The World’s Top 10 Investment Banks 2021

top 10 investments banks

If you think of banks, you tend to think of financial institutions where you get to store your money which you eventually withdraw at a given time. But, there is another type of bank that not only stores your money but also grows it. These are the so-called investment banks.

Compared to commercial banks, investment banks could provide small and growing businesses as well as individuals with high net worth to invest and help raise money to a company while also taking a stake in the company. Though complex, dealing with investment banks can be financially rewarding.

To know more about investment banking, read about the top 10 investment banks in the world. We chose them based on various criteria, including revenue number, global reach, employee headcount, income, etc. Note that not all investment banks are made equal. If you wish to deal with one in the future, you should research more on which of these institutions fit your profile as an investor.

Goldman Sachs Investment Bank

  • Best All in All: Goldman Sachs

One of the Top 10 is Goldman Sachs which is an investment bank based in New York City. It is an American international company that also offers financial services to its clients. Aside from investment management, Goldman Sachs offers services in asset management, securities, securities underwriting, and prime brokerage.

With about 150 years of experience as a financial institution, Goldman Sachs is one if not the largest investment bank in the world. In 2019, the company earned a revenue of US$36.546 billion while its total assets were recorded at US$992 billion. In terms of awards, Goldman Sachs was ranked by Fortune as the 62nd largest US corporation with total revenue.

JP Morgan Chase Investment Bank

  • Best from a Big Institution: JP Morgan Chase

JP Morgan Chase is an American investment bank based in New York. It is considered a global leader in the investment banking industry as it has one of the largest client bases in the entire world. Today, the company has around 200,000 clients ranging from governments, corporations, educational institutions, banks, and individual investors. They have a global reach expanding to around 100 countries.

In 2019, the company reached a revenue of around US$115.6 billion. Meanwhile, they had a net income of around US$36.43 billion. With around 200 years of history, JP Morgan has received awards from groups advocating for women, people with disability, veterans, and many more. Without a doubt, the company is one of the largest investment banks in the world.

Barclays Investment Bank

  • Best in Europe: Barclays

Barclays is a British multinational investment bank with more than 325 years of history in banking. It operates in more than 40 countries and has around 80,000 employees tasked to provide service to the clients. While Barclays does not have a global reach as wide as the first two investment banks, it is considered as the best in Europe. Its headquarter is in London, England.

In 2019, the company had a revenue of around US$28 billion. Because of its excellent service in its electronic trading platform, the company won the Electronic Platform of the Year award from the GlobalCapilta Americas Derivatives Awards 2019. Today, the company continues to grow its reach not only in Europe but also in Northern America and Asia.

Bank of America Investment

  • Best for Innovation: Bank of America Corporation

The Bank of America Corporation is best known for bringing innovation to the field of investment banking. It is an American multinational investment bank based in North Carolina but has central hubs and offices in New York City, London, Hongkong, Dallas, and Toronto. This bank has brought innovation by merging and partnering with other top financial institutions, including Countrywide Financial and Merrill Lynch, to name a few.

The company earned revenue in 2019 amounting to US$91.24 billion. The company was awarded as Top Global Bank on Fortune’s “Change the World” list in 2020. Its quality service in other parts of the globe has also received recognitions. In particular, it was awarded by Euromoney the Best Transaction Services Bank in Latin and North America this year.

Morgan Stanley Investment

  • Best for Markets: Morgan Stanley

Also included in the top 10 of the global investment bank is Morgan Stanley. It is known for its effective and successful contribution to the growth and development of the capital markets as well as its effective and efficient wealth management. It is an American multinational investment bank that also offers financial services. Its headquarter is located in Manhattan, New York City. Currently, Morgan Stanley is found in more than 42 countries in the globe employing more than 600,000 individuals from various nationalities. It offers services, including investment management to different types of clientele, including governments, business institutions, and individuals.

Morgan Stanley gained revenue of US$41.4 billion for 2019. In the same year, it was awarded the title of World’s best bank for markets by Euromoney. According to the award-giving body, Morgan Stanley has shown resilience in spite of problems in the market. It was able to provide growth in the investment of its clients or customers.

Deutsche Bank Investment

  • Best for the Asia Pacific: Deutsche Bank

Another prime investment bank is Deutsche Bank which is a German multinational investment bank based in Frankfurt, Germany. It has offices found all over the globe including in Europe, the Americas, and in Asia. In 2019, Deutsche Bank has earned US$26.3 billion. Its great work in the Asian market has won the company Top 1 in Best Investment Bank for Financial in the Asia Pacific from the business intelligence firm Coalition.

With around 150 years of history, Deutsche Bank has proven its strength in traditional fields of investment banking including financing, advisory services, fixed income, and currencies. Aside from doing well in Asia, Deutsche Bank is one of the top 4 investment banks in Europe. This indicates its capability to satisfy its clients from all parts of the world.

Citi Group Banking

  • Best for Inclusive Investment Banking: Citigroup

Probably known for being the largest credit card issuer in the world, Citigroup is also one of the most reliable financial institutions in the field of investment banking. It is an American multinational investment bank based in New York City. In 2019, it had revenue of US$73.29 billion with as many as 204,000 employees as of June 2020. It provides strategic and financing products and advisory services to corporations, governments, and private businesses to more the 160 countries.

Citigroup is best known for being a haven for customers from all walks of life. It is friendly to even to young, women, racial minorities, and many more. It has been recognized as one of the Most Community-Minded Companies in America since 2012. With such an accomplishment, no wonder new clients continue to choose this company for their investment banking needs.

Credit Suisse Banking

  • Best for Modern Investment Banking: Credit Suisse

Credit Suisse is a global investment bank founded and based in Switzerland. It is particularly popular for its strict bank-client confidentiality and banking secrecy. For clients who do value their privacy, choosing Credit Suisse is the best choice. It has proven excellent services in wealth management and capital markets especially in South East Asian countries as proven by the recent accolades it has received.

The company earned US$24.63 in 2019. Meanwhile, in 2020, Credit Suisse received the award of being the Investment Bank of the Year from The Banker besting all investment banks in the world in 19 different product areas. The Banker said that the decision was because “Credit Suisse ticks all the boxes of what a modern investment bank should be focused on.” This investment bank was able to make sustainable banking for its clients.

UBS Group AG Investment Bank

  • Best for Secured Investment banking: UBS Group AG

Like most Swiss global investment banking companies, UBS Group AG puts secrecy and confidentiality its priority. It had a revenue of US$30.21 billion. The company is best known to provide access to capital markets for corporate and institutional clients. Aside from providing investment banking and investment management services, it also provides global wealth management.

HSBC Holdings plc Banking

  • Best for Sustainable Finance: HSBC Holdings plc

HSBC Holdings plc is a British multinational company offering services on investment banking, wealth management, and many more. It is considered as the 6th largest bank in the world as of 2020. In 2020, it had a revenue of US$56.1 billion. Also in the same year, this investment banking company was awarded by the Euromoney Awards for Excellence for sustainable finance as well as the Banker Investment Banking Awards with Investment Bank of the Year for Sustainability.

Closing

It is true that looking for a trusted investment banking company can be daunting and exhausting. We have to make sure that we choose the best investment bank that provides services deserving of our hard-earned money.

To begin your search, you can start with these top ten investment banking corporations. They have provided outstanding services to thousands of customers in the past decades.

Be sure to research more about deciding which of these investment banking companies is right for you. Note that customers have different demands. Make sure that your bank of choice can accommodate your needs and wants.

8 Best Long-term Investments

Coins stacking with growing plant use for long term investment

Automatically, we associated the term “investments” with planting a seed and watching it become an enormous tree in 10-15 years. You’re not wrong thinking about it this way — long-term investments do resemble trees. They branch out and evolve to tremendous value if their environment meets certain conditions.

If you’re planning to start on long-term investments, we’ve got you covered. Below, we’ll share with you great examples of long-term investments capable of growing to sustainable and beneficial heights.

But, first things first…

The Risk and Rewards of 8 Top Long-Term Investments

1. Stocks

Investors classify these into two: regular dividend stocks and high-yield/growth stocks. Stockbrokers present regular stocks as upcoming or established companies and their growth prospects in the next 3-5 years.

Truthfully, most stockbrokers and exchanges advertise certain growth stocks in a certain way because investors need to invest higher due to the exceptional value these have.

  • Risk Level

When you hear people say “investments,” you think of dividend stocks and shares. During high manufacturing and gross domestic product (GDP) seasons, locking on both regular and high-yield investments will give you huge returns.

However, when economic recessions hit, stocks lose the most value than diversified funds (mutual, ETF, and others), unless you find or invest in a “unicorn” company like Facebook, Amazon, and other equivalents.

  • Rewards

If you’re willing to stick it through thick and thin with your diversified portfolio of regular and growth stocks, you’re sure to get huge returns when higher FTSE Straits Times Index (Singapore’s S&P500) performance happens. Truthfully, it’s easy to own high-performing stock if you’re looking for long-term investments that yield great profits.

2. Long-Term Bonds

During a bearish market (meaning a poorly-performing commercial and industrial market), interbank borrowing rates, such as SIBOR, have increased interest rates due to increased risks. Long-term bonds have a powerful shield because it does not use bank rates as their value anchor.

