Raise your hand if the interest rate on your CDs and other risk-free accounts is practically zero. If your hand is NOT in the air, please call me immediately!
These are tough times for anyone looking for a return on low-risk investments. While the Feds are keeping interest rates low to encourage consumer spending, it means you can forget about getting rich from interest income on savings, CDs, and other insured accounts.
Leave a comment and let me know you’re using any of these strategies or if you have any additions to the list!
Shop around – Use an online search to compare rates for insured savings accounts nationwide. Smaller local banks and credit unions often have higher rates than the bigger banks that show up in these search engines, so check local deals too.
Invest in stocks – Investing in stocks is obviously riskier than putting money in an insured savings account, but the rewards can be much higher.
Mutual funds – One of the keys to investing on Wall Street is diversification: Spreading your money out over a group of stocks or bonds is safer than just buying one or two. That’s the idea behind mutual funds. With a mutual fund, your money is pooled with other investors’ and invested into a big basket of stocks, bonds, or both.
Bonds – Bonds are basically IOUs from companies or federal and state government agencies. As with a bank CD, when you buy bonds, you’re loaning money and earning interest. You can either hold the bond until it matures or sell it on the open market prior to maturity for its then-current market price.
Peer-to-peer lending – With peer-to-peer lending, you’re the bank. Individuals post loan requests on different peer-to-peer lending sites. You fund the loan and earn interest. The biggest sites are Prosper and Lending Club.
Real estate – If you have the money, it’s a good time to buy real estate now that many experts believe the housing market has bottomed out. You can rent the home and wait for it to appreciate.
Microloans - You make a small loan to entrepreneurs around the world – they use the money to fund projects ranging from farming in the Dominican Republic to green businesses in Argentina.
Collecting - Collecting things is a good way to combine a hobby with a potential money-maker.
– Nedra Rhone, for the Atlanta Bargain Hunter blog