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While 2022 wasn’t the best year for investors, that is now a thing of the past– in 2023, multiple investment opportunities could bring significant long-term profits. When hearing the word ‘investing’, many may believe it is only meant for wealthy people or older ones. But that’s not really the case. Anyone can start investing, regardless of their career or age – as long as they do it responsibly. Investing is an excellent way of generating extra income and meeting your financial goals. However, it’s important to remember that certain risks are involved, so you want to assess your current financial position and determine which type of investment suits you best – because not all do. For example, cryptocurrencies like Ethereum are a very popular type of investment, but they are risky, as the Ethereum price fluctuates significantly. While it once reached an all-time high of $4,865.57, this token can also go down, as last year, its lowest price was €1,022.46.
That being said, some investment options may be safer for some people depending on certain factors. For instance, if you’re just starting your career and have no savings in your bank account, it’s pretty much evident that your investment plan won’t look the same as someone retiring soon. Does that mean you should avoid investing? Absolutely not! The key is weighing your options and choosing the right investment for your circumstances. Read on to learn the 5 best investment types of 2023.
Certificates of deposit
Also known as CDs, certificates of deposits are an excellent investment for several reasons. Suppose you are a retiree who doesn’t need to make an income immediately. In this case, a CD allows you to hold your money and gain interest. Certificates of deposits are also suitable for risk-averse investors who need cash at a specific time. Although they are generally perceived as a safe investment option, CDs aren’t risk-free. For example, if you want to reinvest, but the interest rates fall, you will earn less. Suppose inflation rates increase considerably; this could also affect your purchasing power. CDs are easy to get, as credit unions and banks offer them. After opening a CD account, you’ll get paid interest on a regular basis, and as soon as the account matures, you’ll receive the original principal back. Remember that a CD account is timestamped, meaning that your cash must remain in the account until the maturity date – suppose you decide to withdraw some money before that time; in that case, you’ll have to pay the penalty.
High-yield savings account
This option is suitable for investors looking for a less risky investment and those who need money in the near future. Since they involve a lower risk level, you can easily save cash and create an emergency fund. This investment option is appealing because it offers higher returns than traditional bank savings. Banks that provide this type of accounts are FDIC-insured, meaning that losing your deposits is out of the question if you don’t exceed the federal insurance limits. Like CDs, high-yield savings accounts are considered safe, but if rates are low, you could lose purchasing assets because of inflation. Suppose you’ve only started with investing. Ideally, you want to keep an amount of money in this account that can cover living expenses for 3 to 6 months.
Dividend stock funds
If you want an additional source of income, no matter how small, dividend stock funds could be the right investment for you. Dividend stock funds are regular payments that organizations pay to shareholders, and they are appealing due to the stability they offer. However, this investment method involves risks, so it’s imperative to research and choose a reputable company. Also, it’s advisable to diversify your assets, as this could help eliminate risks. While this investment is suitable for any investor, whether a first-timer or a retiree, you want to choose dividend stocks depending on your investing journey. Suppose you are a young investor; in this case, dividend growers may be more suitable. Although they don’t have high yields at a specific moment, they could still lead to great returns in the long run. On the other hand, older investors may prefer stocks that pay dividends consistently. Taking dividends as cash could allow them to receive a fixed income as part of their investing plan.
Real estate
Real estate investing remains one of the best options, but it’s only suitable for those with a healthy portfolio seeking to diversify their assets further. Simply put, this investment type means purchasing a property so you can sell it in the future and make a profit. Or, you can own the property and collect rent to get a fixed income. But there are many different other ways you can invest in real estate – for instance, through REITs, which are companies that own hotels, malls, offices, or other income-generating properties, providing regular dividend payments. Since real estate investments are illiquid, it’s not recommended to put into them cash that you may need in the near future.
Cryptocurrency
Unlike other types of investment, cryptocurrency is only ideal for those with a high-risk appetite and who are okay with losing some of their money. If you’re looking for a safer investment route, digital currencies may not be the best option because they are unregulated and highly volatile. However, if you aren’t faint-hearted and your financial position allows you to invest in cryptocurrency, this investment can make you a lot of cash – if you approach it the right way. This means not letting your emotions control your decisions, calculating all your moves and remaining disciplined and patient.
Choosing the investment that works best for you
In times of high inflation and economic instability, investing can be a great way to ensure you won’t run short of money. But at the same time, it also allows you to generate passive income and make money work for you. However, not all investments suit everyone, so you should consider factors like time horizon, investing knowledge, risk tolerance, and, obviously, your current financial situation. Each investment involves its pros and cons, so it’s essential to pick the one that makes the most sense to you.
