Invest Now: Where To Put Your Money

There are many options for what to invest in right now, and the best choice depends on your goals and risk tolerance. Here are some of the most popular investments to consider:

- High-yield savings accounts: These accounts offer a higher rate of return than traditional bank savings accounts, and your money is easily accessible.

- Certificates of deposit (CDs): CDs are a type of federally insured savings account that offers a fixed interest rate for a defined period. They are ideal if you want to save for a specific goal, such as a home down payment.

- Bonds: Lower-risk bonds, such as government or corporate bonds, provide a relatively safe form of fixed income. Government bonds, in particular, are considered a safe investment as they are backed by the government.

- Mutual funds: Mutual funds are a way to invest in a diversified portfolio of stocks, bonds, or other assets at a low cost. They are suitable for people saving for retirement or other long-term goals.

- Index funds: Index funds are a type of mutual fund that aims to provide investment returns that match the performance of a specific market index, such as the S&P 500. They tend to be more cost-effective and less volatile than actively managed funds.

- Exchange-traded funds (ETFs): ETFs are similar to mutual funds but are traded on stock exchanges, and shares are bought and sold just like stocks. They are ideal for investors with a long-term horizon who want to invest in a diversified portfolio.

- Stocks: Stocks offer the potential for higher returns but also come with higher risk. They are suitable for investors with a well-diversified portfolio.

- Dividend stocks: Dividend stocks provide regular cash payouts and are attractive to investors looking for a stable income. They are often found among more mature companies.

- Real estate: Investing in real estate can be a good long-term investment, but it requires a large amount of capital and hands-on management. An alternative is to invest through real estate crowdfunding platforms or REITs.

- Robo-advisor portfolios: Robo-advisors build and manage a diversified investment portfolio for you based on your goals, time horizon, and risk tolerance. They are a good option if you don't want to actively manage your investments.

High-yield savings accounts

UFB Direct High Yield Savings

UFB Direct is an online division of FDIC-insured Axos Bank. It offers a competitive APY of 5.25%, with no monthly fee, no minimum balance requirements, and all balance tiers earning the top rate. It also provides customers with a complimentary ATM card that can be used at 91,000 ATMs nationwide. UFB Direct has 24/7 customer support available by phone and access to accounts through a highly-rated mobile app.

Laurel Road High Yield Savings

Laurel Road is an FDIC-insured digital banking platform owned by KeyBank, offering a competitive APY of 5.15% with no monthly account fees or balance requirements. There is no minimum deposit needed to open the account, and linking your savings account to your Laurel Road checking account can provide overdraft protection. The mobile app has excellent ratings, but customer service is not available on weekends.

Varo Savings Account

The Varo Savings Account offers an APY of 3.00%, but you can earn 5.00% on balances up to $5,000 if you meet certain requirements, such as having a Varo Bank Account and receiving direct deposits of at least $1,000 per month. Varo offers multiple automated savings tools, and customers have access to over 40,000 Allpoint ATMs nationwide for free withdrawals. However, there is a $3.50 fee for using out-of-network ATMs, and customer support hours by phone are limited.

LendingClub Bank High-Yield Savings

LendingClub's High-Yield Savings account offers a competitive APY of 5.00% with no monthly fees, and you only need $100 to open an account. They provide customers with a free ATM card for access to over 37,000 MoneyPass or SUM ATMs, and they have glowing customer reviews on Trustpilot, with an average rating of 4.7 stars. However, there are no physical branches, and customer support is only available by phone Monday through Friday.

Bask Bank Interest Savings Account

Bask Bank is an online-only financial institution that offers an APY of 5.10% with no monthly account fees, minimum deposit, or balance requirements. However, you must deposit at least a penny within 15 business days of opening the account, and there is no option for a debit or ATM card, so customers must rely on electronic transfers to access their money. Bask Bank also offers CDs and a mileage savings account that earns American Airlines AAdvantage miles instead of interest.

Certificates of deposit (CDs)

CDs are available at banks, credit unions, and brokerages, with terms ranging from 3 months to 10 years. The interest rate on a CD is usually fixed, but there are also variable-rate CDs that could earn a higher return if interest rates rise. When you open a CD, you'll need to consider the interest rate, term, principal amount, and the financial institution's early withdrawal penalties.

CDs can be a good option if you want to save for a specific goal or if you prefer a more conservative investment strategy. They can also help you avoid spending temptations since withdrawing funds early triggers a penalty. However, keep in mind that CDs typically earn less than stocks and bonds over time, and if interest rates rise during the term of your CD, you could miss out on higher returns.

When choosing a CD, it's important to shop around and compare rates from different banks and credit unions. The top-paying CDs typically offer much higher rates than the national average. You'll also need to decide on the term length, considering your plans for the money and expectations for interest rate changes. Building a CD ladder, which involves investing in multiple CDs with different maturity dates, can be a smart strategy to hedge against rate changes and maximize returns.

Bonds

Types of Bonds:

• Corporate Bonds: These are issued by private and public corporations to raise capital for initiatives like expansion or research and development. The interest earned from corporate bonds is usually taxable, but they offer higher yields than government or municipal bonds.
• Municipal Bonds ("Munis"): These are issued by states, cities, or counties to fund public projects such as schools, roads, or hospitals. The interest earned from municipal bonds is typically tax-free, and they are generally considered safe investments.
• Treasury Bonds ("T-bonds"): Issued by the US government, these bonds are backed by the full faith and credit of the government and are considered risk-free. While they offer lower interest rates than corporate bonds, they are exempt from state and local taxes.

