Right now is a tricky time to manage investments. Stocks, real estate, gold, and crypto are all in bear market territory with a huge chance that the recession will worsen this year.
If you’re looking to make a risky bet, you could consider shorting the market in various capacities.
However, if you’re looking to allocate capital as safely as possible, here are some options with (relatively) high returns.
US government-backed bonds are about as safe as it gets. The Series I Savings Bonds accrued at a whopping 9.62% in 2022, and now are offering 6.89%.
Interest on the bonds is tax deductible on your federal income taxes. (Though the investment of principle isn’t.)
These interest rates are pegged to inflation, and they change every six months. So if inflation goes up or down, the rates will go up or down, too.
The downsides to this investment involve time and investment caps.
You have to keep the bond for at least one year to gain any interest. If you redeem the bond before holding it for five years, your last three months will not be paid interest as a penalty.
The investment cap is $10,000 per person per year. This is more flexible than it seems.
You’re allowed to invest $10,000 for every person in your household, including minors. So if you have a family of four, you can invest $40,000 per year.
Businesses can also invest up to $10,000. So if you have one or more businesses, that gives you additional investment opportunities as well.
The calendar year limitation is quite flexible too because you don’t have to wait 12 months before making your next investment.
If you already maxed out your I-Bond allocations even as recently as December 2022, you can make your next investment in January 2023.
The traditional inflation hedges, gold and silver, actually declined in price in 2022. So the I-Bond may be your best bet to stay ahead of high inflation.
2. Pay Off Your Mortgage
Source: Photo by Scott Webb from Pexels
This may not be the sexiest investment of the year, but it’s guaranteed to pay off.
If the stock market and other investment markets have a down year, paying off your mortgage may be one of the best returns you can get.
Paying off your mortgage early can save you tens of thousands of dollars in interest. It also decreases your overall financial risk and eliminates what is most likely your biggest monthly bill.
Say you’ve been in your house for three years and have a balance of $300,000 on your home loan at a 3.5% interest rate. The loan term is 30 years.
If you pay an extra $1,000 per month, the loan will be paid off 12 years and 2 months earlier than it would have been.
More importantly, you’ll save $91,824 in interest. (Based on these Calculator.net calculations.)
If you analyze your return on investment, you’ll net 4% per year in annualized returns. (Based on this ROI calculator.)
That may not be record-breaking, but it’s a guaranteed return on an asset that you own 100% of and have insured. Anyone can do it.
Even high net-worth individuals often have huge mortgages, so this advice applies to people across the economic spectrum.
Don’t have a mortgage? The same advice applies to student loans and car loans.
Of course, credit cards are the best debt to pay off because of their high-interest rates. In my opinion, credit card debt should be the first investment priority of anyone who has it.
Fixed-income annuities are like setting up your own private pension plans. You can invest in them while you’re healthy and working, with the expectation that they provide money for you as long as you live.
The biggest financial risk that any of us face is that we’ll outlive both our working years and retirement savings.
Annuities fix this by guaranteeing income for retirement. This is one reason why many economists recommend annuities.
There are many different types of annuities, and like any investment, they can vary quite a bit. Some contain more risk than others.
Still, if you’re looking for an investment alternative to the huge movements in the stock market, annuities offer an opportunity to diversify your portfolio and shield you from market fluctuations.
As with all investment opportunities, you should make sure that you understand what you’re investing in and speak with your financial advisors before proceeding.
Annuities are particularly tricky in this regard because they are usually offered by life insurance salespeople who get huge commissions for selling them. But if an annuity strategy is smartly employed as part of a balanced portfolio, it can offer a consistent retirement income source that few other products can match.
4. Invest in Art
This is an unusual one that is normally reserved for the wealthy.
However, as alternative investment platforms like Masterworks and Yieldstreet will tell you, the entire asset class of art has outperformed the S&P 500 by a healthy margin since 2000.
The Artprice100® Index vs. the S&P 500. Source: Yieldstreet
It also has a low correlation to the price movements of stocks and bonds.
Normally the cost and expertise needed to buy a $5,000,000 painting make art inaccessible to the average investor.
However, alternative investment platforms, like those mentioned above, make it affordable for the average investor to buy a share of a valuable piece of art.
One of the main downsides to investing in art is the asset itself. Most asset classes are necessarily boring and unoffensive.
Conversely, many people consider contemporary art to seem silly at best. Or downright repulsive at worst.
