The last several years have devastated what was once a booming economy. The good news is that the United States isn’t currently in a recession. The bad news is that inflation has been the highest in decades. Prices and interest rates are sky-high, and both might stay there for a long time.
Investing when the economy is unstable might sound like a recipe for disaster. In reality, chaos can often present an excellent opportunity for tremendous profit.
For example, stocks usually fall during a recession, meaning you can buy in cheaper than usual. You’ll still be taking on a lot of risks, though, so you want to make sure to make intelligent investments.
These are seven of the best high-yield investments that you should consider in 2022:
1. Savings Account
The odds are high that you already have an open savings account. A national survey conducted in 2021 estimates that only 4.5% of U.S. households are currently “unbanked.” These roughly 5.9 million households had no one living with a checking or savings account.
If you don’t have a savings account, you should look into opening one. Many unique benefits come with having a savings account. It would be a mistake to continue missing out on these benefits.
If you already have a savings account, you should open another one. Generally, having at least three different savings accounts is a good idea — one for emergencies, one for short-term needs, and one for long-term investments.
Having multiple savings accounts will allow you to be more flexible with your investments. The majority of traditional savings accounts offer significantly lower interest rates. Stashing your emergency fund in a low-interest savings account isn’t a big deal since it’s not meant to grow.
However, you could miss out on a lot of money by having a low-interest rate for your long-term savings account.
The goal is to find a savings account that offers the highest annual percentage yield (APY). A higher APY will mean that your interest payments will be in dollars instead of cents. Over time, that can add up to quite a bit of money.
It’s best to consider your savings account a low-risk, low-reward investment. The point is to grow your money as much as possible and safely. It’s improbable that you’ll become rich because of your savings account. On the other hand, there are higher yield options out there that can make you a millionaire.
2. Certificate of Deposit
A certificate of deposit (CD) is like having a locked savings account. You’ll purchase the CD and receive a fixed interest rate if you don’t touch the funds for a predetermined amount of time.
In most cases, the term of a CD can last anywhere between a few months and a few years. There are some exceptions available that you can purchase with terms lasting decades.
The main benefit of buying a CD is that the interest rates are usually higher than those for savings accounts.
Withdrawing large sums from a savings account or closing the account altogether can be volatile for banks. They would much rather you lock in your funds with a CD and offer higher interest rates as an incentive. The difference might only be a few tenths of a percent, but that can quickly compound over time.
Another bonus is that you won’t have easy access to the money. While that might sound bad, it can be great for some people. Most CDs have an early withdrawal penalty that wipes out months of earned interest. The idea of losing this money can be a helpful deterrent against needless spending.
Buying a CD isn’t a good idea if you only have one type of savings account. You need liquidity in an emergency, so your emergency fund and short-term savings shouldn’t be CDs. You should only look into buying a CD if you have sufficient funds in your other two types of savings accounts.
3. Money Market Account
A money market account (MMA) is a hybrid between checking and savings accounts.
The majority of savings accounts have limited features for accessing your money. You can still use the funds as needed, but you won’t be able to use a card or check. An MMA grants these abilities while also paying you interest.
The interest rates for a standard MMA usually aren’t too impressive. You’ll likely receive a lower APY than a CD or savings account. However, it’s very rare for a bank to pay out any interest for checking account balances.
Replacing your checking account with an MMA can easily generate some extra money over time.
A bond is essentially a loan funded by investors instead of a bank. The holder of a bond or bond fund is owed a debt by whatever entity issued the bond. The debt's principal is repaid whenever the bond reaches its maturity date, along with any interest that may have accrued.
In other words, it’s like a CD where the money is being used to fund a specific activity.
There are several different types of high-yield bonds available with varying degrees of risk and reward:
- Corporate bonds are issued by private and public businesses that need additional funding for operational costs, expansion, or research and development. These are investment-grade bonds, and their maturity dates vary.
- Municipal bonds are issued by states, cities, and counties to help fund any projects or programs that might be struggling.
- Treasury bonds are issued by the U.S. government and feature maturation dates of a few days, a few months, a few years, and several decades. Government bonds are reliable, as the issuer is the U.S. treasury.
Buying stocks is one of the most popular forms of investing. A stock is a representation of the equity that you have in a corporation. Each “share” of stock that you own indicates a more significant percentage of ownership.
