Smart Ways To Invest Money For Quick Returns

Investing can be a great way to grow your money. However, there is no one-size-fits-all approach to investing, and the best investment for you will depend on your risk tolerance, timeline, and other factors. Here is a list of some of the most common investment options:

1. High-yield savings accounts: These accounts offer higher interest rates compared to traditional bank savings accounts, making them a good option for those with short-term goals or those who want to avoid risk.

2. Certificates of Deposit (CDs): CDs are federally insured savings accounts that offer a fixed interest rate for a defined period. They are suitable for those who want to save for a specific goal, such as a home down payment.

3. Bonds: Bonds offer a relatively safe form of fixed income. Government bonds are considered low-risk, while corporate bonds offer potentially higher yields but come with more risk.

4. Mutual Funds: Mutual funds pool money from multiple investors to invest in stocks, bonds, or other assets. They are a convenient way to diversify your investments and are suitable for those saving for long-term goals.

5. Exchange-Traded Funds (ETFs): ETFs are similar to mutual funds but trade on stock exchanges, making them more flexible. They are ideal for investors who want to invest in a diverse range of securities without meeting the minimum investment requirements of mutual funds.

6. Stocks: Investing in stocks offers the potential for higher returns but also comes with higher risk. It is important to diversify your portfolio and not put all your money into individual stocks.

7. Real Estate: Investing in real estate can be a stable investment option, often with income through rents or dividends. REITs (Real Estate Investment Trusts) are a popular way to invest in real estate without the hassle of managing properties.

High-yield savings accounts

• SoFi Checking and Savings: This account offers a combination of checking and savings, with a competitive APY of 3.80% on the savings portion. There is no minimum deposit requirement and no monthly maintenance fee.
• Discover® Online Savings: Discover Bank's high-yield savings account has a strong APY and an easy-to-navigate website. It offers 24/7 customer support and has highly-rated mobile apps for both iOS and Android.
• American Express® High Yield Savings Account: This account offers a competitive yield, $0 monthly fee, and $0 minimum balance requirement. American Express also offers a rewards checking account that earns interest, but it is only available to those with an American Express credit card.
• CIT Bank Platinum Savings: CIT Bank's Platinum Savings account pays a high APY of 4.35% on balances of $5,000 or more. However, if your balance dips below $5,000, the APY decreases significantly to 0.25%. There is no monthly fee and the minimum opening deposit is only $100.
• Capital One 360 Performance Savings™: This savings account earns a competitive APY with no minimum deposit requirements or monthly fees. Capital One also offers a checking account that earns interest and has no monthly fees.
• UFB Portfolio Savings: UFB's savings account has no monthly maintenance fee and no minimum deposit. It offers a competitive APY of 4.01% for any balance. UFB also provides a mobile app that allows you to access standard banking functions, including mobile check deposits and funds transfers.

When choosing a high-yield savings account, it's important to consider factors such as monthly fees, minimum balance requirements, APY, mobile app ratings, and customer service availability. Additionally, some high-yield savings accounts may have higher minimum opening balance requirements compared to regular savings accounts, and they may be online-only, limiting face-to-face customer service options.

Exchange-traded funds (ETFs)

• Open a brokerage account: You'll need a brokerage account to buy and sell securities like ETFs. Many brokerages have no account minimums, transaction fees, or inactivity fees.
• Find and compare ETFs with screening tools: There are thousands of ETFs listed, so screening tools are critical for finding the ETFs you're looking for. Use criteria such as administrative expenses (expense ratios), commissions, volume, holdings, performance, and trading prices to narrow down your options.
• Place the trade: Navigate to the "trading" section of your brokerage's website and buy the ETF using its ticker symbol. Specify the number of shares you wish to buy and choose from different order types, such as market order, limit order, stop order, or stop-limit order.
• Sit back and relax: Congratulations, you've just bought your first ETF! These funds can help form the basis of a well-diversified portfolio. There's no need to compulsively check their performance, but you can access that information when needed.

ETFs have several advantages, including:

• Diversification: ETFs provide diversification across different industries, company sizes, geographies, and more. This helps to balance your portfolio and safeguard it against market volatility.
• Transparency: ETF price activity and holdings are disclosed daily, allowing you to keep a close eye on your investments.
• Tax advantages: ETFs have two major tax advantages over mutual funds. First, you may only need to pay capital gains taxes when you sell the ETF, reducing overall tax liability. Second, you can decide when to sell, making it easier to avoid higher short-term capital gains tax rates.

However, there are also some potential drawbacks to consider:

• Costs and commissions: While ETFs are often low-cost, they are not free. There may be commission fees from online brokers, and management fees can eat into your returns.
• Potential liquidity issues: ETFs that aren't frequently traded may be harder to unload when it's time to sell.
• Risk of fund closure: ETFs with insufficient assets to cover administrative costs may close, forcing investors to sell sooner than intended, possibly at a loss, and deal with unexpected tax consequences.

In summary, ETFs are a great option for investors seeking a diversified, low-cost, and relatively safe investment. They are suitable for those with a long time horizon and are a good choice for beginners as well as experts.