Source: Artist JEAN MICHEL BASQUIAT via Masterworks.com
If you can hold your nose regarding the appearance of the asset itself and learn to understand how the art market works, it can be a valuable investment.
Also, keep in mind that this is not a liquid investment. You’ll want to hold onto your ownership shares until the underlying asset gets sold, which could take 1-10 years.
5. Buy Farmland
Like art, this one is off the beaten path for the average investor. And historically, it requires large capital investment and considerable expertise to get involved.
Also like art, farmland is now accessible to a wider group of investors through multiple investment platforms. A few platform examples include Acretrader, Farmfolio, FarmTogether, and many more.
Many of these platforms require that you be an accredited investor to invest, but some don’t.
Acretrader claims that farmland has an average 11% historical yield, without the volatility of stocks and real estate.
I was particularly surprised to learn that farmland prices don’t mirror commercial real estate, but it makes sense. Farmland supply and demand differs greatly from commercial buildings and land, which are mostly urban.
It’s important to note that farmland investments do not involve the farm operations themselves.
Many farmers lease their land, and the buildings, livestock, and farming businesses themselves are not part of the investment.
The main downside to farmland is that it’s not liquid. You won’t get your money back until the land is sold years later.
If your investment horizon is at least 5-10 years, then it could be a good option for diversification and safety.
6. Invest in Your Own Business
Venture-backed companies typically invest all of their profits back into the company for rapid growth. However, most small businesses don’t operate this way.
If you’re a business owner, now might be the perfect time to think more like a startup and plan your expansion. If your business is in good shape financially, spending on growth could be your smartest investment.
Real business expenses like advertising and inventory are tax deductible, so any new business cost that you take on will lighten your tax burden.
As mentioned earlier, many small business owners don’t allocate capital into their business at the same level they would their own 401(k). Why not?
A smart growth strategy can be your best weapon in protecting your business as the recession gets worse in 2023.
Of course, you don’t want to spend frivolously or on expenses that won’t promote growth.
But if your business has a good track record and you believe in your operation, it could be a solid investment path.
7. Your Savings Account
High inflation in 2022 turned off many investors from saving money in a bank account.
On the contrary, I would argue that bolstering your cash reserves may be the smartest move you can make right now.
For starters, interest rates are high. Saving account interest rates are higher than they’ve been in over a decade. Getting 3% interest on savings is entirely doable.
Second, it never hurts to have a lot of cash on hand during a recession. As they say, “cash is king.”
If you lose your job or any of your income sources get jeopardized over the next year, a healthy cash reserve will be your best friend.
Third, and most importantly, there is a very high probability that deflation will set in. There are loads of indicators that the economy will get worse and that markets will continue to tumble.
Why not build your cash reserves to buy back in at the bottom?
Over the past 100 years, the average stock bear market lasts 1.3 years and has a typical loss of 38%.
Source: First Trust via UIdaho.edu
In more recent years, bear markets have been even longer and lower:
- The 2007-2009 bear market was 1.3 years and went down 50%
- The 2000-2002 bear market lasted 2.1 years and went down 45%
Warren Buffet famously cites the GDP to stock market valuation ratio to measure the state of the overall market. Some people call this the “Buffett Indicator.”
At the time this article was written, markets are “Significantly Overvalued.”
In 2022, the Federal Reserve demonstrated a high commitment to quashing inflation. They did this by raising interest rates.
If inflation remains the #1 enemy to US economic policymakers in 2023, then the markets will continue to tumble.
What better way to wait out the crash than with a healthy savings account?
None of us have a crystal ball. But the markets and the government policies that affect them typically follow patterns.
One of the most difficult parts of investing is controlling your emotions.
Keep your head. Follow a sound strategy. That’s how you’ll make 2023 a great year for your portfolio.
The post 7 Safe Investments with Relatively High Returns for 2023 appeared first on Due.
Where can I get 10 percent interest on my money? ›
- Invest in Stocks for the Long-Term. ...
- Invest in Stocks for the Short-Term. ...
- Real Estate. ...
- Investing in Fine Art. ...
- Starting Your Own Business (Or Investing in Small Ones) ...
- Investing in Wine. ...
- Peer-to-Peer Lending. ...
- Invest in REITs.
- HAL-0.78 (-2.26%)
- CEG+0.39 (+0.50%)
- ENPH+2.26 (+1.08%)
- MCK+1.05 (+0.31%)
- NOC-0.13 (-0.03%)
- NFLX+3.65 (+1.25%)
- SWK-0.28 (-0.35%)
- VFC-0.79 (-3.60%)
- Stocks & ETFs. One of the most common ways to start investing is to build a portfolio of various stocks and exchange-traded funds (ETFs). ...
