Top Investments That Can Achieve A Solid Profit

November 19, 2021

If you’ve developed some financial acumen and a sharp eye for opportunity over the years, it’s only natural that you’d be interested in investing your earnings and getting your money working for you — a wise decision!

Now you’re using those eagle eyes of yours to search for the best possible investment that will yield the largest possible profit. However, investing well is a little more complicated than finding a single, potentially lucrative asset and throwing all your eggs into one basket.

One reason going all in on a single asset isn’t the best move is that the markets react to the world in real-time, meaning the wisest investment right now, may not look so good 6, 12, 24 months down the line.

Another thing to note is that most shrewd investors balance their portfolios with diverse assets to hedge against possible downturns. So, we’ll be covering a few different areas that either create robust portfolio synergy or service very particular needs.

Short-Term Investments

Short-term investments are usually defined by a zero-to-low risk factor, relatively low yield, and, of course, liquidity.

They won’t make you a billionaire, but they can complement riskier long-term investments exceedingly well, and provide a location for money to steadily gain interest until you find a better use for it.

The Best Short-Term Investments Right Now

  1. High-Yield Savings Accounts

If you’re a first-time investor, you’re probably not looking to take on much risk, and that’s fine. In fact, it’s more than fine; it’s intelligent, which is why a high-yield savings account is our number one short-term option.

These online savings accounts have fewer overheads than brick and mortar banks, so they can offer higher interest rates. All you have to do is pop your money in there, and watch it grow.

Some may have a few restrictions on fund accessibility, such as 6 fee-free withdrawals per statement cycle, but that gives you plenty of opportunity to dip and take what you need in emergencies. You can also deposit money in the account whenever you please.

Even if you do wish to roll the dice on a risky, large-profit investment, we’d still recommend using high-yield savings accounts to store your backup pool, so it can appreciate while your other conquests run their course. Just make sure whichever savings account you choose is FDIC-insured, otherwise, your money won’t be protected.

2. Short-Term Corporate Bond Funds

For a high liquidity, low-risk investment, look no further than short-term corporate bond funds.

Bond funds invest in a variety of corporate bonds pertaining to a number of different industries.

You’ll typically see your investment appreciate at quarterly intervals or maybe even twice a year, so you don’t have to spend your life biting your nails wondering how things are going to turn out — it’s a great confidence booster!

Unlike high-yield savings accounts, corporate bond funds are not guaranteed by any governing body, so there is a chance that you’ll lose money, but as long as you invest in a diverse array of bonds, the chances of running a loss are exceedingly low.

3. Short-Term US Government Bond Funds

Government bonds aren’t all that dissimilar to corporate bonds. You’re essentially just giving the government a loan. The investment isn’t insured by the FDIC, but it is backed by the full faith of the United States government, so these funds are considered incredibly safe.

Bond funds are by and large protected from rising and falling interest rates, so it’s best to invest when they’re high or if you expect rates to sink before long.

Government bonds are also highly liquid and can be bought and sold on any business day, which is why they’re the most traded asset on the exchanges.

4. Certificates of Deposit (CDs)

As an agreement with your bank to put a certain amount of money into an account for a predefined duration, CDs can be either short or long-term investments.

In exchange for the guarantee that your money will remain in their vault, the bank will offer better interest rates than any of their savings accounts.

CDs are insured by the FDIC, so the only thing you have to worry about is the lack of liquidity. You can retrieve your funds, but you’ll be hit with an early withdrawal penalty, so you need to be okay with saying goodbye to that cash for a while.

Long-Term Investments

By definition, long-term investments are low liquidity ventures involving big risks and big profits.

The Best Long-Term Investments Right Now

  1. S&P 500 Index Funds

S&P 500 index funds are based around 500 of the most prominent businesses in the United States, including Amazon, Hathaway, and Berkshire.

There is volatility to this investment, but similar to short-term corporate bond funds, the instantaneous diversification across a variety of industries does provide something of a safety net.

If all goes well, after a certain amount of time, you could be seeing as much as a 10% annual return on your investment, which is nothing to scoff at.

S&P 500 index funds are a fantastic long-scale opportunity for novice investors, as they provide portfolio diversification at the price of a comparatively low buy-in.

2. Growth Stocks

Cards on the table, growth stocks aren’t for the faint of heart, as they can fluctuate wildly over short periods, but they stand to be one of the most lucrative investments if you’re able to play the long game.

A growth stock is defined as any stock of a company with sustainable, substantial earnings, and earnings that are forecast to grow at a faster than average rate. However, don’t count on receiving dividends, as most profit is reinvested in the business.

Due to the established success of the investable companies, the buy-in-to-company earnings ratio can be a little dicey, and downturns in the market can hit hard. But if you back the right companies, the rewards will take your breath away.

3. Dividend Stock Funds

Dividend stock funds are something of a unicorn in that they can offer long-term market appreciation on your investment as well as quarterly dividends.

While dividend stocks are considered safer than growth stocks, they aren’t without risk. You’ll need to choose your stocks wisely, paying close attention to the dividend history of the company. Steady growth over longer periods is more reliable than sudden dividend booms, but no matter the horse you back, it’s always a bit of a gamble.

Alternative Investments

Any asset class that falls outside of cash, stocks, and bonds – the big three investment categories – is considered an alternative investment. Generally speaking, alternative investments are unregulated, which increases the risk factor, but as they exist outside traditional markets, they can be a fantastic way to diversify your portfolio.

Best Alternative Investments Right Now

  1. Collectibles Through a Certified Platform

Collectibles can refer to just about anything, and normally, they’re a fairly weak investment as their value is determined by what people are willing to pay. Success in this field also requires specialist knowledge of the collectible in question and its corresponding market.

However, investing through an authority platform such as Masterworks nullifies a large portion of the risk, saves you doing the product and market research yourself, and keeps the buy-in low by splitting collectible assets into affordable shares.

2. Real Estate

Real estate may be expensive, but it also stands to be incredibly lucrative. If you set it up right, it can be quite flexible in terms of liquidity, too.

You can rent the property out and start recollecting your investment immediately, you can make improvements and flip the property for what is normally $10,000+ more than you paid for it, or you can hold on to it and sell when the market rates spike.

It takes a lot of confidence to throw your hat into the real estate arena, but there are reasons why it’s America’s favorite long-term investment.

The fact that you can get a mortgage from your bank to fund the investment is a huge bonus, especially if you strike when mortgage rates are low, and the fact that property owners are afforded multiple tax benefits doesn’t hurt either.

But do bear in mind that with ownership comes quite a lot of responsibilities, so if you’re looking for a truly passive investment, real estate might not be for you.

Masterworks is a fintech company democratizing the art market. Our investors are able to fractionally invest in $1mn+ works of art by some of the world's most famous and sought-after artists.