When was the last time you checked your savings account? If it’s been a while, I’m sure that you were expecting a big, juicy return. Guess what? You’re probably severely disappointed to find out that you’ve made almost nothing.
To make matters worse, if you’re dealing with a big bank you may have to shell out pesky account fees. And, don’t get me started on the unresponsive customer service who could care less about how much money you’ve got in your bank account.
1. Neo Banks
In the past few years, several financial technology companies have emerged that offer mobile-first banking services, including low-cost checking accounts. A Neo bank, such as Chime and Current, can partner with a bank to provide accounts. And, in rare cases, becomes a bank itself. No matter how you slice it, neo banks are FDIC-insured and can act as regular online bank accounts.By using technology, these institutions provide services other banks and online banks cannot. I’m talking about perks like two-day-early direct deposits and 24/7 access. There are also no costs associated with maintaining branches. So, these savings are passed on to customers through lower fees and competitive rates.
Let’s take Chime as an example here. With a 0.50 percent APY, Chime’s is one of the best online savings accounts currently available. When compared to traditional accounts, you can grow your funds faster with this high-yield account. If you have at least a penny in your account, you’ll earn interest. And, there’s no cap on the amount of interest you can earn.
2. Treasury Inflated Protected Securities (T.I.P.S.)
You can buy Treasury Inflated Protected Securities online at TreasuryDirect.gov. These are issued by the government and are known as T.I.P.S. for short. But, how exactly do they work?They are tied to the CPI or the consumer price index. Here’s some Economics 101 for you. The CPI basically measures what goods and services are being paid for. Prices are going up or down, so in theory, if inflation starts to increase you’ll see the CPI go up, and then what T.I.P.S. are paying will also increase, so the yield should go up.
3. Online Investment Apps
AMC or GameStop are common examples of meme stocks you purchase through online investment apps like Robinhood.So, here’s the deal with Robinhood. As opposed to most online brokers, Robinhood does not offer mutual fund trading. They only support stocks, ETFs, and cryptos. Despite offering commission-free trading, Robinhood makes money from your business in several ways.
It works like a neo bank in the sense that you can open up an account, get a debit card, and start purchasing items. There are also ATMs all over the country if you need cash.
And guess what they’re paying? Point three percent. While that’s not a huge amount, it’s still more than the national average.
4. High Yield Bonds
From a technical standpoint, high-yield bonds are pretty much the same as regular corporate bonds because both provide debt issued by a firm with the promise of paying interest and returning capital at maturity. With junk bonds, however, the credit quality of the issuer is poorer.There are two basic bond categories, high-yield and investment-grade, based on this credit quality. According to the major credit rating agencies, high-yield bonds have lower credit ratings. A bond rated below “BBB-” from S&P or below “Baa3” from Moody’s is considered speculative and will have a higher yield. An investment-grade bond is one that has a rating at or above these levels. Bonds with ratings of “C” or lower could default as low as “D” (currently in default).
5. High Yield Stocks
Let’s say in the realm of high yield. But, we’re gonna look at high yield stocks.“In today’s world, which is characterized by historically low-interest rates, stocks with eye-popping dividend yields are often too good to be true,” he adds. Investing in high-dividend stocks requires extra scrutiny to avoid falling into yield traps due to dangerous debt loads or declining businesses. Those looking for retirement stocks that can generate income for decades into the future should take note—especially since some of these stocks offer returns between roughly five and nine percent.
6. Blended Approach
Do you want a little bit of high-yield stocks and bond investments? Would you also like to keep some in that high-yield savings account? If so, then a blended approach might be right up your alley.7. Real Estate Investment Trust (REIT)
The purpose of real estate investment trusts, or REITs, is to pool investors’ funds to buy and fund income-producing properties. Commercial properties like office buildings, apartment complexes, or hotel buildings are owned by REITs. Through stock investments in those companies, you can invest in real estate without owning any of the actual properties.There are many reasons why REITs appeal to investors. The first benefit is that, since you do not own the properties, you do not have to maintain them. Another benefit is that, in general, REITs pay higher interest than other kinds of investments. The reason for this is that companies are required to distribute 90 percent of their taxable income to their investors as dividends.
Additionally, when you invest in REITs, you have the option of reinvesting the income you earn from them, so your investment (and income) will grow even more.
Investments in REITs can be made through major brokerage firms (i.e. the New York Stock Exchange or NASDAQ), or through non-traded REITs. You might want to stick to publicly traded REITs if you are new to the concept because they are more liquid and easier to sell than non-traded REITs.
8. Short-Term Notes
A short-term note is a financial product that provides investors with the opportunity to earn interest over a 120 or 180-day period. A note’s maturity date is when the note’s investors receive their principal along with monthly interest payments. That means this is perfect for investors who are looking for an extremely liquid financial product.9. Crypto Savings Accounts
Last, but definitely not least, are crypto savings accounts.Full disclosure here. This is the riskiest baking alternative. On the flip side, rates can be outrageously high.
How exactly does a crypto savings account work?
In general, a crypto interest account lets you earn interest on digital assets you bought on a crypto platform. In return for interest, you lend bitcoins or altcoins to other people. It actually functions similarly to how savings accounts work at traditional banks. You deposit money, the bank borrows it, and you are repaid plus interest. Generally, you can withdraw your money whenever you want.
