Tomorrow's Investments: Where To Look

People are investing in a wide range of areas for the future, from stocks and bonds to more niche areas such as space-based economy, longevity-tech firms, and artificial intelligence.

Some of the more traditional investment options include stocks, bonds, mutual funds, exchange-traded funds (ETFs), real estate, and high-yield savings accounts. These options offer varying levels of risk and return, catering to different investor profiles and financial goals.

For those looking beyond the traditional, the space-based economy, longevity-tech, and artificial intelligence sectors present long-term growth opportunities. These areas have the potential to significantly impact how we live, work, and invest in the future.

Additionally, with the recent focus on clean energy and sustainability, investing in clean energy projects and communities offers both financial and environmental benefits. This includes supporting rural communities in adopting renewable energy, creating clean energy jobs, and advocating for decarbonization.

Overall, the future of investing offers a diverse range of opportunities, from well-established options to emerging trends, allowing investors to make choices that align with their values and financial objectives.

Long-term certificates of deposit

CDs are a good option for those who want a fixed rate of return, usually higher than a standard savings account. The longer the term, the higher the interest rate tends to be. For example, Discover Bank's 10-year CD has an APY of 3.75%, while their 1-year CD has an APY of 4.70%.

However, there are some considerations to keep in mind. Firstly, your money is locked in for the term, and early withdrawal usually results in a penalty. Secondly, it's important to shop around as CD rates can vary greatly between financial institutions. For example, the average 1-year CD rate is 1.82% APY, but some banks are offering over 5% APY for the same term.

CDs are a good option for those who are saving for the long term and are happy to put their money away without touching it for a set period.

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 your money by quickly transferring it to your primary bank or via an ATM.

• UFB Direct: 5.25% APY
• Credit Karma Money Save: 5.10% APY
• Varo: 5.00% APY
• My Banking Direct: 5.55% APY
• Cloudbank 24/7: 5.22% APY

The APY on your account can and likely will fluctuate any time the Fed raises or decreases the federal funds rate. That's the interest rate banks charge one another to borrow money, and your bank may be inclined to raise or lower rates on its financial products based on these changes.

Dividend stock funds

When choosing a dividend fund, it is important to consider your investment goals, risk tolerance, and financial situation. Assess whether you are looking for regular income, capital growth, or a combination of both. It is also crucial to understand the associated risks of dividend strategies, as funds focusing on dividend income tend to incur more risk than those focusing on dividend growth.

Additionally, consider the number of stocks held by the fund, the turnover rate, and the fees associated with the fund. Well-constructed dividend funds should have broad diversification, control the risks they take, and deliver the style they are attempting to achieve.

Value stock funds

Value stocks tend to do better as interest rates rise and growth stocks become less attractive by comparison. Many value stock funds also pay a dividend, so that's an additional attraction for many investors.

• 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
• Vanguard Value Index Fund Admiral Shares (VVIAX)
• Vanguard Selected Value Fund (VASVX)
• Vanguard Small-Cap Value Index Fund Admiral Shares (VSIAX)

Rental housing

Single-family rentals offer tenants advantages that aren’t typically found in apartment-style living. For example, monthly costs are often lower than those involved in owning a home, as renters don’t have to budget for repairs, maintenance, property taxes, or homeowners’ insurance. Additionally, tenants can relinquish the chores of owning a home, such as landscaping and exterior updates, which are the responsibility of the landlord or property management company.

The popularity of single-family rentals is not a new phenomenon. In fact, single-family rentals have had a steady presence in the U.S. housing market since the 1980s. However, the sector has recently experienced rapid growth, with about 4 million single-unit dwellings (a 35% increase) added to the market in the past decade. This growth is expected to continue, making single-family rentals a promising investment opportunity.

When investing in rental properties, it’s important to consider the location, with factors such as low property taxes, good school districts, and walkable amenities contributing to a profitable rental property. It’s also crucial to stay up-to-date with rental trends, such as technology integration and sustainability, to cater to the evolving preferences of tenants and make informed investment decisions.

While investing in rental properties can be lucrative, it also comes with risks. These include the potential for high maintenance costs, vacancies, and fluctuations in rental demand. Additionally, low inventory and high interest rates can make it challenging to find good investment options. Therefore, it’s important for investors to carefully evaluate the risks and considerations before making any investment decisions.

Frequently asked questions