Do you feel like your savings need to grow faster? Does the idea of investing feel risky and complicated? You're not alone. Many want to build their savings but must figure out where to start. The good news is there are easy, low-risk ways to steadily grow your money without being an expert investor. With simple strategies, you could earn an extra $1,000 or more per year. This blog post will explore seven low-risk investment avenues perfect for steadily padding your savings. These options gracefully do the hard work for you over time. Ones you can set and forget so more money flows effortlessly into your pockets year after year.
Grow $1K+ Yearly with These 7 No-Risk Investments.
Building savings seems impossible when living paycheck to paycheck. However, achievable options allow your money to grow in the background. Keep reading as we explore seven low-risk investment avenues to lift your savings by $1,000+ yearly.
Let’s read these avenues one by one in detail.
High Yield Online Savings Accounts
Savings accounts used to feel like a bummer, paying less than 1% interest per year. However, some online accounts now offer over 2% interest with no minimum balance. That may sound like little, but 2% interest on a $10,000 balance is an extra $200 per year. Some accounts offer sign-up bonuses, too, like getting $150 just for depositing in the first 60 days. An online high-yield savings account takes minutes to open, costs nothing, and gives you instant cash access. It also protects your money, as the accounts are FDIC-insured.
CD Ladders
CD ladders lock in returns on your money for set periods. Terms range from 3 months to 5 years. Funds stay insured and earn better rates than plain savings. Here's how laddering works. Say you invest $10K total into 5-year CDs. In year one, your first CD matures, making $2K available to use. The rest keeps earning high interest over the longer term.
Reinvest and repeat to keep gains flowing!
I Bonds Help Beat Inflation
I Bonds are a type of savings bond where the interest rate changes twice yearly to help you beat inflation. The fixed base rate is always 0%, but a variable inflation-adjusted rate is added. From November 2022 to April 2023, I Bonds pay out 6.89% interest guaranteed for the first six months. After that, the rate can be adjusted every six months based on inflation. Even if it drops, it will likely beat regular bank account rates. You can invest up to $10K per year in I Bonds with zero risk since they are government-guaranteed. Today's $10K purchase would earn around $344 in interest after just one year.
Robo Advisors
Robo advisors make investing super easy for beginners. You take a short quiz about your financial goals. Then, computer algorithms invest your money into suitable ETFs on autopilot. Top robo-advisors include Betterment, Wealth front, and SoFi. You can start with no minimum deposit, though $500+ is typical. Fees range from 0% to 0.25% of assets. Returns vary depending on your investments, but realistic averages of 5-7% per year are achievable. Starting with $2,000, you could earn an extra $100+ annually.
Just set it and forget it!
Target Date Index Funds
Target date funds simplify investing for retirement. They automatically shift your money from risky stocks to stable bonds as you near retirement. So, in the early years, we see growth while later one’s lock in gains. Stay on course without constant monitoring. These funds spread money across investments suited for your timeframe. With low fees, anyone can easily invest for retirement. Saving for the future doesn’t have to be painful with the right tools!
Fixed Indexed Annuities
Fixed-indexed annuities guarantee your principal while offering upside tied to stock market gains. Your money grows safely even during market downturns, and annuity contracts often provide a minimum 1-3% annual return. These products work well for conservative investors who don't want direct exposure to the stock market but still want their money to grow faster than in a high-yield savings account. Just beware of the high sales commissions and long surrender periods associated with some fixed-indexed annuity products.
Peer to Peer Lending
Peer-to-peer lending platforms like Lending Club and Prosper connect investors directly with individual borrowers. You fund short-term loans, earning attractive returns from the borrower's interest payments. Returns typically range from 5-7% for safer loans to 2-3% for riskier borrowers. These alternative loans help you diversify beyond just the stock market. While no investment is risk-free, peer-to-peer platforms allow you to spread investments across many notes to reduce risk. Automated tools make investing and managing your account simple!
Start Investing in Your Financial Future Today!
As you can see, there are many options nowadays to steadily grow your savings by $1,000 or more annually without needing to be an investing expert or take on a lot of risk. Even an extra 1-2% interest can make a big difference. For example, after only five years, $20K at 3% annual interest becomes over $28K. See what reward checking your bank offers. Little steps today set you up for a brighter financial future.
Here's to a prosperous year ahead!
