Finding money market and financial tools that give high interest rates is a dilemma that most people face. The so called risk-reward ratio keeps people from investing and putting their hard earned money on seemingly very good tools to make it grow. This keepw them from achieving potentially very high gains. High rewards or gains normally come from high risk instruments which scares a lot of people. Nobody can blame them, after all, there are a lot of scams, fly by night companies, and even very reputable and seemingly stable companies that went bankrupt and closed leaving their clients and customers with basically nothing. People would rather prefer security over growth.
Lack of financial literacy is one hindrance that keeps most people from achieving high interest yields. Most people invest but only a few are wise investors. Wise investors are people who are financially educated and have the right information on how and where to find very high yielding financial tools. It doesn’t require a rocket scientist to figure out which financial tools would give good growth and at the same time, with lower risk. Here are some tools that you can consider in earning maximum earning potential for your money.
1.) Mutual funds. Mutual funds are popular. Mutual funds are very convenient, yet they are much better than ordinary savings accounts and even time deposits. In time, mutual funds are said to perform on an average of 12% annually, some five or six times better than time deposits from banks. Mutual funds normally are at their greatest after recessions or market crisis. Some mutual fund companies performed returned as high as 50% to 70% after the 2008 financial drought. Mutual funds are financial tools that are designed for long term growth. In at least 10 years, mutual funds can make your money grow to as high as 500% or even more than 1000%. That is quite fast.
2.) Bonds. In comparison to mutual funds, bonds give lesser gains, but are still substantial and significant enough. Bonds yield approximately between 4% to 8% annually depending on the type i.e. government vs corporate bonds. One difference between bonds and mutual funds is that bonds give a fixed interest rate annually, but often yield less than a good mutual fund company. Bonds are all about debt. Companies and firms borrow money with the guarantee of paying an interest on top of the capital. Bonds are very low risk but their reward isn’t as high as mutual funds and other higher risked investments. For those who aren’t risk tolerant, bonds are an ideal choice. Bonds are good investments when the economic state is not that well because bonds are generally not dependent on the economy.
3.) Rural banks. Large banks generally give only 1% to 2% interest on their savings and time deposit accounts. Rural banks give higher interest rates. Why is this so? Rural banks are lesser known banks and in order to gain more clients, they offer good interest rates and promise high returns. Since these accounts are deposits and not investments, rural banks give fixed interest rates annually that range from 4% to 6%. The purpose of banks are only for safe keeping and for business transactions and for a bank that will give at least 4% by merely letting them keep your money, it is a good deal. However, because of the risk reward ratio, rural banks are very risky compared to large banks. Many rural banks closed after a decade or some didn’t even reach that long. The key in saving in a rural bank? Check whether it is covered by an insurance commission and only put money that is insured. Never put an amount more than the maximum amount covered by the insurance because just in case the bank closes, you can still get your money and if you’re lucky, you can also get the interest as well.
4.) Real estate. Investing in real estate is one of the best and most lucrative investments that you can ever make. The growth in real estate properties and investments is fast. The key in real estate investment success is to pick undervalued properties or properties that post huge earnings and growth potential. Pick strategic locations such as areas that are targeted for future developments. A developing area gives a growth of 500% to 1000% of its starting value. Other than the appreciation of a property, you can also earn a lot by leasing your property. That is another way of earning an interest or profit. The key in real estate investments is to learn how it works. It is very profitable but at the same time, can be very disastrous if done the wrong way.