Wednesday, January 30, 2019

10 Ways to Get the Best Return on Your Investment

Investing is the easy part. Finding the best return on your investment is a bit more challenging. Here are 10 ways to get the most out of your money.

best return on your investment

Table of Contents

No matter how much money you have to invest, it’s essential that you make sure to choose the best investment opportunities. Below are a few options for you to choose from. All of these investments are worth considering if you have some extra money on hand.

1. Consider Giving Peer-to-Peer Lending a Chance

In recent years, peer-to-peer lending (or P2P lending) has become much more popular than it was in the past–and for a good reason. It’s a great way to earn a lot of money on your investments.

And if you’re looking for a guaranteed 10% return on investment, then you will want to consider this option, as many investors meet or exceed that threshold.

Rather than buying shares in a company, with P2P lending you end up loaning your money to another person who needs it and then wait for them to pay you back. Companies like LendingClub, Prosper and Upstart are two of the best resources for peer-to-peer lending.

I do think that it’s important to take time to screen your potential loans so you don’t make a mistake and lose money if the borrower defaults.

2. Invest by Purchasing Real Estate

Real estate is an excellent option if you have a fair amount of extra money to invest, as purchasing property tends to be more expensive. But it often offers a high rate of return.

If you aren’t comfortable purchasing property and becoming a landlord (which many people aren’t), you can still make a fair amount of money by investing in REITs. This allows you to invest in property without actually having to deal with tenants and the day-to-day situations that you will encounter as a landlord, which is why this is such an attractive option for some people. If you’re an accredited investor, PeerStreet is a real estate crowdfunding platform you’ll want to learn more about. You can read our full review on PeerStreet here.

There can be a lot of risk with this type of investing, but you often can make a solid return on investment.
There are other options for investing in real estate, as well. Jeff Rose from Forbes wrote a fascinating article detailing some of the different great ways to invest in property without a lot of risks. He also covers ways to invest without having to be involved in managing the property on a daily basis, which can be very overwhelming and undesirable.

3. High-Interest Savings Accounts Are Safe and Worth Considering

A lot of people ignore high-interest savings accounts when they’re looking for the best way to invest their money because they don’t think it’ll get a high enough return.

Savings accounts definitely offer less in return for your investment than higher-risk options do. But you never have to worry about losing your money due to a stock market crash or another person failing to pay you back what you lent them.

I think that high-interest savings accounts are worth looking into for a few reasons. They often offer competitive rates and don’t charge fees, so you won’t have to spend money to make money.

Additionally, you can work with a bank that has excellent customer service and offers online account access and management. This way, you can keep an eye on your money without a lot of effort, and even transfer more money into your accounts on a regular basis, if you want to.

We’ve even done the hard work for you by compiling a list of the best high interest savings accounts available today.

Deal of the Day: CIT Bank is offering a fantastic 2.45% APY on their Savings Builder Account. There are no monthly maintenance fees and the minimum deposit to open is $100. FDIC Insured.


4. Buy Long-Term Stocks for the Future

With so much about day traders in the news, it’s important to remember that buying stocks and holding them for an extended period may be the best way to get a 10% ROI.

Regularly investing in stocks is a great way to set money aside without giving it much thought. No matter how well or poorly the stock market is going. When you continually invest, you will be able to make more money in the long run.

Rather than trying to guess which new stock will make you the most money in a short period, playing the long game is a much better way to get a higher rate of return on your capital.

I find that, while day-trading can be exciting, putting money in long-term stocks will allow you peace of mind. You’ll have the knowledge that you have a well-diversified portfolio correctly expressing your risk tolerance.

Remember, though, to get a higher rate of return, you need to be willing to take on more risk. One of the best ways to manage this risk is by working with professionals.

Personal Capital provides you with a dedicated investment advisor that you can reach by phone, web conference, online chat or email. While their Wealth Management service is available for a fee, one of the best features of Personal Capital is their free financial dashboard. You can always sign up for Personal Capital for free and then decide to add their Wealth Management service later. In the meantime, you can take advantage of the following features: 401k fund allocation analyzer, retirement planner, investment checkup tool, net worth calculator, and cash flow analyzer.

If you prefer a hands-off approach, Betterment does most of the work for you by automatically reinvesting dividends and rebalancing your portfolio. When you use an automated service like this, you’re likely not checking it everyday and won’t be tempted to make any major changes that could cost you money. Having a service like Betterment manage your investments could allow your money to grow more quickly over time.

TD Ameritrade is another option and overs both self-directed investing and professionally managed investing, or a combination of both. You can learn all about TD Ameritrade here.

For new and small investors, Wealthsimple lets you open an account for as little as $1 and also features a Socially Responsible Investing Portfolio (SRI). SRI Portfolio allows you to invest in companies with low carbon emissions, companies that support gender diversity and businesses that support affordable housing.

One of my favorite new services is SoFi Automated Investing. SoFi has recently formed a robo-advisor service that also gives you access to real financial advisors when you need them. I highly recommend checking this service out if you’re newer to investing, or just want a hands-off approach.