Benefits of Investing in Bonds:

• Capital Preservation: Bonds typically carry less risk than stocks, making them a good option for investors who want to preserve their capital and protect their investment.
• Income Generation: Bonds provide regular and fixed income through coupon payments, offering a steady stream of interest payments.
• Diversification: Investing in a mix of stocks and bonds can help diversify your portfolio and reduce volatility. Bonds often move in the opposite direction of stocks, so they can be a good counterbalance to stock holdings.
• Risk Management: Fixed-income investments like bonds are generally less sensitive to macroeconomic risks and are considered lower risk than stocks.

Risks of Investing in Bonds:

• Interest Rate Risk: When interest rates rise, bond prices fall, and bonds can lose value. This is a major factor in price volatility in the bond market.
• Inflation Risk: If the rate of inflation exceeds the fixed income provided by a bond, investors lose purchasing power.
• Credit Risk: There is a possibility that the issuer may default on their debt obligations and fail to make timely interest or principal payments.
• Liquidity Risk: Investors may not find a buyer when they want to sell a bond, leading to potential losses.

Factors to Consider When Investing in Bonds:

• Maturity Date: Know when the bond will mature and your investment will be repaid. This is important for understanding how long your funds will be tied up.
• Bond Rating: A bond's rating indicates its creditworthiness and the risk of default. Higher-rated bonds have lower credit risk, while lower-rated bonds offer higher yields but come with greater risk.
• Issuer's Track Record: Research the background and financial health of the company or entity issuing the bond to assess their ability to make timely payments.
• Risk Tolerance: Understand your own risk tolerance and don't invest solely based on yield. Consider the potential for losses and how long you can afford to tie up your investment.
• Macroeconomic Risks: Interest rate changes and rising inflation can impact the value of bonds. Diversifying your portfolio and focusing on long-term investment objectives can help mitigate these risks.

Where to Buy Bonds:

You can purchase bonds from brokers or directly from the underwriting investment bank or the government, depending on the type of bond. US Treasury bonds, for example, can be bought directly from the government.

Mutual funds

When you invest in a mutual fund, you're issued units that represent your portion of the fund's holdings. The fund's price is based on the value of its underlying assets, and most funds will calculate and publish a price every working day, usually at noon. It's important to note that when you place a deal, it will be traded at the next available valuation point, typically the following working day.

When choosing a mutual fund, you can opt for income units or accumulation units. Income units pay out any income generated from the fund's underlying investments as cash, which can provide an income stream or be reinvested to buy more units. On the other hand, accumulation units reinvest income within the fund, increasing the unit price. Accumulation units are generally more convenient and cost-effective for investors who want to reinvest income.

It's important to remember that mutual funds, like any other investment, carry risk. The value of your investment can go down as well as up, and you may get back less than you invested. Therefore, it's crucial to do your research and understand the risks and potential returns before investing.

Stocks

What to Look for in Stocks

First, it's important to do your research. Look at the company's financial statements, such as revenue, earnings, profit margins and debt. Consider industry trends and analyst predictions. Evaluate the management team's experience and track record, the company's competitive advantage, and the valuation of the stock. Dividend yield is also an important factor to consider, as are the associated risks.

Growth Stocks vs. Dividend Stocks

Growth stocks are stocks of companies with faster-than-average revenue growth. These companies typically reinvest their profits into growth rather than paying dividends. Investors buy these stocks hoping for quick gains in share price. Examples include large tech companies like Apple, Microsoft, Amazon, Tesla and Alphabet.

On the other hand, dividend stocks are those that provide consistent dividend payments. Dividend stocks are often less risky than growth stocks but may offer lower returns.

Best Stocks to Buy Now

According to various sources, here are some of the top stocks to consider investing in as of June/July 2024:

• Meta Platforms (META)
• Goldman Sachs (GS)
• Granite Construction (GVA)
• Universal Health Services (UHS)
• Booking (BKNG)
• Spotify Technology (SPOT)
• The Progressive Corporation (PGR)
• Alphabet, Inc. (GOOG, GOOGL)
• Intuitive Surgical, Inc. (ISRG)
• Tapestry, Inc. (TPR)
• TopBuild Corp. (BLD)
• The Kraft Heinz Company (KHC)
• Fidelity National Information Services, Inc. (FIS)
• Abercrombie & Fitch Co.
• GigaCloud Technology Inc
• Super Micro Computer Inc
• Crowdstrike Holdings Inc
• Robinhood Markets Inc
• CVS Health Corp. (CVS)
• Estee Lauder Cos. Inc. (EL)
• Global Payments Inc. (GPN)
• Baxter International Inc. (BAX)
• Clorox Co. (CLX)
• Zimmer Biomet Holdings Inc
• Anheuser-Busch InBev SA/NV ADR
• Yum China Holdings Inc
• Roche Holding AG ADR
• Bristol-Myers Squibb
• British American Tobacco
• Reckitt Benckiser Group
• Polaris
• Micron Technology Inc. (MU)
• Western Digital Corp. (WDC)
• NRG Energy Inc. (NRG)
• Lilly(Eli) & Co (LLY)
• Fair Isaac Corp. (FICO)
• Applied Materials Inc. (AMAT)
• Lam Research Corp. (LRCX)
• Qualcomm, Inc. (QCOM)

A Word of Caution

Remember, past performance does not guarantee future results. Picking individual stocks can be risky, and most investors are unable to beat the market consistently. A safer option may be to invest in index funds and exchange-traded funds (ETFs) that track a particular market index or sector. This provides instant diversification and reduces the risk associated with individual stocks.

Happy investing!

Frequently asked questions