Instead, it increases its price thanks to its limited supply. You can think of it as an alternative to gold. When stock prices decrease, bond prices stay the same, but the treasury’s bonds can deplete.

  • Risk Level

A direct inverse to stocks, bonds allow investors to float during the most terrible financial recessions. However, if the commercial and private sectors have flourishing profits and low-interest rates, bonds become virtually useless — until a recession happens again.

However, bonds are decades long-investments, the lowest being 30 years. Additionally, bonds change interest rates as fast as a single year. Therefore, your 30-year 3% yield treasury bond will sell low because it is a fixed-rate bond, even if the current year endorses a 5% yield on the bonds.

  • Rewards

Stability is one cornerstone low-risk investors love about bonds. Their predictability allows them to invest more money with safe and calculable yields. Furthermore, if you invested in bonds the previous year and saw a recession the following year, you can get high returns once bonds deplete, and investors are clamoring to purchase them at higher than ever prices.

3. Mutual Funds

When you combine a set of stocks and bonds to achieve a certain goal, they become a fund. Mutual funds are managed by professionals who create a company (complete with incorporation) to help first-time and long-time investors make long-term investments with different profit possibilities.

You’ll only allocate a certain amount of capital, then the professional brokers and managers will make the investments.

  • Risk Level

Mutual funds present their fund manager’s strategy and objectives. Working with actuaries, managers can present optimistic, average, and pessimistic returns their investment strategies can achieve.

    • Mutual funds describe themselves as the following:
    • Equity: Stock-oriented with high risk
    • Fixed-Income: low but guaranteed stable income, medium risk
    • Index: high-yield stock oriented. Expensive but medium risk
    • Balanced: Risk-reduction focused. Very low risk but low return
    • ETFs (More on this below)
  • Rewards

Like other investment products in this list, your rewards depend on the risks you’re willing to take. Most beginner mutual fund investors go for balanced funds but find its slow, and low profit returns troublesome. Some want equities for impressive returns, even if it’s just once or twice in a blue moon.

For long-term investments, balanced funds are your best bets. Choose stability and low risk over quick and high profits accompanied by high risks.

4. Exchange-Traded Funds (ETF)

ETFs have an extremely popular mutual fund, an investment trust structure, allowing them to trade on the stock and receive stock benefits. Therefore, it enjoys stock liquidity, making it another option for short-term investors.

Their lower fee makes them a much more appealing choice. Plus, ETF managers can hedge or leverage funds for maximum profits.

  • Risk Level

While most financial advisors rate ETFs as a low-risk investment, stock tax variety will apply to its liquidity. Truthfully, tax-efficiency is notable in ETFs if managers buy and sell them in-kind. Capital gains taxes occur when derivatives, commodities, and other factors get involved.

  • Rewards

Like stocks, ETFs increase their value if the market is bullish (or positive). When GDP plus commercial and industrial activities increase, so will ETF values regardless of style. However, if your ETF does not trade in bonds, you might be in trouble once recession hits.

Long Term Real Estate Investment

5. Real Estate

From the Middle Ages to modern times, real estate is a commodity that only grows in value. Truthfully, it’s one of the most expensive investments you can make with a 20% down payment as the minimum ownership fee of properties you intend to rent out to Singaporeans or foreigners.

The average cost of non-HDB properties in Singapore is beyond S $200,000 – S $ 400,000 at a minimum. However, because of the high demand for real estate in the country, it remains an excellent source of income despite its slow start.

  • Risk Level

One risk exists with real estate investments: bank debt and passive management. You can assume bank debt as money you’ll invest in the property coming from a reputable financial institution. Truthfully, this works similarly for owner-occupant properties.

Once you’re running multiple rental real estates, you’ll want to use a management company to oversee maintenance, accounting, and other necessary procedures to enhance your investments’ quality and dependability.

Both of these entail great risks because you can end up with deep bank debt if you fail to pay or secure a tenant (if your interest to invest in real estate is rental profit). Plus, your passive real estate management company can demand you to pay their accumulated fees if you default on property payments.

  • Rewards

Real estate’s value remains high, thanks to the consistent demand and limited supply. If you can ride out the initial massively-expensive storm, you can expect to find an enormous profit. This outcome is true, especially if you’ve completed property and debt payment and going beyond your break-even rates.

6. Tax Sheltered Retirement Plans

Honestly, you haven’t heard a single Singaporean soul tell you they’ve achieved financial independence by using tax-sheltered retirement plans. However, many financially-successful individuals use them to minimize their investment losses. Everybody pays taxes, but if you have tax shelters, you use legal means to minimize your contributions and get more profit from your assets.

Tax shelters use existing tax brackets for investment profits regardless of capital assets. Thankfully in Singapore, you won’t need to worry — the government does not charge for any capital gains taxes. Alternatively, you can lower your taxes by familiarizing yourself with the country’s bilateral tax treaties.

  • Risk Level

With no capital gains tax to worry about, Singaporeans can maximize the sale, purchase, property transfer, and other profits they receive by moving assets. Truthfully, tax shelters are zero-risk ventures, but then again, they’re not actual investment vehicles. On the other hand, they can be tedious with all the legwork and paperwork.

  • Rewards

Being familiar with Singapore’s tax system enables you to maximize profit within every legal limitation possible. Therefore, you won’t need to worry about long-term issues arising from investment profits you’ve failed to track. While the absence of any capital gains tax helps, you might step on a legal landmine if you’re not too familiar with Singapore tax laws.

7. Robo-Advisor Portfolios

Automation is one of the biggest benefits this age of progressive and advanced technology benefits any Singaporean, including investors. A Robo-advisor is like a fund manager in your pocket with the option to customize their management and purchasing style. For example, you can set your Robo-advisor to invest in stocks and minorly in bonds.

It uses machine learning, another advancement for both technologies. Once it learns you and other investors’ practices, it can give you asset recommendations using success percentages from other Robo-advisers as the basis.

Most Robo-advisors have some basic parameters to set during the start, allowing you to adjust them progressively to suit your automated investing style.

  • Risk Level

Truthfully, the 0.25% commission it receives is negligible. However, you face similar risks if you will invest in stocks or bonds independently. When using your Robo-advisors, research and decision-making bulks will always be yours; they can only provide suggestions.

As for your bot, its responsibility is to assess whether it meets your pre-set investment goals. It will then give you recommendations using its talents of fast-tracked data comparison analysis between investors who have the same investing behavior and assets as you.

  • Rewards

Like risks, the rewards you get from Robo-advisors are thanks to your assets’ performance. However, it’s easier to assess rewards thanks to a data-accurate Robo-advisor.

It can provide you details on trends and actions by other investors. Having an effective briefing regarding the general investor flow helps you anticipate whether certain asset prices can increase or decrease.

8. Annuities

These are insurance products that invest for you. These products have their respective objectives, such as providing you with income at 65 until your death.

To make their products accessible, insurance companies make annuities affordable for entry-level products at least. However, substantial-paying life-plans ask you for a higher initial down payment before subsequent installations until you finish paying.

Some financial advisers consider annuities a controversial product because it benefits the insurance company and its representatives more than the beneficiary.

For example, if you paid to get an income after you retire by 65, you maximize your annuities if you lived up to 100 years. Achieving this meant the insurance company paid the additional percentage they advertised.

Otherwise, you will have fared better saving your huge initial annuity down payment and subsequent installation payments to pay yourself after retirement.

  • Risk Level

Annuities are useful if you are in good shape. Unfortunately, no human can ever predict their final resting years’ duration. However, having peace of mind that a financial institution is liable to keep you financially afloat during retirement can benefit the majority of Singaporeans.

  • Rewards

As we’ve mentioned above, if you live for 65-100 years, you have maximized your investments to the fullest. On the other hand, passing away earlier than 75 will reward the insurance company the retirement fund remainder. Some annuities award your remaining fund amount to family members or registered beneficiaries, but these are rare.

Factors to Consider

  • Higher Risk Levels Equal Higher Returns (And Vice-Versa)

Don’t be swayed or fooled by seminars and advertisements brokers publicize about investing being worry-free and easy. Making investments is easy, thanks to technology and financial technology advancements. However, turning a profit through long-term investments will always be challenging. To make your long-term investments bear fruit, you’ll need to research and have a complete understanding of SWOT.

Every business relies on its strengths, weaknesses, opportunities, and threats (SWOT) analysis. Thankfully, many business and market analysts have their respective SWOT analytics data on different websites and magazines. All you’ll need to do is a simple search engine query.

  • Time Horizon Anchored To Your Goals

Truthfully, long-term investments have smaller risks than their short-term counterparts because assets can recover their value over time. For example, during a recession, short-term investors suffer more losses if they invested in stocks. However, best long-term investments with in-depth planning can ride out the ups and downs of its stocks through a recession and gain double or triple the initial investment value.

However, a long-term investment fund is never risk-free. You might be at the end of your holding position, and without warning, interest rates have plunged so low, spelling bad news for your bond-oriented investment approach. After decades, you’ve received only a small investment growth instead.

