Dividend Yield: Dividend yield shows how much you earn in dividends for the price. It is calculated by dividing the stock's annual dividend by its price. Companies with consistent dividend increases and strong cash flows are more attractive to income-seeking investors.

When investing in value stocks or any other type of stock, it's crucial to assess the company's financial health, growth potential, and competitive advantage. Additionally, factors such as industry trends, management quality, and market conditions can also impact a stock's performance.

Small-cap stocks

If you don't have the time or knowledge to research individual small-cap stocks, you can invest in small-cap mutual funds or exchange-traded funds (ETFs). These funds may track broad small-cap indexes, specific industries within the small-cap market, or investment goals like value or growth.

Frequently asked questions