- Work With a Financial Advisor. ...
- Real Estate. ...
- Mutual Funds. ...
- Use a Robo-Advisor. ...
- Invest in a Business. ...
- Alternative Investments. ...
- Fixed-Income Investments.
For example, certificates of deposit (CDs), money market accounts, municipal bonds and Treasury Inflation-Protected Securities (TIPS) are among the safest types of investments.What is the safest investment for $100000? ›
- Index Funds, Mutual Funds and ETFs.
- Individual Company Stocks.
- Real Estate.
- Savings Accounts, MMAs and CDs.
- Pay Down Your Debt.
- Create an Emergency Fund.
- Account for the Capital Gains Tax.
- Employ Diversification in Your Portfolio.
U.S. Treasury bonds are widely considered the safest investments on earth. Because the United States government has never defaulted on its debt, investors see U.S. Treasuries as highly secure investment vehicles.Where do millionaires stash their money? ›
Where do millionaires keep their money? High net worth individuals put money into different classifications of financial and real assets, including stocks, mutual funds, retirement accounts and real estate. There were 24.5 million millionaires in the U.S. in 2022. And only 21% of them inherited money.What to do with your cash in 2023? ›
Completing your emergency fund should be your first priority in 2023. But from there, it pays to branch out into investing. As such, you may find that it makes sense to put your money into a savings account, an IRA, and a brokerage account this year so you get the best of all worlds.How to survive inflation 2023? ›
32 Ways to Fight Inflation in 2023
- Make a Budget. ...
- Pay Down Your Debt. ...
- Share Resources with Neighbors. ...
- Become a Vegan. ...
- Save Money on Produce. ...
- Buy in Bulk.
Do Banks Offer 7% Interest On Savings Accounts? 7% interest isn't something banks offer in the US, but one credit union, Landmark CU, pays 7.50% interest, though there are major requirements and stipulations.
Is 10% return on investment realistic? ›
Most investors would view an average annual rate of return of 10% or more as a good ROI for long-term investments in the stock market. However, keep in mind that this is an average. Some years will deliver lower returns -- perhaps even negative returns. Other years will generate significantly higher returns.Where should I put my money to earn the most interest? ›
- Switch to a high-interest savings account. ...
- Consider a rewards checking account. ...
- Take advantage of bank bonuses. ...
- Try a money market account. ...
- Check with your local credit union.
Jai Mata Glass share price history
After ushering in the new year 2023, this penny stock has hit upper circuit on all trade sessions. In year-to-date (YTD) time, this multibagger penny stock has delivered more than 35 per cent return to its shareholders.
Healthcare. If interest rates remain high and the U.S. economy moves into a recession this year as a result (as many experts are predicting), Akullian points to the healthcare sector as a contender for strong performance in 2023.How can I invest a millionaire in 5 years? ›
- Select your Niche. ...
- Put aside 20% of your income every month. ...
- Don't spend anything other than essentials. ...
- Get out of debt as quickly as possible. ...
- Start building Passive Income Streams.
Can I Retire At 62 with $400,000 in a 401(k)? Yes, you can retire at 62 with four hundred thousand dollars. At age 62, an annuity will provide a guaranteed level income of $25,400 annually starting immediately for the rest of the insured's lifetime.Can I retire at 62 with $600,000? ›
Say that you plan to retire at 62 with $600,000 saved. You expect to withdraw 4% each year, starting with a $24,000 withdrawal in Year One. Your money earns a 5% annual rate of return while inflation stays at 2.9%. Based on those numbers, $600,000 would be enough to last you 30 years in retirement.What are 3 very safe investments? ›
- High-yield savings accounts.
- Series I savings bonds.
- Short-term certificates of deposit.
- Money market funds.
- Treasury bills, notes, bonds and TIPS.
- Corporate bonds.
- Dividend-paying stocks.
- Preferred stocks.
- U.S. Treasury Bills, Notes and Bonds. Risk level: Very low. ...
- Series I Savings Bonds. Risk level: Very low. ...
- Treasury Inflation-Protected Securities (TIPS) Risk level: Very low. ...
- Fixed Annuities. ...
- High-Yield Savings Accounts. ...
- Certificates of Deposit (CDs) ...
- Money Market Mutual Funds. ...
- Investment-Grade Corporate Bonds.
What is the safest investment for $10000? ›
- Mutual Funds & Exchange-Traded Funds (ETF) ...