Start Your Investment Journey With The Right Information!

One of the best ways to build wealth over time is to invest long-term. If you’re looking to get started with long-term investing, it’s critical to always invest with the right information on hand. With the right thoughts on the best long-term investment products, your user experience during investing becomes smoother and profitable. Subscribe to Investoralist for more investment tips and ideas!

How to Generate $1,000 Per Month in Dividends

Business Man With Hands and Coins From a Dividend Stock

The dream of all investors is to build an investment portfolio capable of generating a regular and sustainable income per year or even per month. But, achieving this is easier said than done. Even with the advent of advanced research tools and improved services from investment advisors, there is no assurance that your money can earn as much as you want it to be.

In this article, investors like you will learn what you need to do to earn $1000 a month. Also, we will demystify the concept of dividend stocks to make sure that you get all the necessary information in making the right investment decisions. Lastly, we tell you how much money you need to prepare before you have a portfolio that is giving you regular money per month.

What are DIVIDEND STOCKS?

The term “dividend” refers to an amount of money given by a company to its shareholders of its profits on a regular basis. Since each of the shareholders owns a piece of the company, they get to take a slice of the profit as well. It is the company’s sole prerogative to determine the number and the value of each dividend it wants to give to its shareholders.

In the case of investment, the term “dividend stocks” refers to the share of the investors of a company’s profits paid on a regular basis. This share may be paid monthly, quarterly, bi-annually, annually, or in rare conditions, in a lump sum. Also, it may come in the form of cash or additional stocks.

How DIVIDEND STOCKS work?

Most dividends are paid in cash. The investor is paid a certain amount of money based on the number of shares he owns. For example, if a company pays 1 dividend for $100, investors with 100 shares will be paid at $10 000. Since dividends are often given regularly, you can expect $10 000 of income on a regular basis.

Another way dividends are paid is in the form of stocks. They are in the form of percentages. For example, if a company issued a 10% stock dividend, an investor who owns 200 shares will have 220 shares after the dividend is given. To turn this into cash, you will have to sell the stocks you own.

Take note that there is no guarantee that you will receive a dividend. The decision to give out dividends is based on what the board of directors of the company has agreed upon. This setup is different from owning a bond where a bond investment earns a fixed-rate income called the “coupon rate.” When it comes to a dividend, the board of directors has the prerogative to reduce the dividend or remove it altogether.

Why Do People Invest in Dividend Stocks?

While there is no guarantee that investors can receive dividends immediately, a lot of people continue to do dividend investing because it can be a profitable investment for the future. We list some of the best reasons why investing in Dividends gives you the best investment options

Regular Stream of Income

Retirees choose to invest their retirement fund in dividend stocks, knowing that they will receive a dividend every month in the future. While they may not get a return on investment (ROI) immediately, their retirement money can give them a regular stream of funds in the future.

Invest while you’re Young

Dividend investing has also become an option for young people because, with the stock dividends option, they get to own more stocks, reinvest it now, and then cash in stocks they have gained in the past years. One important reminder, though, even if you choose to reinvest your dividends, they are still taxed in the same year that you got them. Tax-exemption is only applied to accounts like an individual retirement account.

Secured Investments and Returns

Compared to bonds and mutual funds, dividends gain higher yields when the interest rates are low. Dividends also has the potential for share price appreciation. Meaning, even if the stock market or the share price falls, dividends can survive because of their steady income. If you decide to reinvest the additional dividends you earned, you will have more shares per dividend because of the lower share price.

How to Find the Best Dividend Stocks?

Despite the numerous advantages of dividends, it is not free from market instability and risks. Investors must also be careful in choosing which shares to buy to make sure that their dividends earn a profit. People must look for a dividend portfolio with a high dividend yield. Below are tips on how you can find the best stocks in the market.

1. Look beyond dividend yield

A lot of beginner investors are lured when they see high dividend yields. They believe that buying dividends with high returns or yields guarantees their financial success. But in reality, yields or return is not the bottom line. There are many other factors to consider, including interest rates, fees and expenses, compound interest, market volatility, and more.

For one, you must look at the sustainability of the stock prices. You need to know the history of the stock you are being and the company you are buying it from. Remember that companies can make dividends appear profitable by increasing the yield. As an investor, you have to look for trustworthy companies with established history and reputation.

Also, pay attention to the sector and structure where your investment belongs to. Take note that despite the high yield of your investment structured as real estate investment trusts, they are taxed higher. This means that you must also pay attention to other factors and not only the dividend yield. It is best that you set a realistic goal, so you do not get disappointed in the end.

2. Recognize red flags

As mentioned above, the yield is not the bottom line of dividends. Consider some discrepancies on the yield as warning signs. Here is an example. If a company has a high dividend payout ratio but took debt to pay the dividend, the company is most likely experiencing financial troubles. Instead of paying attention to the yield of the stocks, check if the company has strong balance sheets or has an efficient cash flow.

Also, do not start investing unless you have seen the performance of the company in the past years. If a company faces financial trouble, the dividend investors will surely suffer. Avoid small business companies that have not proven their performance in the market. If you can, choose companies with a good record in the past 30 years or so.

Most importantly, do not be lured by companies assuring you of earning $1000 a month immediately after creating your funds. Any seasoned investor would tell you that earning a regular and sustainable income from dividends takes time. Instead of trying to get as much as $1 000 a month during your first year as an investor, try to grow your shares each month or per year first. It is only through this slow and certain way that you can ensure your income from investments.

3. Diversify to minimize risk

To assure a high return on investment, combine your high-yield stocks with growth stocks. It is risky to invest in growth stocks because it has a high-win high-lose scheme. To balance it out, spend on stocks that have more conservative growth. By doing so, you are making sure that you do not lose everything on a single investment.

Also, try not to pour your investments into one sector or industry. While the technology and communications sector have high yields in recent years, it is not wise to focus on it alone. If the sector experiences a crash, you could lose big. Try to diversify your investments by including other industries like real estate in your portfolio.

Moreover, you need to understand how factors like rising rates, inflation, consumer spending, company balance sheets, and many more affect your investment. As an investor, you can only set your goal if you have the essential information about funds, expenses, income, risk tolerance, and more. Without understanding the stock market data, you cannot get started in building your income portfolio.

How Much Money Do I Need to Invest to Make $1,000 a Month?

So, the million-dollar question is: how much do you need to invest to earn $1 000 a month? If you have a high-yield investment, you might need at least $100 000 invested in your dividend portfolio to make $1 000 per month. In most cases, where the stocks only have moderate growth or yield, you might even need to invest $200 000 to make $1 000 per month.

Income investments of one hundred thousand or more can be overwhelming for many. Do not worry, though, because you do not have to put in these investments all at once. Get started by putting in the money based on your available funds. When you earn stock of cash dividends, put your earnings back into your portfolio. By doing so several times in a decade or so, you will be able to grow your investment exponentially.

When it comes to the stock market, it is best to think of it as a long term investment. It is not a get-rich-quick scheme where investment can make you a millionaire overnight. Instead, it is meant for people willing to take long term waiting. One has to wait several years or even several decades before being able to own a big sustainable investment portfolio.

Final Words

Investing in dividends to earn $1 000 per month can be a challenging feat. You need to spend time, money, and effort before you can expect $1 000 a month regularly coming into your income portfolio. If you are a beginner, you may want to learn basic concepts of stock market investing first before putting all your savings into a single investment. Do not expect 1000 a month of return just yet. Instead, make your goals attainable.

Also, new investors are often lured by unrealistic claims of investment companies and advisors, like 1 000 a month income during the first year of investment. Instead of trying to achieve these extraordinary feats, investors must pay attention to the details of their investment and the mechanics of how their money is earning money. They must read the terms, agreements, privacy policy terms, interest rates, fees, to name a few, before putting their entire retirement savings into investment accounts.

This article is a product of extensive research by the Investoralist team. If you feel that you need more information about dividends, stocks, bonds, and other related topics about investing, the Investoralist team has more articles to help and guide you. We have written materials dedicated to helping out investors who do not have prior knowledge and experience about the trade. Our materials are guaranteed to guide you in navigating the investment industry.

3 Best Fidelity Stable Value Fund For Smart Investors

Investing in Fidelity Stable Value Fund

When it comes to talks on investment, nobody wants to be ill-informed. We all want to be smart and well-aware about where we invest our funds, especially as future retirement plan participants. With this, stable value funds have been designed to exist in the market, in order to help us keep ahead of inflation and market volatility.

Now, to stay smart, we would want to choose which type of stable value funds we would want to invest in, and all these come along with a wide array of risks and fees. All you have to do is to choose which among the best stable value funds out there will suit you best.

But what are stable value funds? How do they work, and how do I know which among these will fit my needs? Let’s talk about all these in this article.

What Is a Stable Value Fund?

In a nutshell, stable value funds are one of the various investment options you can choose from in the money market funds today. These money market funds options focused on preserving the capital and investment objectives you put into. Because of this, a stable value fund keeps the value of your cash in the markets regardless of the performance of the stock and the bond markets.

