14 of the Highest Investment Return Options
I nvestors share one common goal: to earn the highest return possible on their initial investment. While investing in the stock market is a combination of risk and reward, there are a few investment opportunities that are known to offer a high return.
- The highest return on investment requires a balance between risk and reward.
- There are multiple types of investment risks to be aware of when choosing high return investments.
- High return investments have varying degrees of risk.
- Diversification can help investors maximize their investment returns.
What Is a High Investment Return?
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A high investment return refers to an investment that returns a high amount of money. While what constitutes a high return can be subjective, a high return can also mean achieving a certain percentage over the initial investment. While it may be tempting to always choose the safest investments, these investments do not always provide returns and are not always the best investment plan for high returns overall. Investors looking for the highest investment return will need to consider what risks are present and what types of investments are available.
What Is Investment Risk?
It can be helpful to evaluate the potential risks of investments when determining the highest investment returns available. Many would agree that the biggest risk of investing is losing money. However, investment risks go much deeper than that. In addition to the possibility of losing funds, it is also important to understand the different types of risk that are also present, including:
- Market risk: Market risk refers to the risk of an investment based on economic developments.
- Credit risk: Credit risk refers to the risk that the company loses money and is unable to make its payments.
- Inflation risk: Inflation risk refers to the decrease of purchasing power based on investment value not coinciding with inflation.
- Longevity risk: Longevity risk refers to outliving investments, which is an important consideration for those at retirement age.
- Interest rate risk: Interest rate risk refers to the risk of losing investment due to a change in interest rates.
- Tax risk: Tax risk refers to the risk of losing an investment due to a change in taxes.
- Legislative risk: Legislative risk refers to the risk of losing investment funds due to legislative regulations.
- Liquidity risk: Liquidity risk refers to the risk of not being able to sell stocks at a fair market price.
Understanding the different types of risk can be helpful when investors are choosing which high return investments to include in their portfolios. Evaluation of these risks is what leads to determining the best investment plan with high returns.
What Investments Have the Highest Return?
With numerous investment options, including savings accounts and IPOs, it can feel overwhelming choosing the one that offers the highest return. Additionally, as many experts say, the greater the risk, the greater the reward. However, instead of maximizing risk and reward, the key to maximizing investment is to balance risk with reward. Every investor has a different risk level, so what is risky to one may be subtle to another. Investing money can always present a risk. But, these are a few of the best investments that offer the highest returns on investment:
- Bank bonuses: Many banks today offer a cash bonus for opening a bank account and doing business with them. Because this is guaranteed funds, it can be considered both high return and low risk.
- High-yield savings accounts: High-yield savings accounts help investors to earn money on their savings. This is low risk because investors don’t lose anything as long as they invest in an FDIC-insured bank account. It is important to note that this is not the same as a high-yield bond.
- Certificate of deposit (CDs): CDs do offer a slightly higher return on investment than savings accounts. They are also FDIC-insured and can provide good returns when the fund matures. However, investors can lose if they cash out before the fund matures.
- Money market accounts: Money market accounts are similar to a savings account, except that they offer greater flexibility. They also offer a higher return than when compared to a traditional bank account.
- U.S. savings bonds: U.S. Treasury securities provide investors with a return on borrowed money. These funds mature in just one year unless otherwise noted. Once matured, the government will provide a return in the form of face value.
- Short-term corporate bond funds: Short-term corporate bond funds work similar to a U.S. Treasury note, except that the funds raised go to a corporation to expand. These funds mature in one to five years and offer little risk if the company does well. However, they are not usually FDIC-insured, making them a greater risk compared to the other options.
- Dividend stock funds: Dividend stock funds can offer a high return on investment because investors can re-invest these dividends for additional return. The payment of dividends reduces the overall risk of the investment.
- Municipal bond funds: Municipal bond funds are supplied by the state or local government and provide returns in the form of earned interest. The return is tax-free federally, making them a high-return, low-risk option.
- S&P 500 Index Fund: The S&P 500 Index Fund is slightly riskier than bonds, but the diverse collection of numerous stocks in an index fund will also increase the ROI options. Depending on the economy, they can be a good high return option.
Investors who are willing to take a greater risk in search of a higher return might consider the following:
- Peer-to-peer (P2P lending): P2P lending can offer high returns on investment, but they can also be risky.
- Real estate investment trusts (REITs): REITs can lead to hefty returns, as long as the real estate market is booming.
- Initial public offerings (IPOs): With IPOs, it can be difficult to know how well a company will do.
- Venture capital funds: A significant percentage of new businesses fail within the first two years, making them a riskier investment.
- High-yield bonds: High-yield bonds will often pay a higher return. However, they are issued by companies with less than a trusted reputation.
It can be helpful to understand where the different types of investments fall in terms of risk. This helps investors make an educated decision when choosing the high-return investment options that will make up their portfolio.
Best Investment Plans for High Return
It can also be beneficial to consider different investment strategies that help investors calculate risk versus reward. These are a few of the most common strategies for considering investment options for high returns:
- The Rule of 72: The Rule of 72 refers to the amount of time it takes to double an investment. Investors can calculate this by dividing 72 by the annual rate of return. This will provide a number, which is the estimated time to double the investment.
- Options investing: The process of options investing involves setting rules to automate the investment process. This involves setting a specific buy price and time. If the price does not meet the set price at the preferred buy time, the sale will not go through. Timing the market can lead to a higher return, but it can also be riskier.
- Trade volume: Monitoring and analyzing trade volume over a set period of time can help investors determine the supply and demand of certain investments.
- Portfolio diversification:Diversification of an investment portfolio can help investors maintain a good return. If the value of foreign markets decreases, investors can make up these losses with funds in other types of investments.
Diversification is important when seeking high-return investment stocks. It also helps investors to create a portfolio that caters to their individual risk comforts. For example, while REITs might be higher risk, individuals in higher tax brackets might use them to minimize tax liabilities, thus reducing some of the risks present. Additionally, dividend stocks can provide investors with passive income, which can help fund additional high-return investment stocks.
Investing is all about balancing risk with reward. Each of the available high investment return stocks come with varying degrees of risk that should be considered when creating an investment portfolio. By creating a diverse portfolio, investors can maximize their investment returns. Of course, we are not a stockbroker or advisor, and we don’t make investment recommendations, but learning how to diversify risk with the potential returns will help investors choose the highest investment returns available.