- Real Estate Crowdfunding. ...
- Real Estate Investment Trusts (REIT) ...
- Rehabbing & Home Improvements. ...
- High-Yield Savings Account. ...
- Start Or Add To An Emergency Fund. ...
- Self-Directed Brokerage Account. ...
- U.S. Treasuries.
- Stocks or exchange-traded funds (ETFs) Investing your 100k in individual stocks or ETFs has historically proven to be one of the most profitable options. ...
- Robo-advisors. ...
- Real estate investment trusts (REITs) ...
- Retirement accounts. ...
- Alternative investments.
Cash savings are always popular with people who want to put away a lump sum and earn interest over a long period of time. This can be a very good way to save for things, without taking on bigger levels of risk. Savings accounts are much safer, but how much interest you earn will come down to your bank's interest rate.What is the safest investment for 1 million dollars? ›
For example, bonds and real estate projects are the safest methods for investing $1 million dollars. Bonds are undoubtedly one of the preferred ways for investors just starting since they represent a minimum risk of loss, ensuring a return equal to the initial investment. They also provide earnings through interest.Where can I invest my money without losing? ›
Some common securities are money markets, fixed income treasury bills, government bonds, certificates of deposit, etc. Debt fund investment is ideal for investors who are not willing to take major investment risks, like in the case of equity funds.Where can I invest money to get good returns without risk? ›
- Fixed deposit (FD) Fixed deposits are the ideal investment option for many individuals because of their security and higher returns. ...
- Systematic Deposit Plan. ...
- Mutual Funds - debt.
- Exchange-Traded Funds. ...
- Use a Robo-Advisor. ...
- Real Estate Crowdfunding. ...
- Individual Stocks. ...
- Alternative Investments. ...
- Fixed-Income Investments. ...
- Cryptocurrency. ...
- Retirement Accounts.
“90% of all millionaires become so through owning real estate.” This famous quote from Andrew Carnegie, one of the wealthiest entrepreneurs of all time, is just as relevant today as it was more than a century ago. Some of the most successful entrepreneurs in the world have built their wealth through real estate.Where is the safest place to keep cash at home? ›
Where to safely keep cash at home. Just like any other piece of paper, cash can get lost, wet or burned. Consider buying a fireproof and waterproof safe for your home. It's also useful for storing other valuables in your home such as jewelry and important personal documents.How much do the wealthy keep in cash? ›
How much money do rich people keep in cash? Studies indicate that millionaires may have, on average, as much as 25% of their money in cash. This is to offset any market downturns and to have cash available as insurance for their portfolio. Cash equivalents, financial instruments that are almost as liquid as cash.
What to invest in 2023 recession? ›
Look for low-cost stock and bond buying opportunities
With a maximum contribution limit of $10,000 this year, I-bonds are one attractive option for investors these days with a combined annualized rate of 6.89% for those issued from Nov. 1 to April 30, 2023.
- Invest with a robo-advisor. ...
- Invest with a broker. ...
- Do a 401(k) swap. ...
- Invest in real estate. ...
- Put the money in a savings account. ...
- Try out peer-to-peer lending. ...
- Pay for an education. ...
- Pay off debt.
Fed officials expect inflation to slow in 2023, although they believe it will take a few years to reach the central bank's target of 2 percent annual inflation over time, according to the Fed's most recent economic projections.How bad will the 2023 recession? ›
The threat of a U.S. recession remains alive in 2023. The consensus estimate on the probability of a meaningful downturn in the American economy in the next 12 months is at 65%, according to Goldman Sachs Research. But our own economic analysis rates that probability much lower, at 35%.Will inflation get worse in 2023? ›
Two-thirds of U.S. residents believe inflation will be worse in 2023 than it was last year, according to a new survey by WalletHub. The pace of inflation has dropped in recent months, but the poll indicates the subject is still top of mind for many people.Are CD rates going up in 2023? ›
Yields on CDs are expected to peak this year before leveling off. According to Bankrate (opens in new tab), by the end of 2023, the national average for one-year CDs is estimated to increase to 1.8% up from 1.38% at the end of 2022.What is the highest yielding savings account right now? ›
- Bread Savings - 4.25% APY.
- Salem Five Direct - 4.10% APY.
- TAB Bank - 4.06% APY.
- CIT Bank - 4.05% APY.
- CIBC Bank USA - 4.01% APY.
- PNC Bank - 4.00% APY.
- LendingClub Bank - 4.00% APY.
- Citibank - 3.85% APY.