Consequently, the returns are low for this, because the risks are low as well. While some financial management professionals and tenured investors would consider that an SVF is similar to a money market fund, you will have to understand that stable value funds still yield higher interest rate returns than a money market fund and some other stock plan company in the market, and without having to add on more risks.

How Stable Value Fund Works?

Stable value funds are investments offered by insurance companies, stable value investment associations, and banks. They are designed to be wrap contracts or fixed-income securities, as they assure investors a certain amount of return, even if the value assets’ performances decline in the market.

Now, to support that assurance of returns, a wrap balance contract enters the picture. Wrap contracts are those that are reliant on the associated asset value as well as the financial backing provided by the wrap issuer (in this case, the issuers may be banks and insurance companies).

To guarantee your return, it is crucial to know that your money balances should never have worth that is lower than your principal investment in the fund. With this, the bank or insurance company that offers you the wrap will assure you of small percentages of a return–regardless of the performance of the economy. Now, if the fund loses incredible value, the insurance companies and the banks will have that responsibility to complete and make it whole for you.

As it has been mentioned earlier, you will have to remember that just like any other investment in the market, stable value funds come with a risk, albeit a small amount. For example, if your insurance company goes bankrupt and starts to shut down, their bankruptcy will have some sort of impact on your investment strategy and stability.

3 Best Fidelity Stable Value Fund

There are different types of fidelity investments that come with different investment requirements and an array of risk levels. Let’s discuss the top three:

1. Fidelity Balanced (FBALX)

FBALX or Fidelity Balanced is an investment that is considered the highest-rated type of funds in the group of Fidelity funds. Choosing to invest in this keeps you ahead of inflation with a competitive margin. Because of higher yields, the FBALX comes with a rather moderate level of risk balance, as it may not be considered as the most stable among the three in this lineup.

Logic will tell you, however, that the higher the risks you take, the higher the possible yields. The FBALX is one of the best options you can choose with regards to yields and its relation to risks. Keep in mind that the financial portfolio for FBALX is a combination of about 1/3 bonds and 2/3 stocks in the market.

Possible Expense for FBALX: $56.00 per annum, every $10,000 invested

Minimum Investment Requirement for FBALX: $2,500.00

2. Fidelity Freedom Income (FFFAX)

The second type of Fidelity fund is called a Fidelity Freedom Income, and with an acronym of FFFAX. This will suit best those who are conservative with their investments and would prefer company funds with low volatility in the market.

As compared to FBALX funds, the FFFAX has an asset allocation of 1/4 stocks, 1/4 cash, and 1/2 bonds. This is below the average for the income funds set for retirements such as a 401 k, and the allocation of cash is mere twice the category preservation average.

The FFFAX always maintains itself on the conservative side of the funds spectrum. Because of this, the preservation yields come in with an average long term return, but it performs with risks that are below the average. It can guarantee a return after a 10-year investment period of 4%. This means that the FFFAX can beat ahead against inflation on your funds while it maintains the stability its shareholders require.

Possible expense for FFFAX: 49$ per annum for every $10,000 invested

Possible minimum investment for FFFAX: $2,500.00

3. Fidelity Government Income (FGOVX)

If you are those types of investors that settle in with stability while at the same time have a good fund management portfolio and are into investing in high credit quality bond funds, then a Fidelity Government Income (also known as FGOVX) will work best for you.

The stock portfolio of the Fidelity Government Income is comprised of a balance in blend agency bonds (such as GNMA bonds or even Fannie Mae bonds) and U.S. treasury bonds. 98 percent of the mentioned bonds have been qualified with an AAA rating, which performs a lot higher above the average (which is 80%).

The average period for all the bond holdings in this category has been proving itself valuable when interest rates have been rising yet again because long-term bond funds are more sensitive to the interest rate. On the other hand, a short term bond fund might find it challenging to stay competitive in the midst of inflation.

Possible expense for FGOVX: $45.00 per annum for every $10,000 invested

Minimum investment for FGOVX: $2,500.00

How Much Are Stable Value Fund Fees?

When it comes to looking and committing to stable value funds and contribution plans, always check on those that charge relatively small and strategically competitive fees. A stable value fund would usually charge only 0.5% or smaller, and that percentage is already considered as a fair charge. If your stable value funds start to charge you with fees of 1.0% or higher, then be wary because they can consume your already-low yield return.

The fees that you can expect from a stability fund may revolve around the following:

  • Internal Expenses or Expense Ratio (this is also known as your operating expenses in the fund).
  • Investment advisory Expense or Investment Management Expense (an expense you pay the person who manages your fund in the money market)
  • Transaction Expenses (the fee you pay each time your order to buy or sell your stable value funds).
  • Front-End Load (commission charges that may possibly reflect into your account)
  • Surrender Charges, or Back-End Load (charges each time you sell your fund from your account)
  • Custodian Fee or Annual Account Fee (regular annual fee that may be charged on your account).

When Stable Value Funds Are a Good Fit

Stable value funds will be a good fit for you and your 401 k contribution plans if you are a conservative investor and would like to invest exclusively in GICs or Guaranteed Investment Contracts. These stable value investment association contracts are those issued by 401 k insurance or retirement plan providers that guarantee you, as the investor, some sort of yield and return.

Know that because a lesser risk is involved with stable value funds, a lower return should be expected. But if you are a worker who is nearing your retirement, or if you would simply want to have stability in your portfolio– especially amidst times of market volatility and crises, then a stable value fund would be a perfect fit for your investments and 401 k.

Bottom Line

Always keep in mind that you will have to be well-informed and smart with your stock investments. With this, it is important to do your research and refer to professional institutions like Investoralist that can help you not just with information on your stock investments and retirement plans, but also with your assets and the risk that you would like to use in investing.

Stable value funds are indeed beneficial in the long haul, especially if you are an employee excited for your nearing retirement period in life. If you would want to diversify your financial stock portfolio and gain some sort of stability and security with your cash and finances with a low level of risk, then these types of funds and securities in the market would suit people like you best.

10 Investment Ideas Other Than Stocks

A businessman thinking about investment ideas other than stocks

Once you have secured yourself through insurance and have put aside a substantial amount of savings, then it is high time to look for ways to grow your money.

Investment in stocks through mutual funds and government bonds is always a good idea. However, it is important that people diversify their funds and resources.

The stock market is a very promising source of fortune but the stock market is very volatile and it can be precarious. It would be nice to have a part of your money invested in other places. So after you have learned how to invest in stocks, you should learn other investment ideas that would make your hard-earned and carefully-saved money grow.

Below are a few options other than the stock market.

Rental Properties

Money required: As low as $500, $1,000, or $10,000

A lucrative alternative to the stock market is real estate investment. Compared to the stock market, real estate is less volatile. The prices of real estate in Singapore do not fluctuate that much. In fact, they keep on rising. Investors do not worry about investing long-term as short-term fluctuations are unlikely to happen. Hence, real estate is really a good investment to put your money in.

Investing in real estate is a very good source of passive income. Investors keep on earning returns from rent. Rent has never been this expensive. As a place to live or space to conduct business is a necessity, Singaporean residents and businesses will always continue to find a way to pay up the rent.

There are three various ways to invest in real estate.

The first one is buying the property directly. As real estate will unlikely depreciate but more likely to appreciate value, buying property now is very good alternative where returns are guaranteed.

The second way is through real estate limited partnership (RELP). RELP is composed of investors, usually up to 30 members, who pool their money together for the purpose of purchasing, leasing, and developing real estate. There is a general partner that assumes full responsibility and there are limited partners whose liability is only limited to the amount of money they contributed. This offers relatively high expected returns but with comparably high risks.

Lastly, real estate investment may be in the form of a real estate investment trust (REIT). You invest in real properties managed by your chosen REIT. REITs use investors’ money to purchase, manage, and operate properties. In a sense, investors become part owners of the properties bought, managed, and operated.

Such properties earn in the form of rental income. Part of that earning is paid in dividends to investors.

Farmland

Money required: $10,000

Farmland is probably the biggest opportunity you have probably never heard of. There is an increasing demand for high-quality food but the supply of lands continues to decrease due to development efforts brought by globalization. Hence, farmland is seen to become more essential over time.

Investments in smart agriculture technologies that boost crop produces are expected to generate profits. Investments in farmland have become more profitable than they have ever been before especially that the government of Singapore is taking a more active role in promoting agricultural technology (AgriTech) innovations.

In fact, AgriTech all over the world has skyrocketed by 49% in 2018. Such indicates a growing interest in farmland globally.

You may invest in farmland through AgriFood B2B eMarketplace.

Precious Metals

Precious metals like gold are distinguishable from other asset classes like the stock market, real estate, bond, and equities in terms of the economic forces that determine their prices. Gold is usually bought during the extreme financial crisis or at times when high inflation is expected because it acts as a diversifier that mitigates losses during market stress.

Investments in gold are highly encouraged because this precious metal is highly liquid yet very scarce. It may give you more competitive returns than what other financial assets can give you.

Investments in gold come in many forms. You may opt to buy physical gold (bars and coins). The more common way nowadays is through Internet Investment Gold (IIG) where investors get to buy physical golds online and get them stored in professional vaults.

