Investment Shopping: Navigating The World Of Smart Spending

There are many options to consider when deciding what to buy for investment. The best choice depends on your financial goals, risk tolerance, and the amount of money you have to invest.

Some common investment options include stocks, exchange-traded funds (ETFs), mutual funds, bonds, certificates of deposit (CDs), and real estate.

If you're just starting with investing, you might want to consider lower-risk options such as high-yield savings accounts, money market accounts, or short-term CDs. These options typically offer higher returns than traditional savings accounts while still providing a guaranteed return on investment.

On the other hand, if you're looking for higher potential returns and are comfortable with more risk, you could consider investing in the stock market, either directly through individual stocks or indirectly through ETFs or mutual funds.

Additionally, real estate can be a lucrative investment, but it requires more time and knowledge. You could consider purchasing rental properties, investing in real estate investment trusts (REITs), or using alternative options like real estate crowdfunding.

Before making any investment decisions, it's important to carefully consider your financial situation, goals, and risk tolerance. Consulting with a financial advisor can also help guide you towards investments that match your risk tolerance and financial objectives.

High-yield savings accounts

With fewer overhead costs, you can typically earn much higher interest rates at online banks than you would at a traditional brick-and-mortar bank. Plus, you'll likely have easy access to the money by quickly transferring it to your primary bank or maybe even via an ATM.

• SoFi High-Yield Savings Account: SoFi offers a competitive APY, and its account is fee-free. It doesn't limit the number of withdrawals you can make, and it has great free budgeting tools.
• Bask Bank Interest Savings Account: Bask Bank's savings account has no minimum balance requirement or monthly fees, and it earns a 5.10% APY on any balance.
• Discover High-Yield Savings Account: Discover offers no monthly fees and no minimum opening deposit or monthly balance requirement. Its customer service is hassle-free, extremely helpful, and available 24/7.
• UFB Direct Secure Savings: UFB Direct is another bank with no minimum opening balance requirements and no monthly fees. It offers versatile phone support and easy access to your money at around 91,000 ATM locations across the country.
• Milli High-Yield Savings Account: Milli is best for its "Jars" feature, which allows you to earmark your money for up to five financial goals. It also provides detailed spending insights to help you visualise your habits and build a better budget.

Long-term certificates of deposit

CDs are a good choice for retirees or risk-averse investors who don't need immediate income and can keep their money locked up for a fixed period. They are also a good option if you want to save for a specific goal, like a down payment on a house or a new car, or if you want to use the CD as an emergency fund that earns a guaranteed return.

When you open a CD, you agree to leave your funds deposited for a specified term, such as six months or one year. During this time, your money will earn interest at a fixed rate, which is usually higher than the rates offered by savings or money market accounts. Once the CD reaches its maturity date, you can withdraw your funds without penalty. However, if you need to withdraw your money early, you will be charged a penalty, typically in the form of a fee or a reduction in the interest earned.

When deciding whether to invest in long-term CDs, it's important to consider the interest rate environment. In a falling rate environment, long-term CDs can be a good option because they allow you to lock in a higher rate for an extended period. On the other hand, if interest rates are expected to rise, you may be better off with shorter-term CDs or other investment options, as you could miss out on higher returns by committing to a long-term CD.

Overall, long-term CDs are a stable and conservative investment choice that can provide a predictable return on your money. They are particularly well-suited for those who want to avoid the volatility of the stock market and are willing to keep their funds invested for an extended period.

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.

Some examples of long-term corporate bond funds include:

• 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

Dividend stock funds

Dividend stocks can provide the fixed income of bonds as well as the growth of individual stocks and stock funds. Dividend stocks are also attractive to investors because of the dividends and stability they provide. Dividend-paying companies are often larger, more established companies with predictable profits, and a steady track record of paying dividends makes stocks more attractive to investors.

However, it is important to note that dividends can be reduced or canceled at any time, and there is a possibility that share prices may fall, resulting in a loss for investors despite the dividends. Additionally, a high dividend yield may be a sign of an impending crisis at a company.

Value stock funds

Value stocks tend to do better as interest rates rise and growth stocks become less attractive on a relative basis. Many value stock funds also pay dividends, which is an additional attraction for many investors.

• Vanguard S&P Mid-Cap 400 Value Idx I
• LSV Small Cap Value Institutional
• Vanguard Small Cap Value Index Admiral
• Vanguard Mid-Cap Value Index Admiral
• Vanguard Russell 1000 Value Index
• Vanguard S&P Mid-Cap 400 Value Index
• Vanguard S&P Small-Cap 600 Value Index
• Vanguard Small-Cap Value Index/ETF
• Vanguard Value Index/ETF
• Victory Sycamore Established Value
• Victory Sycamore Small Company
• Fidelity® New Millennium Fund®
• Vanguard Equity Income Fund
• Hamlin High Dividend Equity Fund
• Columbia Dividend Income Fund
• Vanguard Windsor™ II Fund
• ClearBridge Large Cap Value Fund
• BNY Mellon Dynamic Value Fund

Frequently asked questions