Are you new to investing and looking for ways to grow your money without making a huge commitment? Investing doesn’t have to require a large sum of money or big strategies. If you are a beginner who is planning to invest, then you must know that there are several small investments that can generate returns and help build wealth over time. Take a look at some of the best and most useful small investments that make money and will help beginners a lot:
5 Small Investments That Make Money For Beginners
1. High-Yield Savings Accounts
“High-yield savings accounts reward you with a higher interest rate than traditional savings accounts, making your money grow faster as it sits in your account. The interest rate that these accounts offer is known as the annual percentage yield, or APY”, as per a report by CNBC. These accounts are similar to regular savings accounts but offer significantly higher interest rates, helping your money grow faster with minimal risk. They are also easy to open and manage, making them an excellent choice for beginners.
2. Certificate of Deposit (CD)
A Certificate of Deposit is a time deposit offered by banks with a fixed interest rate and maturity date, as per a report by Bankrate. When you invest in a CD, you agree to leave your money in the account for a specified period, ranging from a few months to several years. In return, you receive a guaranteed return on your investment. CDs are low-risk and provide a predictable return, making them suitable for new investors.
3. Exchange-Traded Funds (ETFs)
ETFs are investment funds that trade on stock exchanges, similar to individual stocks. They hold a diverse portfolio of assets, such as stocks (Indian Stock Market Trading For NRIs), bonds, or commodities, providing instant diversification. Investing in ETFs can be a cost-effective way to gain exposure to a wide range of investments with relatively low fees. Many ETFs are designed for long-term growth and are suitable for beginners looking to start with modest investments.
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4. Mutual Funds
“A mutual fund is a collective investment vehicle that collects & pools money from a number of investors and invests the same in equities, bonds, government securities, money market instruments”, as per AMFI India report. They are managed by professional fund managers who make investment decisions on behalf of the investors. Mutual funds offer diversification and professional management, making them ideal for beginners who want to invest small amounts of money with less hands-on involvement. Multiple investors purchase a diversified portfolio of stocks, bonds, or other securities, as per CNN report.
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5. Fixed Annuities
Fixed annuities are a widely popular type of annuity contract, basically used for retirement planning and medium-term financial objectives. It is usually offered by insurance companies and financial services firms, a fixed annuity provides a guaranteed fixed rate of return for a specified duration. As per Forbes, “There are two stages in the life of an annuity: the accumulation phase and the payout phase. In the first, you make a series of payments into your annuity and earn interest that grows the value of your account tax deferred. The payout phase may be either a single, lump-sum payment or a series of regular payments over time.”
Note: You are advised to take professional advice from financial advisors before making any investment.
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