5 Investments That Will Make Your Life Easier

When you hear the word "investment," you might immediately think of the chaotic New York Stock Exchange, or you could think that it is just something that older, wealthier, or professionally more accomplished individuals do.

When done wisely, investing is a great way to raise the value of your money. And practically everyone can invest in a variety of ways, regardless of age, income level, or line of work. However, these factors will influence which assets are best for you at this time.

One who is approaching retirement and has a sizable nest egg, for instance, is likely to have a completely different investing strategy than someone who is just starting their career and has no savings. Both of these people should invest; they only need to pick the ones that are ideal for their particular situations.

1. High-Yield Savings Accounts

In comparison to typical bank savings or checking accounts, online savings accounts, and cash management accounts provide higher rates of return. Cash management accounts resemble a combined checking and savings account: These accounts often come with debit cards or checks and may offer interest rates similar to savings accounts, however, they are typically offered by brokerage firms.

Best for: For short-term savings or money you only infrequently need access to, like an emergency or vacation fund, savings accounts are perfect. Six withdrawals from a savings account are permitted each month. Accounts for managing cash have more freedom and often even higher interest rates.

Keeping three to six months' worth of living costs in an account like this before putting more toward the investment items below on this list is a decent rule of thumb if you're new to saving and investing. Opening a savings account: Online banks typically provide greater rates than those conventional banks with physical locations since they have lesser overhead expenses. Where to open an account for cash management: Competitive rates are available for cash management accounts from investment firms and robot advisers like Betterment and SoFi.

2. Certificates Of Deposit

A federally insured savings account with a fixed interest rate for a specific period is known as a certificate of deposit or CD.

Best for: A CD is for money that you are certain you'll need at a specific future period (e.g., a home down payment or a wedding). If you want to safely increase your money for a specific purpose within a set time frame, CDs with typical maturities of one, three, and five years might be a wise choice. But it's important to remember that if you want to take money out of a CD early, you'll generally have to pay a fee. Don't put the money you could need soon, like you wouldn't with other investments, in a CD.

Where to buy CDs: The greatest rates on CDs, which are marketed depending on term length, are typically discovered at online banks and credit unions. View the current best CD rates according to term length and account minimums.

3. Money Market Funds

Online banks and credit unions frequently offer the best CD rates, which vary based on the term length. View the most competitive CD rates currently available by term length and account minimums.

Best for: Money that you're willing to expose to a little bit more market risk because you might need it soon. Money market funds are also used by investors as a holding container for cash designated for future investments or to hold a portion of their portfolio in a safer investment than stocks. Although technically an investment, money market funds won't provide the higher returns (and higher risk) of the other options on this page. Growth in money market funds is more comparable to yields on high-yield savings accounts.

Where to acquire a money market mutual fund: You can purchase money market mutual funds directly from a mutual fund provider or a bank, but an online discount brokerage will have the largest choices (you'll need to open a brokerage account).

4. Government Bonds

A government bond is a debt that Makes Your Life Easier for a government organization (such as the federal or local government) that will pay investors interest over a predetermined period, usually one to thirty years. Bonds are referred to as fixed-income securities due to their consistent source of payments. Due to the U.S. government's complete faith and credit, government bonds are essentially a risk-free investment.

The negatives? Government bonds offer less of a return than other investment options in exchange for that safety. It would be significantly more difficult to reach your retirement or long-term goals if you had a portfolio that was entirely made up of bonds (as opposed to a combination of stocks and bonds).

Best for: According to Delia Fernandez, a certified financial planner and the owner of Fernandez Financial Advisory in Los Alamitos, California, "Bonds provide stability to a portfolio by often rising when equities fall, allowing anxious investors to stick to their investment strategy and avoid panic selling.

Bonds are popular among investors approaching or in retirement because of their constant income and decreased volatility, as these people do not have a long enough investment horizon to withstand sudden or significant market falls.

Where to purchase government bonds: You may purchase individual bonds from a broker, or bond funds—which contain a variety of bonds to offer diversification—directly from the underwriter investment bank or the U.S. government. You may choose which varieties to buy and where by using our guide to Investing in Property.

5. Corporate Bonds

The main difference between corporate and government bonds is that with a corporate bond, you are giving money to an organization rather than the government. Because the government does not guarantee them, these loans are riskier. A high-yield bond, often known as a garbage bond, might have a risk/return profile that is substantially greater and more akin to stocks than bonds.

Best for Investors who are ready to accept a little amount of additional risk in exchange for a fixed-income asset that may offer higher yields than government bonds. In the case of corporate bonds, the yield increases in direct proportion to the probability of the company failing. The yield on bonds issued by well-known, big companies, on the other hand, would typically be lower. The ideal risk/return ratio for each investor must be determined by them.

Purchase of corporate bonds: You can purchase corporate bond funds or individual bonds through an investment broker, just like you do with government bonds.