- BMO Harris: 5.00%* APY, $1,000 minimum deposit.
- Popular Direct: 4.80% APY, $10,000 minimum deposit.
- First Internet Bank of Indiana: 4.75% APY, $1,000 minimum deposit.
- Limelight Bank: 4.75% APY, $1,000 minimum deposit.
- Bask Bank: 4.55% APY, $1,000 minimum deposit.
- High-yield savings accounts.
- Certificates of deposit.
- Money market accounts.
- Treasury bonds.
- Treasury Inflation-Protected Securities.
- Municipal bonds.
- Corporate bonds.
- S&P 500 index fund/ETF.
A 20% return is possible, but it's a pretty significant return, so you either need to take risks on volatile investments or spend more time invested in safer investments.
What is the 90 10 rule in investing? ›
The 90/10 investing strategy for retirement savings involves allocating 90% of one's investment capital in low-cost S&P 500 index funds and the remaining 10% in short-term government bonds. The 90/10 investing rule is a suggested benchmark that investors can easily modify to reflect their tolerance to investment risk.What is the best investment right now? ›
- High Yield Savings Accounts.
- Short-Term Certificates of Deposits.
- Short-Term Government Bonds Funds.
- S&P 500 Index Funds.
- Dividend Stock Funds.
- Real Estate & REITs.
The best places to save money and earn interest include high-yield savings accounts, interest-bearing checking accounts, money market accounts, certificates of deposit (CDs), and Treasury savings bond accounts.What industry will boom in 2023? ›
- CBD Product Manufacturing in the US. 2023-2024 Revenue Growth: 28.0% ...
- 3D Printing & Rapid Prototyping Services in the US. 2023-2024 Revenue Growth: 26.2% ...
- Solar Power in the US. 2023-2024 Revenue Growth: 25.5% ...
- International Airlines in the US. ...
- Tour Operators in the US.
- Energy. Information. technology. Health care. Utilities.
- Real estate. Materials. Industrials. Communication. services.
- Consumer. staples. Consumer. discretionary. Financials.
The other favourable sectors that investors can bet on in 2023 include defence, renewable energy sector, infrastructure, and capital goods.Is 2023 a good year to invest? ›
U.S. equities may disappoint in 2023, but patient investors can find potential income and returns in other markets. A grueling bear market, touched off by decades-high inflation and an aggressive Federal Reserve response, made 2022 one of the most challenging years for investment returns in the last half century.What will be in demand in 2023? ›
Fastest-Growing Careers of 2023
Jobs with the highest projected growth rates from 2021 to 2031 include nurse practitioners, web developers, solar photovoltaic installers and physician assistants.
Some recession-proof industries include healthcare, food manufacturing and supply, infant care and education, repair services, financial services, legal services and others.Which sectors will grow in next 5 years? ›
- Renewable energy sector in India.
- Semiconductor sector in India.
- Drone industry in India.
- Artificial Intelligence (AI) sector in India.
- Internet of Things (IoT) sector in India.
Which markets to invest in 2023? ›
- Consumer staples. ...
- Precious metals. ...
Stock Market Outlook
Fundamentals will likely deteriorate as financial conditions continue to tighten and monetary policy turns even more restrictive. The economy is also likely to enter a mild recession, with the labor market contracting and unemployment rate rising to around 5%.
Almost two-thirds of chief economists believe a global recession is likely in 2023; of which 18% consider it extremely likely – more than twice as many as in the previous survey conducted in September 2022.What industry is projected to have the largest growth to 2024? ›
The construction industry is projected to have the largest industry increase in employment, but construction employment is not expected to reach prerecession levels by 2024. Consistent with its decline over the past 10-year period, manufacturing employment is projected to continue to fall.Where is the stock market going in 2023? ›
Unfortunately, analysts are anticipating negative overall earnings growth will continue in the first half of 2023. Analysts project S&P 500 earnings will drop 5.7% year-over-year in the first quarter and another 3.7% in the second quarter.Is 2023 a good time to invest in mutual funds? ›
However, if you have the patience, you might pocket attractive returns once the interest rates start coming down. In fact, many investment advisors believe that debt schemes, especially medium and long-term funds, will offer better returns in 2023.Will stocks continue to fall in 2023? ›
The S&P 500 or SPX is expected to decline back to the 3,730 level or lower in 2023. This means that any bounces prior to that should be viewed as an ongoing downtrend. The strong conviction has to do with technical analysis as it can precede fundamental analysis,” says David Williams.