This is a post by Ellie Jo about investments.
With many people looking to put the financial and economic downturns of the past year behind them, investment is one thing a lot of people have turned to. Investment in several sectors proved a masterstroke, especially for those who invested but did not panic – particularly in the official cryptocurrency exchanges and the stock market. Over the past few months, these investors have seen their valuations rise exponentially, making them an increasingly attractive choice. Here are four options that could potentially be smart investments for 2021.
Certificates of deposit
Popularly known as CDs, these investments vehicles are issued by banks and offer significantly higher interest than regular savings accounts. They have definite dates for maturity that range from months to years. By their nature as “time deposits,” you will not be able to withdraw any money for the duration of the time specified on the certificate. However, you will be paid interest at fixed intervals and then your total deposit and any accumulated interest when the time elapses.
Government bond funds
These are the safest kind of investment you can make as they are government-issued. Your money is secure and usually involves treasury bonds and bills. This is a perfect place to start investing, as you get a taste of investing without taking a major risk. But it is also one of the least paying investments and is subject to inflation and interest rate variations.
High-yield savings accounts
This type of investment is an online savings account driven by online banks, which offer much higher interest rates than regular banks. With fewer overhead costs and easy access to your cash which can be quickly transferred to your bank or withdrawn by ATM, it makes an interesting choice. You can also increase your funds or withdraw at any time. These online banks are FDIC-insured, so your money is safe.
Short-term corporate bond funds
Often, companies raise money for their projects by issuing bonds to investors. There are different time limits with short-term bonds, but they usually range from 1 year to 5 years. This makes them less affected by fluctuations in interest rates. But like other bond funds that the government does not issue, short term corporate bonds are not FDIC insured but offer higher returns than government bonds. If you are looking for cash flow while reducing your overall risk, this is just for you. You are also at liberty to sell or buy shares any day, and you can also reinvest your dividends at any given time. It is not without risk, though, as there is a possibility that a company can have a downgraded credit rating, affecting your dividends. To prevent this, ensure that you settle on only high-quality corporate bonds.
Growing your wealth through investment is feasible with time and practice. The key is making the right investment decisions and understanding each choice of investment’s pros and cons. This will enable you to make informed decisions that will accelerate your financial growth and secure your future.