The goal of investing is to have your assets appreciate at a higher rate than your money would sitting in a savings account. Many consider a “good” investment to be around 7% per year, based on the S&P 500’s historical average return, adjusted for inflation.
But what if your goal is an even higher return, such as 10% or more? While no investment is guaranteed to secure that significant of a return, many investments have and are likely to continue to do so in the future.
Below are some of the best options to consider if you want a great return on your investment (10% or more).
______________________
SPONSORED: Find a Qualified Financial Advisor
1. Finding a qualified financial advisor doesn't have to be hard. SmartAsset's free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes.
2. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. If you're ready to be matched with local advisors that can help you achieve your financial goals get started now.
______________________
How Do I Earn a 10% Rate of Return on Investment?
For almost all types of investments, the longer you can hold the investment, the more valuable it becomes. Long-term investments tend to perform better because they account for short-term fluctuations.
You never want to sell an investment when the value is down, but for many investments that have dips, they recover and then become worth more than before the dip. In my view, you always want to buy low, sell high.
Stocks and real estate are usually the first to come to mind when people think of investments, and these are good options, but other alternative investments can sometimes perform even better.
1. Invest in Stocks for the Long-Term
Long-term investments tend to carry less volatility than short-term ones. Even stocks that may have volatile movements on a daily basis can produce stable returns in the long run. Additionally, you earn a tax advantage for holding stocks for at least one full year.
Currently, you pay no taxes on long-term capital gains if your income falls below $40,400. If you earn more than that, but less than $445,850, you pay 15% of your gains. If you earn a higher income, those gains get taxed at 20%.
Meanwhile, short-term capital gains count as ordinary income, which takes a much larger cut of your profits. Long-term investing can sometimes also save people money from transaction costs.
Another advantage comes when you purchase stocks that pay a dividend. In this scenario, you have the option to reinvest your earnings. This acts as an excellent way to compound your profits over time.
Finding growth stocks that outperform the market year after year can lead to outsized gains over the long-term. By adding a small part of your portfolio to quality growth stocks, you can additional returns that compound more over time.
With enough additional return held over many years, you can add a significant amount of value to your net worth. You have plenty of investing apps like Robinhood, Webull, M1 Finance and others to buy these stocks.
I’ve had great success purchasing a subscription of Motley Fool’s Rule Breakers service and investing in some growth stocks for almost the last decade. This stock picking service and investment newsletter has elevated my overall portfolio return.
My returns have outpaced the market and I’ve earned more than I otherwise would have by only investing in index funds, my preferred investment.
The investment research tool screens stocks they believe will lead their respective industries for years to come. You can read their recommendations and choose whether you would like to invest using your online discount broker of choice.
2. Invest in Stocks for the Short-Term
While long-term stock investments give you a better chance at making a profit, some people can make significant gains through short-term stock trading.
Day trading, when people buy and sell stocks within a day’s volatility or short period of time, can be extremely lucrative. When a stock rapidly gains momentum, the price can rise in a short amount of time.
For example, Gamestop’s stock has a 52-week low of $2.57 and a 52-week high of $483 (as of publication). Even within single days, the price soared.
For expert day traders, and more beginner traders who got lucky, the profits were substantial. However, while a lot of the people who made money by buying and selling Gamestop for short-term gains did so by paying attention to the financial news, this isn’t always a sound strategy.
For every person who made major gains with the stock, others came out at a deficit. Often, by the time we hear about a stock soaring, the markets have already reacted.
The same appears to happen in cryptocurrency markets. To learn more about this asset type, take a look at these cryptocurrency statistics.
If you’re interested in getting into day trading, first make sure you have a thorough understanding of moving averages, stock cycles, and market trends.
You can develop these skills through use of a stock analysis app and learning with free stock trading apps that have paper trading features like Webull. This app even gives away free stocks for signing up.
3. Real Estate
Real estate is one of the most popular investment options and there are many ways to get involved in it. Real estate acts as an inflation hedge and can create multiple sources of income.
For those who can afford it, buying and running a rental property can provide you with a great return. If you’re looking to invest in apartment buildings, you may want to team up with a partner or invest through a real estate syndication arrangement.
