Most young people today are more focused on investing than buying a home to reap the benefits of this investment in the future. If you’re one of such people with little experience in wealth management, you’re in the right place. We’ll go over a few investment options to consider for your future.
High yield savings
The first go to investment option is a high yield savings account and for good reason. It is the least risky investment option especially since you’re new to investing. You can get more information from a good Wealth Management Team in New York.
This type of investment works like a regular bank account. However, there may be some terms attached to it. You may not be able to withdraw funds as often as possible. The interest rates are worth the wait. Funds in such accounts are also insured by the FDIC, so you don’t have to worry about losing your money.
Index funds
You can opt for the S&P 500 or Nasdaq 100 index funds. The former is based on companies in the United States, but not just any companies. It is based on the most successful ones in the world. You can find companies such as Amazon. The former is based on successful tech companies, including Microsoft and Apple.
While these companies also suffer from volatility, they have had good success in recent years. To benefit more from these funds, you’ll have to invest for a longer period, say five years. Unlike the high-yield savings account, you can lose money as it is not insured by the government.
Mutual funds
These funds are managed by financial experts and focus on buying stocks and bonds. The mutual funds you buy are pooled in with others and the yield from the stock is shared between all of you. For this type of investment, you may need to start with up to $1000 and you have an option to reinvest your dividends after the holding period is over.
Since you don’t need to deal with the technical aspects, mutual funds are great for newbies in the investment space. Also, the risk is much lower since fund managers invest in a wide range of portfolios. The only con most people notice is the taxation bit. Depending on where you live, you will have to pay taxes on your dividends.
Certificate of deposits
Just like the high-yield savings account, a long-term certificate of deposit is issued by the bank. It offers a higher interest rate and reduced risk. However, you benefit more when you leave the money for a longer period. Hence, it may be more attractive to retired people who don’t need a lot of money to get by.
With this type of investment, you can get interest payments regularly, and when the fund matures, your capital will be returned to you.
When it comes to investing, there are other higher-risk and higher-reward options, such as cryptocurrency and bond funds. The best option depends on you and what you’re willing to lose.