You may choose to purchase gold-backed exchange-traded funds (ETFs). GLD is a gold ETF.

Cryptocurrency

Cryptocurrency is an internet-based medium of exchange that is distributed across a large number of computers. No central authority runs it. Its decentralized nature keeps cryptocurrency from government control and interference.

Cryptocurrencies are very portable, inflation resistant, transparent, and divisible yet many are still afraid to venture into them.

The most popular and most valuable blockchain-cryptocurrency is Bitcoin. However, there are many other alternate cryptocurrencies that offer various specifications that may be adequate to your liking or preference.

Business Ownership

Globalization has made businesses a good alternative to the stock market when it comes to investments. Invest in a promising business venture like a restaurant, technological school, by putting your money in either private equity or venture capital. However, to be able to do that, you have to be accredited investors.

Cash and Cash Equivalents

This alternative to stocks is an investment on a short-term basis. The maturity period is usually pegged at 90 days. 

It includes bank accounts and marketable securities and should be easily convertible to cash. Thus, equity and stocks are not considered cash and cash equivalents. 

In other words, cash and cash equivalents are the companies’ cash on hand. Those that can be invested as cash and cash equivalents include cash, foreign currency, and cash equivalent. 

This kind of purchase is a low-risk venture partly because there is little risk that its value will change, unlike stocks and equities. If you are interested in short-term ways to invest then this is worth considering.

Peer-to-peer Loans

Peer-to-peer loans or peer-to-peer lending is a new and straightforward market stocks alternative. It is straightforward because its meaning is already indicated in its name. Basically, you will lend money to your peers and charge them with interest rates as agreed upon.

Money required: $1,000

This alternative investment is one of the most viable investment options you have. It is comparable to lending a friend some cash with the expectation of getting paid the whole amount with interest rate. Peer-to-peer lending involves some P2P platforms like Prosper and Lending Club where all you have to do is to invest a particular amount, say $1,000.

All lending transactions can be facilitated through these platforms. Returns are more likely to transpire than losses because there will be more than one borrower of your investment. One defaulting borrower would not automatically put your investment to waste because only a portion of your money was borrowed.

Remember, however, that this investment option is a high-risk, high-return way to invest. Make sure that you do not rely on this solely for your retirement money.

But when you have some extra cash, then peer lending is an opportunity to diversify your investments. Sign up for peer lending in a trusted online platform and be critical on who you lend your money to. You will surely earn from the interest rates when you manage your investment well.

Collectibles – Alternatives to Penny Stocks

Investing in collectibles is a long term investment because a lot of items increase in value through time. Antique artworks, furniture, and jewelry tend to shoot up in value through time. 

Its value also increases if it has a significance in history and culture. This way of investment is very interesting especially if you have a knack for certain hobbies. 

For example, a lot of sports enthusiasts are also into sports card collection. They take the time and effort to acquire certain cards that are rare and limited. 

For collectors and hobbyists, it is satisfying to acquire coveted items. Secondary to this is the potential of turning these collectibles into cash. 

The rookie sports card of LeBron James, for example, fetched a staggering $1.8 million. If you are into this hobby, keep your collection in mint conditions because you would never know the potential value of that investment in the market in the near future.

Fine Wine & Fine Art

Similar to the collectibles, fine wine and fine art are also long-term investments. As you might already know, these two items earn more value the older they get. What is good about fine art, say a painting, is that you may buy it from a random artist at a small price, like $200. And then a decade later, that random artist grew world-famous. 

Suddenly, your $200 investment started to gain thousands of dollars in value in just a decade. This kind of scenario is highly possible when it comes to a fine art. 

So next time you feel guilty for buying that piece of painting for your small art collection in your living room or for buying that bottle of wine you know you won’t open anytime soon, consider the boundless possibilities that can grow out of that purchase.

Angel Investing

If you have family or friends who are starting entrepreneurs or have a great start-up idea, be an angel and give them a head start by becoming an angel investor. By becoming one, you are taking ownership of equity to their start-up. You can either provide a one-time investment to help the start-ups hit the ground running or you can also inject funds a couple of times as the young company takes on the most difficult part of starting a business–the initial stages. 

Angel investing, however, is a risky business. Make sure that you are investing the amount of money that you can afford to lose. Since you are investing in start-ups, then the idea is not something tried and tested. 

However, angel investing also requires thorough scrutiny of promising business plans. If you are to be proven correct in your appraisal and the start-up became big, then you will reap the reward of being a believer.

Closing

You yourself can also be an investment. It is always a good idea to learn new skills. You may enroll in several short courses and acquire certain certifications that would make you eligible to take side-hustles. 

Invest in acquiring marketable skills that can give you a chance to be an entrepreneur yourself. Aside from this, you may also start working with a life coach or a financial coach that would dedicate time to looking through your personal growth. 

Lastly, take a more aggressive approach to learn how to invest. Move over googling “how to invest stocks.” Make your research more systematic and scientific by taking investment courses or talking to registered investment consultants.

Top 10 Ways To Earn A 10% Rate Of Return On Investment

how to make 10 percent interest monthly

Without a doubt, all of us want to earn more. But, the question has always been, how?

In this article, you will read 10 of the easiest tips and techniques to earn a 10 percent rate of Return on Investment (ROI). While you might think that this percentage is too little, note that these savings can sum up a large amount of money when accumulated. Find which of these ways works for you and your situation, especially during recession and pandemic.

Top 10 Ways To Earn A 10% Rate of Return on Investment

1. Real Estate Investing

One way to earn a 10 percent ROI is real estate investing. There are multiple mechanisms to do this. You can choose to rent out your property. Just make sure that the rent rate is more than your monthly mortgage or loan payments. If you don’t want this type of real estate endeavor, you can try other methods too.

You can also buy and sell homes to earn an income. A pro tip here is to invest in single-family rental homes. These types of homes sell like pancakes.Experts even claim that these types of houses will continue to grow even during and after the pandemic. With the work-at-home option growing popular, people choose to stay in these comfortable and affordable homes even with a high rent rate or an expensive price tag.

If you want to venture into the market of single-family rental homes, you might want to check out companies like Roofstock. The company is dedicated to this type of rental service. They offer to buy, own, and sell rental homes, so this is the best place for you to find potential clients and customers. They are one of the best in the industry, but you can surely look for other companies in the same field.

If investing in single-family rental homes is not right for you, you can also try to invest in real estate debt. Here, you can invest in the loans made to borrowers. As these borrowers pay back their loans, you get to earn you money as well. The nice thing here is that you do not need to manage the property while being part of the thriving real estate investing industry. You can check out Peerstreet if you want to try this out.

Another option to enter real estate investing is to invest in corporations that give dividends or dividend stocks. It may take time before you profit from these real estate investments, but they are relatively more stable sources of income. They are for a long term investment. You might have to wait for five years for your first dividend, but you can earn per month or per quarter after that. Check out Fundrise or Streitwise if this type of real estate investing works for you best.

2. Paying Off Your Debt

If you have an existing loan, chances are you are losing a lot of money because of the interest rates you are paying back. One easy way to earn a 10 percent Return on Investment is to pay back your loans so you can save money. The longer you are keeping your debt, the higher the interest rate you are paying. By doing so, you are no longer charged with the interest rate each month, thereby making you save a ton of money per month.

Just think of this scenario – your credit card debt charges you around 16 percent per month. The longer time you wait to settle your debt, the more money you have to pay the loan agencies per month. The same goes for your other loans. For example, student loans have big interest rates, so you have to pay them back as soon as you can.

If you cannot avoid taking loans, you have to apply to the best credit institutions or to take the best credit cards available in the market. Only take loans with fair and reasonable terms. If you fail to do so, this could hurt your finances in the future.

3. Long-Term Stock Trading

To invest in stocks for the long term, you have to get in touch with an investing company and let them manage your money. Long term stocks are conservative because the Robo advisors or financial advisors put your money into various businesses. They are the ones to choose an option for you. In doing so, you, as an investor, are not taking too much of a risk.

One downside of this type of stock trading is that it might take months or years before you start earning money. But once your investment has given your due diligence, you can start earning high returns.

If this option fits you and your financial goals, you can contact a trusted bank, a discount broker, or even a smartphone app. A financial advisor or Robo advisors will then choose where to put your money.

4. Short-Term Stock Trading

In long-term stock trading, you make trades for a long period of time, like for several months or often years. In contrast, in short term stock trading, you buy-and-hold trade quickly in days of weeks. This is a riskier type of investing because you are only given a short period of time to make trades. The short term fluctuations in the market can potentially turn you into a financial success overnight or potentially lose your savings.

Honestly, the short term stock trading is not meant for everyone. There is a learning curve if you wish to do this for a living. Remember to read various resources before jumping into this market to come in ready and prepared.

5. Starting Your Own Business

If you have a trust issue and would not allow other people or organizations to manage your money, you can always start your own business. Once you build a successful business endeavor, you can ensure your continuous 10 percent earning per month.

To get started in your own business, you have to begin looking at the market familiar. If you are a fan of a fashion, technology, or food trend, make your business revolve around things you know and love.

