There’s an almost constant investment push-pull going on between safety and growth. Safety offers protection of principal, but not much future potential.
In fact, with today’s interest rates, safe investments can lose money through inflation.
That’s where growth becomes necessary. It has risks, but the best long-term investments will overcome those risks, and grow your money many times over.
Depending on your risk tolerance and investing preferences, some types of investments might be a better fit for you than others.
Peer to Peer Lending
If you prefer fixed income investments to equities, peer-to-peer lending offers an opportunity to earn interest rates that are well above average. Peer to peer lending sites bring lenders (investors) together with borrowers, to create an open lending environment that cuts out the banks, and their high rates and restrictions.
This results in what is often more flexible loan terms for borrowers, and much higher interest rates for investors than what they can get on even long-term certificates of deposit.
There are various peer-to-peer lending sites on the web already, and more seem to be coming up all the time. But the best established of the lot is Lending Club. Some people who invest on the platform are reporting double-digit interest rate returns.
There is some risk to investing on peer-to-peer sites, but if your interest rates are high enough, you’ll have the ability to cover those risks, and still come out well ahead of more traditional fixed-income investments.
1. Online Courses
If you are not drawn to the thought of going back to school to get a new degree, or if you are at a stage in your life where it is just too inconvenient, look into taking online classes. There are all kinds of courses available that can help you move into a new career or business.
2. Pay Off your Debt
This is the most risk-free way to invest $5,000 – or any amount of money – and it provides a virtually guaranteed rate of return.
Let’s say that you have a credit card with an outstanding balance of $5,000 that has an annual interest rate charge of 15.99%. By paying off the credit card, you will not only get rid of the debt permanently, but you will also lock in what is effectively a 15.99% return on your money.
No, it won’t mean that you’ll be collecting a 15.99% rate of interest as a cash income on your money, but it will mean that you are no longer paying it – which is virtually the same thing.
3. Invest in High Interest Savings Account
If you want to be completely safe, you can invest the money in high-yielding CDs or a high-interest savings account. These days the best rates are coming from online banks. Online banks have all of the advantages of traditional banks, including a debit card and ATM access.
With inflation, even $10,000 may not seem like a lot of money these days, but it’s plenty if you want to get into some interesting and imaginative investments.