Alternatively, you could purchase a second home to rent out. Renting to a reliable tenant means you get a return on your investment every month and you can often still sell the property for an additional profit later.
More affordably, you could rent out a single room in your home, whether long-term directly or short-term through a service such as Airbnb.
Another option is to work with a real estate crowdfunding company. Real estate crowdfunding platforms let you invest in properties you couldn’t afford on your own and allow you to invest passively without the need for extra time or expertise.
Depending on the opportunity, you may receive dividends monthly, quarterly or annually. Alternatively, you could get a piece of the profits from the property’s sales. Often, you get both.
The following three platforms have received high praise from investors for their returns and accessibility:
- Fundrise is known as the first company to successfully crowdfund real estate. They have more than 150,000 active investors with over $100M net dividends earned by investors. It’s still one of the more affordable platforms.
- EquityMultiple is another crowdfunded investment company to consider. It boasts 14.5% annualized total historical returns. EquityMultiple focuses mainly on commercial real estate.
- DiversyFund is an excellent option for anyone who wants to invest in multifamily real estate. The company was created with the belief that “everyone deserves access to the same wealth-building tools that have long been used by the 1%.” You can get started with as little as $500.
Note that real estate investments, whether bought on your own or through crowdfunding, are illiquid investments where you can’t quickly pull out your funds.
Related: 10 Best Fundrise Alternatives [Accredited & Non-Accredited Apps]
4. Invest in REITs
A real estate investment trust (REIT) is a business that owns cash flow-producing real estate and pools investors’ money to obtain and manage real estate properties.
Usually, these are high-end or commercial properties. Unlike most other types of real estate investments, REITs are a liquid investment you can sell at any time. They pay out dividends to investors.
You can purchase REITs through major brokerage firms, such as M1 Finance. M1 Finance is a great option for buying publicly-traded REITs because they charge no commissions or management fees.
Another option, Streitwise, gives both accredited and non-accredited investors the opportunity to invest in private REITs. The current minimum investment for non-accredited investors is around $5,000 and all investors receive dividend payments.
Millionacres by The Motley Fool puts Streitwise as the highest-rated real estate investment platform and it acts as one of the best passive income investments.
Streitwise | Start Investing in Private REITs Today
Begin earning passive income in private real estate for $5,000. As of 3Q2021, Streitwise paid a quarterly dividend at an annualized rate of 8.4%, net of fees. This more than doubles the average paid by public REIT alternatives.
5. Starting Your Own Business
They say one of the best investments you can make is in yourself. If you have a knack for business and some money to get started, creating your own business has endless potential for high returns. It doesn’t have to be a huge business.
For example, if you’re currently a graphic designer, you can start a graphic design company where you do some work and outsource some to other designers. You would receive a cut of the profits for connecting the client and designer.
6. Investing in Fine Art
Between the years 2000 and 2018, blue-chip art outperformed the S&P 500. Blue-chip art by artists such as Picasso or Claude Money carries exceptionally high price tags and the vast majority of people can’t afford these pieces.
Even if the average person found the money to buy fine art, they would still need the proper connections to sell it for a profit. However, investing in fine art has now become achievable with less money and connections.
The art investment company Masterworks allows you to purchase a fractional share of fine art for a minimum of $1,000. The art experts at Masterworks choose strategic artwork to purchase for reselling later.
In return, they receive 1.5% from investors in annual management fees and 20% of the profit for sold paintings.
Note that fine art is an illiquid investment. Don’t invest money you may need in the near future.
MasterWorks | Invest in “Blue Chip” Art
- The Masterworks team reviews hundreds of pieces of art for sale and selects the best ones for purchasing and later reselling at a gain.
- Learn more about investing in “blue-chip” art by signing up for this alternative investment service.
7. Investing in Wine
Fine wine has less long-term market volatility compared to most other investments, including real estate and gold. There is a finite supply of wine from different regions and years, so the supply can only go down and you’re almost guaranteed demand will go up.
Between 2005 and 2015, fine wine delivered 13.6% annualized returns.
However, you need to store wine in ideal conditions that prove challenging to replicate in your own home. Therefore, it’s useful to use a wine investment company, such as Vinovest.