One of the best tips when starting your first business is to use your personal capital. This is to minimize the risk of being in debt. You do not need to start big here. You can start small, grow your business, and then acquire investors once you are confident about your business plan.

If you plan on investing in a small enterprise, you should get familiar with Facebook, Twitter, Instagram, or other social media marketing tools. These are affordable and easy-to-use tools proven to attract the money market. With limited funds, you might have to do much of the work in the first few months of your business.

6. Art and Other Collectibles

Do you know that your collection hobby can be turned into a profitable business as well? Art and other collectibles can diversify your investments. Make money by buying popular collectible items, keeping them in good condition, and then selling them to the right customers. Navigate Facebook, Twitter, and Instagram to know what items are hot among collectors.

Some of the common collectibles in the market today are books, toys, legos, paintings, and many more. Popular media items, ones released by corporations like Disney, Warner Brothers, Mattel, etc. are also safe bets when it comes to earning your 10 percent ROI. And of course, try to stick on the market that you are already familiar with. If you are into Harry Potter, for example, start your collectible items within this realm.

7. Create a Product

If the stock market or real estate investing does not appeal to you, you can always try to make products that could entice people. One of the useful tips in creating a product is to get an education about the industry before designing or developing a product.

You do not just produce something and sell it to others. Instead, you have to gather the necessary information from your potential clients to ensure that you create a marketable and profitable item.

When creating a product, do not limit yourself to the fashion or food industries. For one, digital products are popular among younger consumers today. You can create a blog, vlog, website, or other online products and earn 10 percent of ROI monthly.

8. Junk Bonds

Given the economic crisis we are currently facing, investing in junk bonds can be the best investment option you can do today. Junk bonds refer to bonds rated below investment grade by the top rating agencies in the country. Most investors would not choose to invest in junk bonds because they carry a higher risk of default than other bonds. But, take note that junk bonds have the potential of significant price increases when the company’s financial situation improves.

Remember that investing in junk bonds is like betting to a given business. This means that before investing, you have to gather all the relevant information to bet on the business that is likely to be a success in the next months or years. If you have to invest in the right junk bonds, the return can be big for you.

9. Peer-To-Peer Lending

Peer-to-peer lending, otherwise known as P2P lending, is a mechanism where lenders are matched to borrowers. You have to use a third party business like Lending Club or Prosper.

In Lending Club, for example, you can earn a rate of return on investment of over 10% per year. For more conservative investments, the ROI is at 6 percent, while for more risky investments, you can even earn a return on investment of 20 percent or more per year.

10. Master Limited Partnerships

There are basically two paths to take under the master limited partnerships. First is the so-called limited partnership is where you provide capital for the business and eventually receive income distributions. Here, you become an investor because of the money you gave to the business as their capital.

On the other hand, there is the so-called general partnership. Here, you help manage the business. Eventually, you get a return on your investment in the form of a compensation basis monthly.

Note that Master Limited Partnerships is similar to trading stocks. They can be risky and are not for every investor. If you wish to proceed, you might want to consult a financial advisor before committing as an investor.

Which One is Right for You?

If you have some funds in your savings accounts, your money is sleeping because of the extremely low-interest rate it earns from the bank. In some cases, inflation could even decrease the value of your funds. If you truly want to improve your personal finance and grow your funds, you have to start building your investment account. As an investor, begin with the industry familiar to you.

Before investing, you have to be certain how much money from your savings account you are willing to use in investing. Also, create a target on when you want to start earning your ROI. All these factors are essential in choosing which type of investment you are willing to make.

While not necessary, it will not hurt you to know the basics concepts in finances and investing, including inflation rate, interest payments, money market fund, credit score, government bonds, and many more.

You do not need to invest a large sum of money. You have to be certain that you are investing in a field with a high rate of return or a growth rate. Make the right decisions by getting insights, suggestions, or education from groups and individuals who are experts in investing. There are more tools online than ever that could make you start earning that 10 percent ROI of interest monthly.

Conclusion

As seen above, there are more ways than ever to start earning that ROI of interest monthly. If you are afraid to start investing, financial websites, consulting firms, and business organizations can be found on the Internet. These groups and individuals are willing to help you and guide you in investing your finds to rightful businesses or endeavors.

One of the most reliable financial websites today is Investoralist. We have tons of reading materials, tips, and guides for you. We can help you understand seemingly complex concepts like compound interest, day trading, real estate investing, mutual funds, money market funds, and more. Just send us your queries and concerns, and we will provide you the necessary information you need.

10 Best Ways How to Invest $20,000 Wisely

how to invest 20000 dollar

It’s not really common for one to inherit or save $20k, as that is a relatively huge amount of money. Credit cards sometimes hinder us from saving! But if you have that amount of cash in your hands, then good for you!

Now, what you would want to do with that amount of money is not to let it sit around. Because of inflation, you might end up losing money rather than making more of it! This is why the idea of investment comes into the financial picture.

This article’s content will help you with 10 of the best ways to keep your money rolling.


1. Invest With a Robo-advisor

One of the best ways to invest 20k is to do it with a Robo advisor. Doing so will keep you invested in the stock market using broad and various approaches. There are many resources and content online should you know more about what Robo advisors do and how they could help you with stocks, ETFs, personal loans, and credit card budgeting. However, let me give you an idea about what Robo advisors are. For one, they know money cards best.

A Robo advisor, in general, is like a financial advisor. Still, instead of them being a person, your finances are analyzed by a series of computer algorithms that are programmed to adjust, maintain, diversify, and pick out your investment as time passes by.

Just like what a financial advisor would do, all these algorithms are based on the context of your finances, credit card debt, car insurance, emergency fund, your risk level of choice (also known as your risk tolerance), and the duration of your investment plan. Also, you can opt for some regular, taxable investment account. You can set up your own IRA funds ETFs by yourself.


2. Max Out Your Retirement Accounts

If people around you say that it is too early (or sometimes late) for you to plan for retirement, then don’t believe them. With an investment of 20k, you may have the financial buffer you need to increase or max out your 401 k and even your individual retirement account.

Take note of these three strategies:

  • Always remember that you put into an investment for each dollar and know that your employer at work will match a portion of that amount. While we all know that plan terms may differ. But a 50% to 100% match on your contributions as an employee (those which range from 3% to 6%) is something that isn’t rare.

    That’s why the tip is for you to be able to contribute an ample amount to earn that full match. You won’t need to worry because if you end up short on your utility bills or credit card bills, for instance, your $20 000 is there to cover for you. Just be sure to read their privacy policy as well.

  • Another strategy is to open an account with the IRA and make sure to maximize that out. Choose between a Roth IRA to collect tax breaks in retirement should you opt to start financial withdrawals. You can also choose a traditional IRA (different from a Roth IRA) for tax deductions made upfront.

  • Lastly, even if you think that it makes sense to raise your best personal 401 k contributions, know that you may also have other goals for investment. This year, to max out both your 401 k and your IRA or Roth IRA, you would need to use a benchmark of $25k if you are aged 50 or below. Also, take note that the annual contribution limit is $19.5k for 401 k and $6 000 k for your IRAs. This is one of the best credit deals ever.

3. Invest With a Broker

Now, if you are those types who wouldn’t patronize Robo advisors’ use because you would want the best credit or to invest on your own instead, that is also a fine choice.

Personal finance brokers, especially with a good investment portfolio, can help you do that–even with mutual funds or retirement funds—people before used to pay high fees to brokers who would trade on their behalf.

Thanks to algorithms, technology, and artificial intelligence, these are now becoming things of the past. All you have to do is to create a brokerage account.

Online brokers now exist, and they only cost a fraction credit of the cost of your regular, traditional brokers. They know credit cards best. They know insurance best. They handle your accounts best.

These online platforms, using a brokerage account, can help you get educated not only with the stock market, the stock exchange, and how its dynamics are but also on investments — namely– how to build your investment options and your other credit investment products.

They can also help plan you with the best online car insurance, emergency fund, life insurance, checking accounts, or even mutual funds.

Some online brokers offer stock trades for free, with additional educational resources that explain how investing works. Others may charge fees, but you get additional options, such as a real-time monitoring system on how the stock market performs.


4. Do a 401(k) Swap

You may already get this idea: if you are not jobless and have 20 000 dollars at hand, which you can use two invest, even for your retirement, it is also the best way to do a credit 401 k swap effectively.

You can easily invest 20k with this method. This is a good advantage to tax-loss harvesting and investing more in life insurance as you age.

Since this type of money comes from your payroll or your work bonus, you can increase your contribution amount, usually up to 75 percent of your paycheck, until you have contributed $20 000 using that money you have on hand — just so that you can replace the income that you have lost.


How Does This Work, Though?

For example, a way to invest here is to imagine that you are a person who makes $40 000 per annum and that you are currently contributing 5% into your 401 k (life insurance) right now.

This amount will be about $2 000 per year, assuming that no employer match is included. Given this context, let’s continue to think that you have come into $20 000 that you’d like to invest.

What’s going to happen is that you could keep that $ 20 000 in some high yield savings accounts and then increase your 401 k contribution, which will make you feel that you are not living off of any less. That’s one way to take advantage of a high yield savings account as well.

