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U.S. High-yield Investments in United States

What instruments can I invest money in and earn a high income? Categories of investments’ risks.

U.S. High-yield Investments

High-Yield Investments

Getting a quick and high return on investment is accompanied by a significant risk. You can easily lose a significant part of the invested money or even everything.

Because of many investment options you can appear in a difficult situation. You face the choice: where exactly invest money to? To limit the range of options, risk assessment and the setting of goals to be achieved will help.

Low-risk investments

Low risk investments include the following three options:

  • U.S. Savings Bonds;
  • saving accounts;
  • certificates of deposit.

U.S. Savings Bonds

Savings Bonds are issued by the U.S. Treasury. Such securities can be attributed to investments with minimal risk. The principle of this investment is that the investor provides a loan to maintain the operations of the state fund. During the stipulated period, the state pays a fixed interest rate on a savings bond.

There are two types of savings bonds:

  1. EE Series Bonds.
  2. I Series Bonds.

EE Series Bonds

Such securities have a fixed interest rate of up to thirty years. EE series bonds refer to long-term investments, that is why there are penalties for payment ahead of the deadline.

They are bought at a nominal value, that is, by investing $100, you'll get a $100 bond. The interest rate of such securities is fixed once per two years. This allows you to know as precisely as possible how much interest the bond will accumulate over the entire term.

I Series Bonds

I series bonds assume interest charge, taking into consideration the ratio of the inflation rate to the fixed interest rate. For such securities, the interest rate is fixed after purchase, and the inflation rate adjustment occurs every six months. Payment for I series bonds within a period earlier than 5 years will bring penalties.

Saving Accounts

One of the reliable investments with a high income is a saving account. This type of investment provides an opportunity to receive interest for every invested dollar. The liquidity of saving accounts allows you to have an access to the money when it is necessary.

Certificates of Deposit (CD)

This type of investment also refers to low-risk investments. With the certificates of deposit, you get the opportunity to receive interest from the invested money, as well as a bonus in the form of an allowance to the current interest rate. But it is only possible on the condition that the contribution is untouchable for the entire period of six months to five years.

Attention! Cashing an account out earlier than the deadline comes is subject to a fine.

Medium Risk Investments

For greater benefit from the investments, medium risk investments are worth paying attention to. They include:

  • High Dividend Stocks;
  • Real Estate Investment Funds (REIT);
  • Crowdfunding Real Estate;
  • Corporate Bonds.

High Dividend Stocks

Dividends are the part of a corporation's profits, which is distributed among shareholders in proportion to the share of their participation. Dividends are paid by companies on a voluntary basis, this is not required by law. But, more often corporations seek to pay shareholders’ dividends as a cash reward.

This type of investment will be risky if you do not have a clear strategy. First of all, it is worth to have a look at the large corporations that have existed in the market for a long time. Such companies tend to be the most financially stable. They have sufficient capital to stay at a fly level within the conditions of market fluctuations.

Important! Stocks of the companies that are paying dividends can be bought directly or the services of broker’s firms can be used. When buying through a broker’s firm, a specified purchase amount minimum will not be required. While buying directly from a company, the minimum amount varies from $25 to $500.

Real Estate Investment Funds (REIT)

This method is considered to be the best money investment in real estate. This investment option allows you not to spend a huge amount of money in contrast to acquisitions of property. REIT pays above-average dividends. Also, they provide a stable income as property values rise.

It is recommended to start the study with REIT, deal with buying real estate in the field of interest. Most REITs are registered with the SEC. They are displayed on the public stock exchanges and are called “publicly traded REITs”.

Unlike public REITs, private ones are not displayed on the stock exchanges and do not require mandatory SEC registration. Among them we can distinguish the private REIT Diversyfund. A diversified portfolio and the investment against price variability in the market insurance are offered to be created with the help of REIT Diversyfund.

Crowdfunding Real Estate

Crowdfunding in real estate makes it possible to unite investors' money to invest in projects with great potential. The developer of the project finds an investment opportunity, but does not have enough funds to completely finance it. This is the aim of attracting other investors.

Reference. In order to become a part of a crowdfunding scheme, you do not need to have a lot of money, it is enough to contribute as much capital as you can.

When the company goes to an IPO, it will have great prospects for profit.

Corporate Bonds

Corporate are issued by large corporations for the purpose of investing capital to expand the business further. Corporate bonds guarantee projected revenue without complex strategic schemes. While buying corporate bonds, you lend money to the issuing company. After that, the latter undertakes to pay interest on the originally deposited capital. Upon maturity of the bond, the company reimburses the principal amount.

Corporate bond profits are higher than government ones. With this type of investment, you can save the principal capital and earn a stable profit. Corporate bonds provide an opportunity to invest in several areas.

Important! You can cash the bonds out until maturity.

You must open a broker’s account to buy corporate bonds.

High-Risk Investments

Risky investments include:

  • Forex,
  • Options,
  • Penny Stocks.

Forex

You can invest in Forex when buying and selling different currencies. Each country has its own currency, and each has different value in relation to different countries. To reduce the risk of fraud, it is strongly recommended to choose a reliable broker.

For example, the largest U.S. broker Forex.com is engaged in activities under the strict supervision of CFTC and NFA regulators.

Options

Options trading is similar to stock trading. An option is an agreement to buy and sell shares at a predetermined price and by a certain date.

Option contracts are based on a variety of basic securities, so it is possible to place any types of warrants. This makes options the most feature-rich option for investing in comparison with equities.

Attention! Options trading has high risks and difficulties, so you need to seek help from the best broker.

Penny Stocks

Penny stocks are cheap stocks that could be a chance of increasing returns by up to 1000% or result in a total loss of capital. Typically, these companies with poor financial history or complete lack thereof. Price instability leads to the need to be patient with risk to generate a high income.

Buying penny stocks is highly speculative. Such small shares are not placed on the major NASDAQ and NYSE stock exchanges.

It is recommended to always have cash reserves in saving accounts, which can be used quickly if required. Public and corporate debt with high ratings, money market funds and annuities are suitable for increasing savings with minimal risk and high returns.