The minimum balance to invest is $1,000. In exchange for a 2.85% annual fee (2.5% for balances of $50,000 or greater), they provide an authenticity guarantee, storage, labor, portfolio rebalancing and insurance. Learn more about the service with our Vinovest review.
Vinovest | Invest in Fine Wine Only $1,000
- Vinovest offers the opportunity to invest in fine wine as a diversifying investment.
- With a $1,000 minimum balance required to start, you might consider adding wine to your investment portfolio.
8. Investing in Silver, Gold and Other Precious Metals
While mining gold may seem to be a thing of the past, people still actively mine it today. There is even a show called Gold Rush following several mining companies’ journeys. While gold prices fluctuate, long-term, it’s a solid investment.
Although gold gets more attention, silver is a favorite of many investors. It’s more volatile than gold, but that means with the proper timing you can end up with substantial gains. Plus, it’s more affordable than gold if you’re starting out.
For exposure to more precious metals, consider precious metals ETFs. In the past year, the S&P GSCI Precious Metals Index has had a respectable return.
As a way to grow your money over time, consider a quick calculation like the Rule of 72 to understand how long it will take to double your invested capital.
9. Junk Bonds
Bonds are categorized as either investment grade or junk bonds. Junk bonds are high yield, higher risk bonds. They come from companies with lower credit ratings than those of investment-grade bonds.
The higher the risk profile of the bond you choose, the greater the return to justify your investment. If you’re nervous about individually picking a junk bond, consider a high-yield bond fund. These bond funds decrease your risk by diversifying portfolios across multiple bonds.
10. Peer-to-Peer Lending
Peer-to-peer lending is when an investor gives an individual a loan, much like a bank would. Sometimes people are unable to secure loans from banks or would prefer to borrow from another person.
The investor receives interest on the loan as well as repayment. However, this system does carry the risk of default.
To reduce this risk, you can use the secured peer-to-peer lending investment platform MyConstant. This platform only offers secured lending backed by cryptocurrency.
MyConstant requires collateral, in the form of cryptocurrency, to back all loans on the platform. This investment isn’t an FDIC-insured high-yield savings account or checking account (nor does it come with an attached debit card), so the high rate of return comes with risk.
However, since the company launched in 2019, no investors have lost their principal.
If you want to help others who need money, while profiting yourself, this is a great alternative investment option.
Our Crypto-Lending Pick
MyConstant | Collateralized P2P Lending
- MyConstant is an alternative investment platform
- Offering secured loans backed by liquid collateral (specifically cryptocurrencies), the platform offers annual returns at or above 4%
- Best-suited for investors seeking consistent returns on a collateral-backed product who want a better return than on a savings account
- Open an account and make a deposit to receive a 15-day $4,000 trial deposit which allows you to keep the 4% interest earned (~$7 bonus)
- Deposit $1,000+ and receive $15 bonus
Final Thoughts
When it comes to investing, it’s essential to find a reasonable balance between risk and reward. In general, long-term investments will make you more money, with less risk.
Remember that a diversified portfolio is key, so choose a few different investments with varying risk factors to stay balanced.
This article originally appeared on Young&TheInvested and was syndicated by MediaFeed.org.
More from MediaFeed:
15 investing myths you should forget right now
Investing money might help you grow your wealth, but it can be a scary concept for some. According to a recent FinanceBuzz survey on investing habits, nearly three in 10 Americans haven’t started investing yet.
There are many reasons that stop us from investing. Unfortunately, some of these reasons are actually old investing myths. But putting off investing may be one of the most significant money mistakes you can make.
To help more people start investing and making smart money moves, we’re going to present 15 investing myths, explain why they’re outdated and how they could be costing you money.
CentralITAlliance / istockphoto
FianceBuzz’s survey found 62% of people believe you should have $1,000 or more to open an investment account. A couple of decades ago, some mutual funds required a minimum initial investment of thousands of dollars.
But this widely believed myth that you need lots of money to start investing simply isn’t true. Today, investing apps have changed how we invest, and many traditional brokerage firms allow you to begin investing with very little money. You can even get started in investing with as little as $1 if you buy fractional shares.