Now consider this: instead of paying a five percent contribution, raise them to 50%! After a year, you did not just invest 20 000 bucks, but you have just reduced your taxable income by 50%. From the government’s perspective, you just paid fewer taxes because you earned only half of what you received per annum.


5. Put the Money in a High Yielding Savings Account

In relation to point number 4 above, we would still recommend that you, as an investor, put off 50% of your money in a high yield savings account because going above it might not return greater investment returns.

However, if you are certain that you will need the money shortly, you should feel okay about going above fifty percent; but we advise you to think twice.

There are high-yielding savings accounts that will give you a 1 percent yield per annum (or sometimes higher). This is good for a savings account. But if you want a higher reward for your investment, one way to invest is to invest in stocks, although you will need to have a higher risk tolerance for this.

Another way to start investing is to do this with your money through the best Robo advisor in the utmost conservative way possible. For instance, if you save for a house, you choose to take your money out of your high-yield savings account and put it onto that best Robo advisor.


6. Try Out Peer-to-peer Lending

Peer lending is a method of loaning money to others who need it. It is a great way to invest. You can lend to someone who needs investors for their business idea, their student loans, for instance, or some would want to pay the debt on their credit cards or bank account. In other words, it just seems like you’re providing personal loans to other people. Some people would do this best online.

Now, the benefits you can get from peer lending is that your investments can give higher returns as compared to having to invest in stocks. When you invest your money here, however, the risks are so much higher.

Because according to experience, people would not usually pay back the personal loans on time, or in some cases, you might not make money because, as you start lending to them, they might not pay the personal loan back at all.

Before you engage in peer lending, be sure to heed to investment advice first (such as Robo advisors), and make sure that you have the personal capital to lend. Remember: based on data, the more risk you are taking, the more yields you receive.


7. Start Your Own Business – 100% Recommended!

Pre-discussion notes: The recommended percentage allocation of investing 20 000 bucks for this is 100%; however, take note that this involves a high level of risk.

Starting a business can be stressful sometimes, but always know that this is a very lucrative line of work and that most times, it is also very fun. All you have to do is to be certain about your plans and what you are doing.

Where does this start, you might ask? It starts with a solid and clear business plan. Without this, starting such a business might just put your investment goals and funds into waste, and might only live for a short term.

Sometimes, you can look for business partners or financial advisors to help you analyze the risk. Compared to other methods on how to invest, you will need to have personal capital and time, and a lot of energy to keep your best personal business going. Some businessmen would say that sometimes they would even work for more hours than a regular employee.

Just get started! The fund’s payoff can be great, and these investments may be good in part for the long term as long as there’s a money market for your products. If you are equipped with the right information and do things the right way, you could end up profiting from your products–with or without business partners on your side!


8. Pay for an Education

You might remember your parents telling you when you were younger that the only thing that other people can never take away from you is nothing but education. Well, a lot of people have testified to the validity of that quote, and the principles behind it stay true –even up to this day. If Robo advisors could talk, they might even suggest the same thing!

Even if you invest in stocks, you can lose all your money in the stock market. You can go bankrupt on your bank account. You could even stumble into debt on your credit cards or even on your checking accounts. But if you have a strong foundation in education, that foundation will never go away.

If you do not have a bachelor’s degree, be an investor in your education, and consider getting yourself through college. Access to this may be hard as you might fall into student loans. If you do already have a college degree, consider getting a higher form of education. For some schools, student loan services are usually available even for graduate degrees.

If you have the college fund to access higher education, consider this one of the best ways to invest in your future. Know that when you invest 20k into this, it might not cover all your fees, but this will surely be a good investment portfolio.


9. Be an Investor in Your Education Today!

Invest in an employer-sponsored retirement account. Once again, one great way to invest your 20 000 bucks is in your retirement account. You can get ample tax advantages when you invest 20k into accounts such as 401(k), the traditional IRA, or Roth IRA.

The first investment for many people is the 401(k) plan, co-sponsored by your employer. This can help you get started with your investments since the transactions are automatic.

One thing to consider about investing in 401(k) plans is the high management fees. With this, your investments might grow more slowly than the other types. This gets worse if the set of options you would otherwise choose and invest 20k on is not offered.


10. Invest in Real Estate Investment Trusts

REITs (also known as real estate investment trusts) serve as an alternative real estate directly when it comes to real estate investing. Some would offer the most attractive services, products, and other information regarding money market accounts and stock trading.

REITs have been very popular in forms of real estate investments since the 1960s. Think of REIT as somewhat to a huge lending club of real estate assets whose location is freely traded on the stock market.

Similar to real estate, REITs can invest in more options and locations. Also, as additional information, know that real estate is categorized into the following:

  • Retail
  • Residential
  • Lodging and Resorts
  • Specialty
  • Industrial and Office
  • Health Care; and lastly,
  • Self Storage

To invest money in REITs can be done easily by any investor (and sometimes guided by best online financial advisors), regardless of their credit score, because of the availability of mutual funds and ETFs. If you are a beginner, you can think of getting index funds based on REIT as a start. You can also check out a crowdfunding website or sites online that offer such services–including ETFs.

Personal finance success stories in real estate prove that it is an excellent avenue for long-term stocks investment. Know that purchasing property accounts best more of a sizable monetary investment (sometimes higher than 20 000 bucks).

However, always remember that you can start investing in REIT, as this is a strategic alternative in owning real estate. This is because REITs provide good gains from expense ratio as you get passive income, a growing nest egg, and a diverse investment portfolio. Imagine how you will continue to earn from stocks or ETFs–even up to your retirement accounts!


Conclusion

Invest your $20k into good use by planting them into the right avenues. Some advisors are available best online, as compared to the traditional financial advisors. You can trust them to Robo advisors who know insurance best or credit cards best. They can handle your accounts best as well! Aside from these, they can educate you with stocks!

Aside from those, other ways to invest can be chosen as well. From education to stocks, to real estate, to ally invest, always remember that you will benefit in the long run as long as you invest your money carefully and properly.

A Complete Guide to Large Investments | How to Invest $500k Wisely

How to invest 500 000 dollars

If you are a person who has $500 000 in your savings accounts and earns little interest (or sometimes, none at all), well, you are not technically on the “bad side” of the earning spectrum. But did you know that you can do so much more with just earning little interest? If you are one of these privileged people who has these amounts of money, it may be a bit overwhelming, as you might feel pressured to manage the finances and make it roll around. This article will help you figure yourself out!

However, know that having these amounts of money is a good opportunity for you to diversify your personal finance portfolio. Given this, we would highly suggest that you split up your 500 k dollars into investment options –which we will be talking about in this article.


How to Invest $500k Wisely?

500,000 bucks is a huge amount of cash that should be placed into diversified investments. While this article gives you a wide array of options to invest that money properly, we also believe that you should be working this out with a personal finance advisor.


1) Guaranteed Investments

The first and safest option for diversification is to have a set of guaranteed income investments. If you would like to invest everything (let’s say the whole 500- k chunk of the pie), then getting sure income returns for your money can be very interesting to think about.

You’ll first need to have a high-interest savings account. Also, it is best to have an emergency fund as well. This means you’ll have to allocate a portion of this to savings accounts or a retirement account. The amount of your savings should have a monetary value of at least six months of your household’s expenses. This will eventually serve as your financial buffer for six months should unforeseen, and unfortunate circumstances arise.


2) Invest in Stocks

All you have to do for this is to get information from online resources and determine which companies you think can grow big in the future market. Once you have identified your company or companies, purchase their stocks in the market. Be sure to buy individual stocks for each. This will be a great way of investing your $500k.

Doing this can be done in partnership with a financial advisor or a stockbroker, but you can usually get better gains and equities with your stock using online platforms.


3) Robo-investing

Consider yourself getting involved in the stock market. If you are not certain which stocks to pick, then subscribing to Robo-investments can give you the jumpstart you will ever need to get started.

Usually, investing with Robo advisors will make you go through a process that identifies your risk tolerance, assess your funds, annual income, dividend income, and other contributors. Afterward, the Robo-investors will engage in the stocks by investing that best credit for you. They can allocate your budget for individual stocks. Many people usually would prefer this method. For the sake of stock, you might want to try this out, too.

Algorithms programmed in Robo-investors will give you the advantage to lessen your liabilities with taxes and will make sure that you will get the highest yields with the least fees possible.

Lastly, Robo-investments are convenient as you are investing without having to get your hands on it. All you have to do is to trust that your money is being managed properly by the platform.


4) Certificates of Deposit

Certificates of deposit (also known as CDs) are not reported to yield positive things like a justifiable interest rate—CDs workaround by putting your funds into a deposit for the short term and guaranteed return rates.

When the great recession hit the market and the Americans in the US, CDs’ returns dropped to one percent. However, interest rates have risen and gave better deals. This made CDs a more attractive investment for those looking at a guaranteed return of investment for their 500 000 bucks.


5) Exchange Traded Funds

Engaging with Exchange Traded Funds (or ETFs) is also a strategic method to diversify your stocks and investments in the market. One way to invest is that you will only get to make a single trade across a wide array of different stocks.