For young adults new to investing, Wealthfront is a robo-advisor worth a look. Wealthfront stands out in being a true robo-advisor with a fee structure suitable for investors with less than $2 million to invest.

For a female-focused approach to investing, check out Ellevest. There are no fees for opening or closing your account and there’s no minimum to start. There’s a large mix of asset classes available to invest in and Ellevest can tailor a portfolio just for you.

5. Put Your Money in an Annuity

True, some people balk at putting their money in annuities. But a big reason for that is shady advisors who encouraged their clients to invest in annuities, even though it wasn’t the best decision for them.

When used correctly, annuities can be a good option if you’re looking to stabilize your portfolio over the long run. But you also need to be willing to learn about the pros and cons of the annuity that you’re purchasing.

Annuities that offer a guaranteed return will provide a lot less risk and therefore a smaller return on your investment. Like any other investment options available, if you want to be able to earn as much as possible on your investment, then you need to be willing to accept more risk.

By taking the time to understand these complicated products and the benefits that they offer, you may be willing to accept more risk and be better suited to earn the best return on investment.

6. Try Your Hand at Day Trading

I know I warned against this when I recommended buying and holding stocks for more extended periods, but you can still use a smaller portion of your money to try your hand with day-trading stocks.

Just remember, you need to be prepared to make mistakes before you really get good at this. It can be difficult to time the stock market correctly.

But when you’re able to, day-trading is a fast way to earn a fair amount of interest. And if you want to know how to make 10% annually, then you need to do a lot of research before setting up an account and making your first trade.

I love that some trading services teach new investors how to invest in small-cap stocks rather than day-trade. When you work with a reputable company that will take the necessary time to help you understand the process, you will find that it can be enjoyable. And it’s incredibly exciting when your stocks are performing well.

Here’s a look at our list of best online stock trading sites.

7. Give Municipal Bonds a Chance

I’ve always been a little skeptical about municipal bonds, mainly because they are not a great way to quickly make a lot of money on your investments. A muni bond is a bond issued by a government entity.

Once you better understand how municipal bonds work, you’ll see why they’re such an attractive option for many people. Now, this isn’t saying that loaning money to the government is right for you, but there are many reasons that municipal bonds are so attractive.

Not only will you avoid having to pay income tax on the money that you make from your municipal bonds, but there is a slim chance that your borrower will default. I like to think of municipal bonds as being a lot like peer-to-peer lending but without the higher risk of the person defaulting (and also without the higher rate of return).

It’s possible to buy individual bonds if you feel confident in what you want. If you aren’t entirely sure yet, you can invest in a municipal bond mutual fund with a broker to get you some exposure.

8. Think About Investing in Precious Metals

If you want to make sure you’ve diversified your investments as much as possible, but still want to enjoy a higher rate of return, then consider investing in precious metals like silver and gold.

I recommend only using a small amount of your total portfolio to invest in these precious metals. But you have the potential to make a lot of money when you add them to the mix. Even though silver is much more volatile than gold, I think it’s a significant investment to consider when you have extra money and want to put it to work.

The reason that silver is such a fantastic option is that it can regularly earn more than 10%. And this is without you having to do a lot of work.  While you do have to deal with lows when you purchase silver, the highs often make holding this precious metal worth it.

9. Keep Your Money Safe in a CD

There are a lot of people who make a reasonable amount of money by putting their money in CDs, waiting for the CD to mature, and then moving their money to another CD with a high APR.

In recent years, CD rates fell dramatically, but they are slowly climbing back up. This makes them a great option if you have money you want to invest and earn a guaranteed rate of return.

While you probably won’t be able to match the ROI you’d get by investing in stocks, you don’t have to worry about a crash tanking your portfolio (see 2008).

As long as you ensure your money is in an FDIC insured bank, your CD will be safe. Of course, there are limits as to how much money can be in each financial institution and still be protected.

But a personal banker can quickly help you structure your accounts to ensure that you fall within the guidelines and won’t have any of your money at risk.

10. Look into Money Market Funds

Money market funds are fixed income funds that allow you to invest your money into different debt securities. These debt securities have minimal credit risk and mature in very short periods. This means that they won’t be as affected by volatile markets, and many people consider them to be much safer investment options for this reason.

There is, of course, some risk you’ll have to undertake when opting for this type of investment, but it’s minimal. And most managers who have years of experience with money market funds can quickly decrease the amount of risk that you will be exposed to.

It’s also vital that you work with a tax advisor who can help you with the tax implications of these investments. They are safe investments with high returns, and they may be taxable.

Bottom Line

Are you ready to get the best return on investment for your money? No matter how much extra money you have that you are willing to invest, consider one of these options to make sure that it is working hard for you.

It can be difficult to make high rates of return when you first start out. But with a little practice and patience, and by continually investing to better your chances at making money, you can learn how to earn 10% interest on investments in no time.

Topics: Investing

The post 10 Ways to Get the Best Return on Your Investment appeared first on The Dough Roller.



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