DepositPhotos.com
It’s a common belief that a bank account is the best place for your short-term investments. The money is usually insured up to at least $250,000 thanks to Federal Deposit Insurance Corp. insurance and at least won’t decrease in value.
Unfortunately, bank accounts typically have awful interest rates. If you want to get decent earnings on your money, other options exist. For instance, certificates of deposit and money market deposit accounts are also normally FDIC insured and may offer higher interest rates.
DepositPhotos.com
If you’ve ever tried to watch an investing show on TV, you’ll know that these strategists often talk about very detailed concepts and strategies in an attempt to eke out higher returns. Thankfully, everyday investors don’t need that level of complication in their investing lives.
Some of the best investing apps just have you fill out a questionnaire about your goals, risk tolerance, and other relevant financial information. Based on this, they suggest a portfolio of investments that fits your needs. They can even automate your investing in that portfolio so you can regularly and easily add more money.
Although you don’t want to blindly follow the advice of an investing app (or a human, for that matter), these services can take care of some of the more complicated work for you.
SIphotography / istockphoto
It’s easy to think stocks are the only option to invest in. You constantly hear about the stock market reaching new all-time highs or dropping by a few percent in the media. The press doesn’t tend to cover other investments as much.
But stocks are only a tiny part of investing. You can invest in many other types of assets, including real estate, cryptocurrency, collectibles, artwork, precious metals, and more. For example, Masterworks helps you invest in fine artwork that you likely couldn’t otherwise afford to own.
DepositPhotos.com
The traditional idea of investing makes it sound like it would take up a lot of your time. You have to research investments, read a company’s public financial reports, and keep track of the news that could impact stock prices. And you have to do that for everything you invest in, right?
Thankfully, the answer is no. You can earn decent returns throughout long periods in other ways. For example, you could easily diversify your assets just by investing in index funds.
Index funds often have diverse holdings, which means they spread out the risk over multiple companies rather than concentrating your risk in one or two. You won’t typically see as high a return as you might with an individual stock, but you also won’t have to spend as much time managing the investments and expose yourself to less risk of losing money too.
DepositPhotos.com
Investing used to be expensive. You had to pay brokers to make stock trades for you and there were a lot of other potential fees as well. But things have changed over the past couple decades.
Now, there are investing apps that offer fee-free trades. And even some of the major investing powerhouses that have been around for decades have started offering commission-free trades.
If you want to invest in a more diversified investment, such as a mutual fund, some companies even offer no-fee investments. In particular, Fidelity offers four mutual funds that have 0% expense ratios and no minimum initial investment.
DepositPhotos.com
If you work at a company that offers a 401(k) plan, it’s easy to think a 401(k) is the only account you’ll need for retirement. Although that may work out in some cases, you may be better off having more than just a 401(k).
You might also consider opening an individual retirement account (IRA). You could also open a taxable investment account. These accounts may work better for you than a 401(k) because you choose where you open them. That means you get to pick where and what you invest in rather than having a 401(k) plan force you into a limited set of options that may come with high expenses.
designer491 / istockphoto
When you research investments, you’ll likely see a section detailing the investment’s past performance. And although that may sound good, the truth is it isn’t an indicator of the investment’s future performance.
No one has a crystal ball. What happened yesterday may have nothing to do with what happens tomorrow. For instance, a company with a stellar performance record before a recession may go bankrupt when a recession hits.
Past performance is something you should consider, but know that it doesn’t promise any given returns in the future. Instead, focus on the fundamentals of a company or investment.
DepositPhotos.com
When you see your investments taking wild swings from day to day, it’s easy to get worried. You may think that selling your assets today and waiting until the market calms down will protect you from the storm. Unfortunately, that may not work out.
Volatile markets can have wild swings both up and down. If you sell once investments have started to dip, you could miss out when markets begin their recovery. The best days in the market often come after the worst days. If you don’t reinvest at the perfect time, you may miss out on these fantastic opportunities. This could dramatically reduce your investing returns.
A smart money move to make in a volatile market could be holding a diversified portfolio for the long term so the wild swings even out over time.
