We may earn an affiliate commission from partner links on the Entrepreneur Guide. These do not affect our editors’ opinions.
If you want to enjoy a prosperous financial future, making diversified investments is crucial. If you have not started acquiring securities, now might be the time to start.
Outlined below are the eleven best investments of 2023.
What are the best types of investments of 2023?
1. High Yield Savings Accounts
Best investment for: This type of investment is ideal for inventors who want to have a short-term account that is less risky. Also, due to it being less risky, you can easily save your emergency fund or money that you want to access.
Risk: Banks that offer high-yield savings accounts are FDIC-insured. You do not have to worry about losing your initial deposit. This is considered a safe investment, but there is a risk that you can lose purchasing assets due to inflation rates being higher than the account’s interest rates.
Where to get it: Banks, credit unions, and online lenders offer high-yield savings accounts. It is important to shop around to get the best rates.
A high-yield savings account pays you a low-interest rate on your account balance. It is a good place to store your cash or emergency fund. With the vast amount of banking options out there, you will find that online bankers will grant higher interest rates.
You can transfer your money easily from the high-yield savings account to your primary bank. Check out some of our favorite savings accounts like Marcus and SoFi.
2. Short-Term Certificates of Deposits
Best investment for: A CD is a good investment for various reasons. It will be an excellent account to hold your money in if you are a retiree who does not need it immediately but wants to gain interest. A CD also works well for investors who do not mind tying up their cash in exchange for gaining interest later on.
Risk: CDs are considered a safe investment for the most part. They can run a risk if lower interest rates are offered after the maturity date and you want to reinvest. It can also be risky if inflation rates rise very high and disturb your purchasing power.
Where to get it: Banks and credit unions offer CD accounts.
A short-term certificate of deposit is also known as a CD.
Banks offer these certificate funds at a higher interest rate than a traditional savings account. There are short-term and long-term CD periods. Short-term is usually recommended because inflation rates are always expected to rise, so once the short-term CD matures, you will be able to reinvest your money to keep up with inflation.
When opening a CD account, the financial institution you are banking with will pay you interest regularly. Once the account matures, you will get your original principal balance back, plus the amount of interest on that account.
One important thing to note about a CD account is that they are timestamped. This means that you must agree to leave your money in the account for the entire duration until the maturity date. There will be a penalty cost if you decide that you need to withdraw money before the account matures.
3. Short-Term Government Bonds Funds
Best investment for: These investment funds are good for beginner investors looking for cash flow.
Risk: Funds that are invested in government debt securities are considered the safest because the U.S. government backs them. Interest rate risks are higher for long-term bonds rather than short-term bonds.
Like any other investment, you can lose money if inflation rates rise above interest rates.
Where to get it: You can invest in exchange-traded funds (ETFs) and mutual funds through online lenders.
Government bonds funds are mutual funds or ETFs that are invested into debt securities by the U.S. government. Government bonds are categorized as low-risk investments, even when interest rates rise.
4. S&P 500 Index Funds
Best investment for: This security is best for beginner investors who want a small taste of investing in the stock market at a lower risk. It is recommended to hold your position for at least three to five years to see a return.
Risk: The S&P 500 is considered less risky because it incorporates pieces of the largest and most prosperous companies in the world. It is still considered a stock, so there is a risk of volatility, and the government does not back it, so you can still lose money with fluctuating rates.
However, the S&P 500 has a historical record of a positive rate of return on investment.
Where to get it: You can invest in the S&P 500 with any brokerage account that allows you to trade ETFs and mutual funds.
The S&P 500 Index Funds are riskier investments in the stock market compared to traditional banking products like high-yield savings accounts and CDs.
These funds are based on around 500 of the largest American companies, for example, Amazon and Berkshire Hathaway. This specific type of security offers small pieces of diversification amongst the 500 companies.
The S&P 500 boasts an annual interest rate of about 10%, even on small contributions.
5. Dividend Stock Funds
Best investment for: Dividend stocks are a good investment for those who are looking for a source of income, even if it is small. Short-term and long-term investors are attracted to this method of investing.
Risk: This type of investment does come with risks. It is important to do some research on company history and good reputation before investing. It would be beneficial to diversify your dividend stock portfolio.
Where to get it: You can invest in dividend stocks at any brokerage account that sells ETFs and mutual funds in the stock market.
Dividend stock funds are portions of a company’s profit paid out to shareholders quarterly. With dividend stocks, you can gain money on your investments over a long period, as well as short-term with dividend payouts.
6. Real Estate & REITs
Best investment for: Real estate is best for long-term investors and those who have big lump sums of money for down payments and all of the related costs. REITs work in a similar way, except without the down payment and fees. With a REIT, you own a piece of the real estate instead of the entire property.
Risk: There can be a big risk in investing in real estate. Inflation rates affect the housing market and all household-related items, such as roofing, boilers, appliances, and more.
Where to get it: In order to obtain real estate, you will have to work with a real estate broker. REITs can be found on various platforms or through a brokerage account with publicly traded REITs like stocks.
Many homeowners already have a huge investment — their home. You can also invest in real estate with income properties, flips, and REITs.
A REIT is Real Estate Investment Trust. With this type of investment, you do not have to purchase a property. Instead, you are investing in a pool of properties under someone else’s management.
Best investment for: Cryptocurrency is best for high-risk investors who have money to play with. It is not ideal for investors who want a safer investment route.
Risk: Cryptocurrency is unregulated, which means that it is not backed by the U.S. government, making it a highly volatile investment.
Where to get it: Certain cryptocurrencies are available on brokerage platforms as well as cryptocurrency exchanges such as Gemini and Coinbase.
Cryptocurrency is a digital currency that can be used as a medium for online transactions. Crypto has gained a lot of hype in the last few years, with many people pumping money into it and driving the value up.
One cryptocurrency that has gained immense popularity in the market is Bitcoin. Bitcoin set a precedent for all other cryptocurrencies. While cryptocurrency can make you a lot of money, you can lose it just as fast with its extreme volatility.
As we have seen in this year, Bitcoin and all other crypto exchanges have taken a big dip, leaving many investors at zero.
Why should you invest?
As seen during the pandemic, what may seem like a stable economy can quickly be turned upside down. Many people lost their jobs and household incomes within the blink of an eye and were left struggling to make ends meet.
With inflation rates skyrocketing to an all-time high, many financial advisors would tell you that investing can be one of the only ways to combat this.
However, that is not the only reason you should invest. Investing allows you to make passive income while your money works for you.
Suppose you want to obtain a downpayment for real estate. Or, maybe you have educational expenses. Or, you may want to put money away for your children. Likewise, you might need a retirement or savings fund for old age. Whatever your goals, investing can help you do all of that.
Best of all, investing can provide you with another source of income. All in all, investing will allow you to build wealth — so it’s worth doing.
The bottom line
Learning how to invest your money to make it work for you can provide you with many financial benefits. You can make many types of investments, whether you are a beginner or an experienced investor.
It is essential to research which investments make the most sense to you and your future. If you have not started investing, you should consider doing so sooner rather than later. If you’re ready to get started, check out some of our favorite investment apps and robo-advisors .
Information provided on Entrepreneur Guide is for educational purposes only. Your financial situation is unique and the products and services we review may not be right for your circumstances. We do not offer financial advice, advisory or brokerage services, we do not recommend or advise individuals to buy or sell particular stocks or securities. Performance information may have changed since the time of publication. Past performance is not indicative of future results