With rising market volatility, people are quite skeptical about making investments today. After all, the ever-growing petroleum and oil share prices also went down because of the unstable global market. Indeed, investment is all about taking risks, but more than that, it is about making the right choices. The stock with astronomical valuations is bound to drop because this is how stock markets work.
Instead of letting pitfalls break your investing spirit, explore different income sources to find the best fit for your savings. The correct investment options can grow your wealth, meet financial goals, and increase purchasing power over time. Thus, lookup for money market and hedging instruments to enjoy lucrative returns. And if you have ample savings, find real estate opportunities.
However, don’t let high returns overshadow the risk that comes with investments. Dig into your risk appetite to determine how much risk you can bear and afford. While conservative investors opt for less-risky investments, young entrepreneurs prefer high returns with high risk. So, do you want to grow your wealth or pinch some pennies for the long run? Here we are listing six financial instruments that yield lucrative returns.
S&P 500 Index Funds
Unlike traditional banking products, S&P 500 index funds offer diversification and high yields. It includes stocks of almost every company in the industry, making it more resilient than other investments. Generally, the index’s return is 10% annually but keeps increasing and decreasing over time. Any idea about the risk? Since this index consists market’s top companies, the risk is relatively lower than traditional stock markets.
Moreover, the S&P 500 index is highly liquid, which means; investors can sell and buy shares at any time. If you know this market, use it to generate additional income. Look into different types of accounting jobs and become a financial manager to advise companies on such investments. If you like taking risks, ask clients to share a small chunk of returns rather than charging a fixed payment.
Treasury Bills
When it comes to investing hard-earned savings, credibility is every investor’s utmost concern. If you want to eliminate the likelihood of fraud, invest in treasury bills. Governments issue these bills at a discounted rate, below the face value, to finance their short-term needs. They have a maturity of 10-20 years with no interest rate. Thus, whether interest rates fall or increase, it won’t have any impact on the investment. The investor would receive profit at the time of maturity that would be the difference between the face value and purchase price. Do you know the best part? T-Bills are exempt from state or local income taxes, eliminating additional expenses.
Cryptocurrencies
Although cryptocurrencies have been in the markets for years, now people see them as a rewarding investment option. These are digital currencies that investors can buy and sell on crypto exchange forums. Neither state nor government backs up crypto, which means it has an unproven return rate. As a result, cryptos have wild fluctuations too. After all, we know how bitcoin touches the sky and falls to the ground in few weeks. Thus, make sure you have a high-risk stomach for this risky investment. Besides this, there are no third-party regulations or intermediaries in the crypto market, increasing the risk for fraudulent activities.
Bonds
Usually, when companies need money, they either issue shares or bonds to raise capital. Bonds are more like debt-instruments as companies are liable to pay investors. They have fixed interest rates, saving investors from market volatility. Besides this, there are different options and types of bonds available in markets. Have a look below.
- Government bonds are exchange-traded funds, a perfect option for beginning investors since they have low-interest rates.
- Perpetual bonds don’t have any maturity dates which means, bondholders will enjoy interest throughout their lifetime, until and unless they aim to sell it.
- Zero-interest rate bonds do not pay any regular interest to the investor. However, authorities issue them at a discounted rate where investors get to enjoy profits.
Options
At times, investors want to enjoy high dividends without bearing the risk that comes with stock markets. It might sound impossible, but investing in stocks through ‘options’ can make it possible. Whenever people invest in an option, they purchase the ability to buy or sell a stock at a specific price in the future. Usually, there are two options ‘call’ and ‘put.’ If you want to buy a share at a future date, you have to use the call option.
Otherwise, if you want to sell the share in the future at any given price, opt for the put option. Thus, if the stock price decreases in the future, the investor won’t be at a loss. These require highly advanced investing techniques, and investors should have enough knowledge to handle the options market.
Certificate of Deposits
Usually, people open up a savings account to keep their savings secure while getting small returns. In the 21st century, we have far better options than savings accounts with the same features and risk. Banks issue certificates of deposits (CODs), offering a higher interest rate than a savings account. They have varying maturity dates ranging from several weeks to years. And since CODs are time deposits, investors cannot withdraw money before the maturity date.
Hence, you would get the interest amount at regular intervals. Once the instrument matures, you will get the original principal back. It could be the perfect option for retirees who don’t need immediate income and can lock up their funds for a while. Above all, CODs are federally insured time deposits, making them a safe investment option.
Final Words
With rising financial constraints, relying on a single income source is impossible. Instead of dreading yourself with part-time jobs, look for investment options. Numerous financial instruments are offering safe, low-returns and riskier, high-returns. Thus, learn about different investment options and decipher the pros and cons that come with them. Most importantly, assess your financial condition and risk portfolio to protect yourself from potential losses.