Khosrork / istockphoto
Gold is an investment that many people have misconceptions about, including the idea that it’s the best investment. Historically, gold may have a good track record. But what happens if a gold mining company finds a massive supply of new gold? If the supply exceeds the demand, gold prices could plummet.
When you invest in only one thing, such as gold, you open yourself to huge risks. Other assets may outperform gold and provide better overall returns if gold performs poorly for an extended period. It’s generally smart to invest in a diversified manner rather than putting all your money into one investment.
DepositPhotos.com
Bonds, which is a fancy name for debt, are normally viewed as a stable source of investment returns and retirement income. Many investment experts recommend slowly switching from stocks to bonds as you get older.
Unfortunately, the broader economic picture has made this strategy less certain. The price of bonds increases when interest rates drop. Interest rates have been falling for decades but may start rising in the future. When this happens, the price of bonds may decrease.
Instead of blindly following a rule of thumb, consider why you want to own bonds. If your reasoning aligns with the investment and its risks in the current environment, consider adding bonds to your portfolio.
designer491/ istockphoto
Buying shares of big-name companies — such as Google, Amazon, Apple, and Facebook — can be viewed as some of the best ways to invest by new investors. These stocks have all had meteoric rises in their prices from when they first debuted on the market.
But big companies aren’t always a good investment. Although they may have had reliable performances in the past, their futures may hold risks that result in lower returns. Some behemoth companies even end up going out of business, such as Toys R Us and Circuit City.
Large companies aren’t always able to adapt to changing times. If they can’t, your investment in them may lose value. Instead, it may be wiser to invest in a diversified portfolio of companies of different sizes.
nortonrsx
When you look at the long-term historical returns of the stock market as a whole, the market appears to provide reasonable returns. If you only look at this long-term trend, it’s easy to think you face no risk when investing. That isn’t the case.
You always face risks when you invest, even when you invest in the most simple and boring investments. If you suddenly need your money, you may have to sell when an investment’s price has decreased. This means you don’t get the advantage of the long-term historical returns because you had to take the money out of the market early.
If you’re nervous about the risk of investing, that’s a good thing. It forces you to educate yourself and find ways to decrease your risks while still meeting your financial goals. If you’re still too nervous about investing, talking to a fee-only fiduciary financial advisor may help.
DepositPhotos.com
According to FinanceBuzz’s survey, one of the top-cited reasons Americans aren’t investing is that they’re afraid of losing money. Investing is risky, as we just discussed, but the degree of risk depends on what you invest in and how long you plan to stay invested.
Some investments are incredibly safe, such as certificates of deposit, money market accounts, and U.S. Treasurys. And even some riskier investments have historically provided positive long-term returns as long as you stay invested and invest in a diversified manner.
Taking a risk tolerance assessment may help you decide on the best path for you. Based on the evaluation results, you’ll be able to craft an investment plan that allows you to take the risks that fall within your comfort level. These sorts of assessments are often part of signing up for an investing app or opening a brokerage account.
The bottom line is that If you don’t take any chances, you reduce your potential returns. This may be disastrous, especially if the cost of living increases over time and the money that’s just sitting in your savings account can’t keep up with those costs.
DepositPhotos.com
You’ve probably heard the saying “The best time to plant a tree was 50 years ago. The next best time to plant a tree is today.” Investing works the same way.
In an ideal world, people would start investing early in life to take advantage of compounding returns. But even if you didn’t start early, the next best time to start investing is today. If you start investing now, you’ll have more time to watch your investments grow than if you start next year.
Consider using an investing app to simplify the process of starting to invest while still meeting your goals and current financial situation. Once you’re more comfortable, you can research more investment providers in detail and move your money at that time if that feels like a good fit.
Ridofranz / istockphoto
Investing myths are commonplace in our society because people haven’t taken the time to research the facts. And, quite frankly, investing can be an overwhelming topic to research on your own. But now that you’re aware of why these investing myths aren’t a reality, you can share this knowledge with your friends and family.
More importantly, you can quit using these myths as a reason to put off investing. It’s easier than ever to start because now you know that you can start investing with just the change you have in your pocket.
Read more:
This article originally appeared on FinanceBuzz.com and was syndicated by MediaFeed.org.
gradyreese
Featured Image Credit: insta_photos/istock.
