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Stepping into the investment world is a great way to gain experience and earn profit. People consider different investment ideas as per their interests. Some people invest in stocks; some like to invest in real estate, while others try their luck in a business. It doesn’t matter what interests you or what your age is as there are always some options for you in the world of investment.
A recent survey by Gallup indicates that over 56% of the US population invests in stocks. Similarly, real estate investment is another great option if you have the funds to invest.
Investment Options for All Ages
Following are some of the investment options you can choose according to your age group and the kind of assets that you are ready to invest in.
Deposit Certificates
A deposit certificate is a federally insured savings account that allows you to enjoy interest for a specific period. This can be anywhere between six months, a year, or 5 years. This helps you keep your money secure, as you can redeem your initially invested amount when you return the deposit certificate. The DC is the safest option for investors who will need money for some important event or life events, such as a wedding, a home down payment, or a car payment.
However, keep in mind that you will need to pay an extra penalty fee if you cash out your DC before the designated period. You can buy these deposit certificates from online banks and credit unions and let your money grow over time.
Government Bonds
A government bond is a loan that you lend to a government for a certain interest rate. These government bonds typically mature in 30 years and are also called fixed-income security bonds. There is a steady streamline payment for the agreed period, which becomes a good way of passive income. Governments use these loans to raise funds for new projects or infrastructure.
However, government bonds have drawbacks like other investment ideas. For instance, the return on these government bonds isn’t as high as the other investment options that you can choose. We still suggest checking these government bonds if you are ready to invest your money for several decades with your state.
If you have little knowledge of investments and do not want to take risks in your business, these government bonds work best. These government bonds usually go up when the stock market goes down, making them most popular with retired people or people who will retire soon. An underwriting investment bank or a broker can help you buy these government bonds and get started with your investment venture.
High-Yield Savings Account
Cash management accounts usually pay off better than all other investment options you may come across. You can think of these savings accounts as a hybrid between a checking account and a saving account because you get interests much like saving accounts but brokerage firms usually offer them with debit cards and checks.
These accounts are a great short-term investment with a good return. However, you should opt for this high yield savings account if you need money for an emergency, a surprise vacation or some other urgent work. However, you can only make six transactions per month with these accounts, making them ideal for new investors.We suggest you keep 4-6 months of living expenses in this account before you move forward to other investment options in the market. This will let you have financial security in case things go south or do not turn out the way you want. You can open these accounts in a bank or with an investment company if you want a cash management account.
Market Funds
Money market funds and money market accounts are two separate things that most new investors find confusing. When you invest in money market funds or market mutual funds, you invest your money in highly liquid, near-term instruments, such as cash, cash equivalent securities, debt-based securities, etc.
Investing in money market funds offers high liquidity with low risk. You can buy these money market funds from an investment fund company. So, there is no guarantee of principal, and it is a short-term investment.
Index Funds
It is a type of mutual fund with a portfolio of stocks/bonds to mimic the performance of a financial market index. These are ideal for you if you plan to invest in a long-term saving idea. They have a lower fund management fee, which makes them a good option. Index funds provide market exposure, low portfolio turnover, and low operating expenses.
It follows a passive investment strategy and is ideal for buy-and-hold investors. Besides, young investors who can deal with the market’s ups and downs and have a long timeline can allocate their portfolios toward higher-returning stock funds. Thus, you get long-term returns. Keep in mind that this type of investment is vulnerable to market trends and crashes, and there is a lack of flexibility. You can buy index funds from fund providers or directly through a discount broker.
Bottom Line
It is safe to say that there are plenty of investment options for people of all ages. It all depends on your investment goals when you need to withdraw your invested amount, and the amount you are willing to risk. You can carefully assess the high and low-risk investment options we discussed earlier and choose accordingly.
However, it is important to do your research and make informed decisions rather than emotional ones while investing in any of these options. While there is no age limit to investing, the sooner you start, the better.