Owning a piece of the company doesn’t necessarily mean that you’ll attend board meetings or make any big-time decisions. It’s primarily a way for a corporation to raise additional funding for business operations.
Unlike a bond, the value of a stock can change dramatically over time. When the corporation is doing well financially, the value will likely increase from when you bought it.
On the other hand, the value is likely to decrease whenever the corporation is struggling. You won’t technically lose any money until you’ve sold your shares, but the share price could continue to decline, and the corporation might go bankrupt.
There are a lot of risks involved with buying stocks. No one knows the future, and even seemingly unstoppable corporations can lose everything.
If you’re not careful, you can lose a lot of money playing the stock market. It’s best to think of it as betting on the success of a corporation. Avoid betting on risky picks and stick to the ones most likely to succeed.
6. Index Funds
Index funds, sometimes called exchange-traded funds (ETFs), are a giant pool of stocks from various corporations.
As mentioned earlier, purchasing an individual company's stock can be very risky. If the company doesn’t perform well or meet expectations, then the value of your stock can decrease.
By buying index funds, the risk is spread across multiple companies. One corporation struggling won’t hurt your investment as long as the others are doing well. This diversification is why much circulating investment advice characterizes index funds as nearly fixed-income investments. While not guaranteed, index funds bring a high degree of reliability.
The unique features of an index fund allow for a ton of customization and financial security. The two most popular index funds track the performance of corporations considered to be on the Nasdaq 100 or S&P 500 index, most of which are reliable growth stocks.
You’ll also have the option to purchase index funds for specific industries or commodities. Instead of buying stock in a single corporation like Microsoft, you can buy an index fund based on the technology sector. If Microsoft has a poor quarter, but Apple, Google, IBM, and Oracle do well, your index fund will increase in value.
Similar to ETFs and index funds, but with different investment objectives, are mutual funds and REITS (real estate investment trusts). Each offers a diversified portfolio designed to withstand downturns and fluctuations, and each is a good choice for individual investors with less risk tolerance. These are relatively safe investments with diverse asset allocation, lower risk, and a solid track record of past performance.
Cryptocurrency is the newest option on this list and is also the most volatile. Cryptocurrency is a digitized currency where transactions are verified and recorded on a decentralized platform.
It’s easiest to think of cryptocurrency as a cross between online money and stocks. The money can be used to pay for goods and services, but the valuation can increase or decrease with time. Buying a car using cryptocurrency can mean you grossly overpaid or practically rob the seller blind.
Cryptocurrency is a bit difficult to understand. Despite this flaw, trading cryptocurrency has made a lot of people a lot of money.
On the other hand, cryptocurrency has lost a lot of people their money too. The crypto markets crashed in early 2022 as cryptocurrencies lost about $2 trillion.
Typically, this type of volatility would kill off an investment opportunity. However, crypto seems to be holding on as the dramatic swings make it a popular option for people looking to get rich quickly.
In general, buying cryptocurrency is a higher-risk, higher-return investment. Some cryptocurrencies are safer than others, but most are unstable at best.
Though opting to invest in a crypto is a high-risk investment decision and perhaps unwise for beginners to embrace in their investment strategies or investment portfolios, the potential cash flow from crypto investments is among the most lucrative asset classes.
Invest Smartly To Stay Safe
Perhaps the safest investment is to join Yotta. Yotta offers online banking services and accounts that pay out interest via prize-linked savings.
Instead of a fixed interest rate for your balance, you’ll receive free tickets to the weekly sweepstakes drawing. Every $25 in your account will get you an additional ticket.
Quite simply: the more money in your account, the more tickets you’ll receive.
Each ticket comes with six numbers and a Yotta Ball. Weekly drawings begin on Monday at 9 PM EST and last through Sunday when the Yotta Ball is selected. Depending on how many of your numbers and tickets match, you can win prizes ranging from two cents to one million dollars.
The result is simply a matter of chance. With a bit of luck, you might just end up a millionaire. There’s no guarantee that you’ll win the jackpot, but you can’t lose anything.
Bonds, CDs, MMAs, and other savings account options might offer fixed interest rates, but the payout will be meager. Stocks, index funds, and cryptocurrency have the potential for huge gains but can also lose you a lot of money.
Yotta offers the best of both worlds: a low-risk, high-reward investment option.
Visit Yotta today to learn more and get started. You have nothing to lose and potentially millions to gain.