Dividend stocks

When investing in dividend stocks, it's important to look beyond the highest yields. A high dividend yield can be a red flag, indicating that the company's stock price is falling or that it's paying out more than it can afford. Instead, look for companies with a solid history of dividend increases.

• Evaluate the stock's payout ratio: This tells you how much of the company's income is going toward dividends. A payout ratio above 80% may indicate that the company is putting too much of its income into dividends.
• Diversify your portfolio: Don't put all your eggs in one basket. Invest in a variety of dividend stocks from different sectors to reduce your risk.
• Reinvest your dividends: Reinvesting dividends can greatly enhance your return on investment. Over time, the difference in returns with and without reinvested dividends can be significant.
• Consider dividend funds: Instead of investing in individual dividend stocks, you can invest in dividend funds, which are funds that hold a portfolio of dividend stocks. This provides instant diversification and is a good option if you don't want to put in the time and effort to research individual stocks.
• Pennymac Mortgage Investment Trust (PMT)
• AG Mortgage Investment Trust Inc (MITT)
• Franklin BSP Realty Trust Inc (FBRT)
• Seven Hills Realty Trust (SEVN)
• Alexander's Inc (ALX)
• Amerisafe Inc (AMSF)
• CVR Energy Inc (CVI)
• Altria Group Inc (MO)
• Pangaea Logistics Solutions Ltd (PANL)
• Bloomin Brands Inc (BLMN)

Real estate

There are several ways to make money in real estate, each with its own pros and cons. Here are some of the most common strategies:

Rental Properties

This strategy involves buying a property and renting it out to tenants, either for long-term or short-term stays. The property can be a residential or commercial space. For example, you could buy a multi-unit rental property, a small apartment building, or a vacation rental. The key is to find a property with expenses lower than the rent you can charge. Being a landlord can be a lot of work, so you may also need to hire a property manager.

House Flipping

This strategy, popularised by TV shows, involves buying an undervalued or run-down property, renovating it, and then selling it for a profit. It requires a good eye for detail, budget management skills, and knowledge of the local real estate market. It can also be risky, as you need to accurately estimate renovation costs and sell the property quickly to avoid holding costs.

Real Estate Investment Trusts (REITs)

REITs are companies that own and operate income-producing real estate, such as office buildings, malls, or apartments. They are traded on major exchanges like stocks, and they pay out dividends to investors. REITs are a more hands-off way to invest in real estate, as you don't need to manage properties directly. They are also more liquid than owning physical properties.

Real Estate Investment Groups (REIGs)

REIGs are similar to mutual funds for real estate. They pool money from multiple investors to buy or build rental properties, such as apartment blocks or condos. A management company handles the day-to-day tasks, such as maintenance and tenant screening, in exchange for a percentage of the rent. REIGs provide income and appreciation potential with less hands-on management compared to owning rentals directly.

Online Real Estate Platforms (Crowdfunding)

These platforms, also known as real estate crowdfunding, allow investors to pool their money to invest in larger commercial or residential real estate projects. They offer the benefit of diversifying into real estate without needing a large amount of capital. However, these investments tend to be illiquid, with lock-up periods, and management fees can eat into profits.

Wholesaling

Wholesaling is when you act as a middleman between motivated home sellers and real estate investors. You find cheap property investment opportunities, negotiate a contract to buy it at a low price, and then find another investor willing to pay more for the property. The difference between the buying and selling price is your profit margin. This strategy requires less upfront capital but can be time-consuming and has many rules to navigate.

Rent-to-Own Lease Options

This strategy involves leasing a property with the option to buy it later. The renter makes monthly payments, a portion of which goes towards a down payment for the property. At the end of the lease, they can choose to purchase the property or walk away. This approach can be lucrative for the seller, as it provides a steady income and the potential for a large payout if the renter decides to buy.

Things to Consider:

• Risk tolerance: Some real estate investments, like house flipping, may not be suitable for investors with a low-risk tolerance.
• Local housing market: Understanding your local market is crucial, especially for rental properties and house flipping.
• Liquidity: Real estate investments like physical properties are illiquid, while investments like REITs are more liquid.
• Capital: Some strategies, like buying investment properties, require significant capital for the down payment and other costs.
• Knowledge: Certain strategies, like wholesaling and house flipping, require a deep understanding of the real estate market and its regulations.
• Passive vs. active investments: Consider how much time you want to spend on your investments. Passive investments like REITs require less time commitment than active strategies like managing rental properties.

Micro-investing apps

Here's how it works: you link your bank account or debit card to the app, which then rounds off each purchase you make to the next highest integer and invests the spare change into your chosen investment fund. For example, if you buy coffee for $2.50, the app will round it up to $3 and invest the remaining 50 cents for you. While the amount per purchase may be small, these regular deposits can add up to a considerable sum over time.

However, there are also some disadvantages to micro-investing. It is unlikely to lead you to meet your retirement goals, so you will need to save more through other means, such as employer-offered retirement plans and contributing to tax-advantaged accounts. Additionally, micro-investing platforms usually charge monthly fees, which can eat into your returns if you are only contributing small amounts.

Some popular micro-investing apps include Acorns, Stash, and SoFi Active Invest. These apps can be a great way to get started with investing, but most financial advisors agree that you will need to adopt a more robust investing strategy over time to meet your financial goals.

Frequently asked questions