ETFs are very much similar to mutual funds wherein you purchase a relatively huge number of stocks that comprise one huge fund all at once. ETFs will mean that it is a single stock share that you buy from the stock market. In other words, you are purchasing portions of the fund from the exchange instead of going through a bigger fund group like what you do with mutual funds.


6) Peer-to-peer Lending

Peer lending is essentially lending and investing money on people (or business ideas) whom you think can give you a high return in the long run. Therefore, peer lending excludes you from the stock market, as you invest using your personal finance inventories and cash flow.

Peer lending usually gives you a higher return than other traditional investments, but the risk investments for this might be high. Everyone knows that some borrowers might give a delayed payment or might pay you nothing at all!

This is why it is important to question who or what business you will be putting your risk in. Remember to ideate your share price, and you may want to also balance it off by investing in people with a set, stabilized financial income, and a good financial portfolio. Otherwise, without that data or information, you might run into a problem that could put your financial items at risk as time will age.

Look into their business portfolio, the product they give advertiser disclosure on, and make sure that payouts and payment terms are all explicit. Link this information with a financial site if needed to make sure you give them the best credit possible, which will, in turn, give high-interest gain for your part of the pie.


7) Invest in Annuities

Previous and historical experiences would stigmatize annuities as a way of investing your $500k, or even for retirement. This is because a lot of salespeople have used the complexities of this product to their self-interests. However, there are scenarios where annuities can be that strategic option for a person who has 500 000 to invest. For those huge amounts of funds, that may be the right decision.

While a wide array of choices are available when it comes to annuities, it is important to take note that you will provide a lump sum of funds to insurance companies, which, in return, will give you a high guaranteed yield of that money. The moment you start to draw funds from that annuity is the moment you will get a fixed income as you move forward. Just be sure to consult with the right financial advisor for these ventures.


8) Invest in Gold

It could be a challenge for an investor to invest a half-million in physical gold, especially when one is already familiar with trading stock and bonds on platforms found online. So, when it comes to gold, you would be transacting with everyone outside traditional brokers, and sometimes you will need insurance and storage funds on the investment.

Suppose your main concern is about inflation, for instance, or other emergency index funds. In that case, putting some risk into the gold investment industry may be one of the ways to invest your half to a million dollars in fixed-income investments.

Always know that using this method would need some reflection on your risk tolerance and how you would want to jump off from that nest egg of yours. Either way, this approach will still be a good investment, especially if you do not want to get involved in the stock industry. But again, as we all know, you would still want to diversify your seeds as an investor.


9) Invest in Real Estate

If I were a person to get a hold of $500 000, I would place a portion of the pie to real estate. Data this 2020 show that the market shows a healthy demand in real estate investment trusts and the real estate industry as a whole. With the right information on risk tolerance, you will know that investing in such an industry can give you a high yield in the long term.


10) Invest in Government Federal Reserve Equities

The FRS’s main goal (also known as the Federal Reserve System) is that they would want to promote the aims of stable prices and maximum employment.


How to Manage Your Investments?


1) Keep it Lowkey

Everyone knows that if someone suddenly gets access to a huge amount of money, there is a tendency that new friends would be attracted to them in a way that they never had before. Sometimes even those whom you have already broken ties with could suddenly return to you to rekindle and amend some relationship. This is a very sad yet very realistic example of how money can bring humans down to their worst.

Given this premise, you can manage your investments easier when you keep them lowkey, especially if this is newly-found wealth. Otherwise, you will most likely fall into two scenarios:

Scenario A: You will either meet the requests of your acquaintances, friends of a family — until most your wealth is gone; or

Scenario B: You will keep tons of people on the margins (usually your lost ties and distant family) and alienate them because they think your wealth should be shared with them.

Don’t worry, you can avoid these stresses if you keep everything on the lowkey–at least until you have stabilized or have managed everything out.


2) Pay Off Existing Debts

Debt will always hinder you from your financial goals. Some debts even go to the very bad end of the spectrum, and you must get rid of them by paying them off immediately. Otherwise, your investment efforts will go to waste. Now, if you want higher returns:

  • Pay your loans from your family and your friends. This is not just because we would want us to be responsible not just with their finances but also because of their manifestations on family and friend relationships. As you invest, now is your chance to pay them off–so you can also secure and protect your social relationships in and outside the home.
  • Pay all your debts on your credit cards. This includes that home equity line of credit for your US home. These equity lines are huge credit cards that are secured by your home. No further discussion is needed.
  • Pay all your debts on your student loans. These are also huge, unsecured debt, and you have to consider paying these immediately–even if they have low-interest rates.
  • Pay all your existing car loans. Pay your pending US car loans if your pending loans are not three years of age yet. (or if you aren’t within 2 remaining years of paying the loan off). This will give you a great leeway of margins for your emergency fund in the long run–should you need it.
  • Pay your mortgage. Signing up for a mortgage as an investment makes sense since this is a very long term asset and may take you huge amounts of amortizations per year. It is more strategic to pay off your mortgage immediately. However, if it is an “interest only,” “sub-prime,” “balloon,” or an “ARM” type of mortgage, pay them off, then don’t patronize it. When it comes to mortgages, make sure to be certain and fully-informed.

3) Give Back to Charities

Do not let money own you; prove to yourself that you have full control of your money, not the other route around. One way you can prove this to yourself is to give back to some extent, and at the earliest possible time.

You do not need to be religious to give back to charities. All you have to do is be kind and generous, especially when you have more than enough. Greed will make us want so much money that it could turn us into selfish people who only want to receive and receive.

But if you would want to practice managing your investments, try doing it the other turn around–give.


4) Plan Your Monthly Expenses Ahead

Prepare for your large windfall. Try to predict the worst possible scenarios life might hit you with, then plan to secure resilient money savings ahead. Planning will give you time to handle your newly-acquired fortune more properly. It will give you ample time to make better decisions about it–such as your retirement, how content you would want to become, your life status on health, the right company you want to be with, or how you would want to live your life.

To assess and plan your financial expenses, ask yourself, do you want to have your retirement solution right now? Given that, do you have other income sources that can help make your retirement possible, or will your USD500 000 be sufficient enough for you? Is this something we would want to have high returns for?

You can also ponder if you would want to stay in your company or if you would want to shift to other careers? Are you satisfied with the current money you are getting for your pay? Subsequently, would you want to have some fixed income or something more fluid?

Extend those questions into where you would want to live in the US, what kind of home would you want to have, would you want to start your own company and risk your money there? What index funds would you want to invest in, and what rates of return would you like to have? What dreams do you want to be made fulfilled but couldn’t because of limited money and just a fixed income?


5) Emphasize Safety of Principal Investment

Just like what has been mentioned earlier, going through a windfall might be a game-changer when it comes to aspects of trying to live a life for yourself. What else contributes to that game-changing experience is how you invest that money when such windfalls arrive. Therefore, the key is to make sure that you have full control over your strategy.

The moment you have secured the safety of your principal money, the better emphasized your fixed-income assets will be. Some of the things you might want to consider are:

  • To secure an ample amount of emergency funds. And to secure an ample amount, we are talking about around 24 months worth of financial content and living expenses, so when your windfalls will come, you will be financially resilient–sometimes even up to retirement.
  • To engage in peer lending. Emphasizing your principal investment can diversify your portfolio in various ways. Be an investor in peer lending so that you could secure your money (but with relatively high risks. Create the best personal loans and schemes for your friends. Just make sure to question and be intuitive, and the only risk is the right company.

6) Keep the Investment Risk to a Minimum

To manage your stock and financial resources properly, it is important to know that if you put these at high risk investing in the market, a ton of the hard work you have gone through might be jeopardized. This is why you would want to become not just fully aware of the things you are investing in but also on and act on it–by adding measured and well-calculated risk strategies.

A typical financial advisor would say that with 500 000 USD, you are considered a huge investor, and you should think and act like one, especially on income, index funds, and returns from the market. You should be able to diversify your portfolio and to make your money rolling–amidst inflation. That is what the stock market is for, at least in the life long run-up to retirement. Do not, however, overdo it, and learn to be content.

Ensure that you still have your stock allocation on close monitoring and do not exceed 50% of your total capital. This will provide you the growth and diversity you need, minus the high risks.

To further create calculated and measured risks, consider subscribing to ETFs or even mutual funds. Robo advisors are also available online, just if you need help on reviews on your a part of your credit cards or your investment vehicles in the market. They can also calculate returns and items on the stock–given available financial data.


7) Invest in Yourself

Self-care does not just apply to your mental and physical well-being, but it also manifests in your relationship with your finances. This is the time to spend on a few things you have wanted to have for the longest time.

Do not go all-grand and get carried away in this part of the process, though. Just spend on a little, and to those that are urgently necessary (just like your 401 k). In light of higher returns, focus on investing, and be content.


Conclusion

We hope you have had an informative read as we have talked about steps to make sure your large items for investment are manageable and accounted for. Always remember, with the right passion, data, and attitude for things, getting to the financial goal you’ve always dreamt about will always be one step closer to reality. Read more about Investoralist personal finance articles and be knowledgeable on the current economic situation about finances!