To further grow your future income, investing in different investment options is definitely important for most people. In long-term planning, it is popular for investors to invest with fiat currencies like USD. The currency has been falling in value over the years. It is not a wise move to keep it, especially during the current shrinking economy. In fact, you can spend it on different investment options to maximize your return, instead of to hold a weakening fiat currency. Every investment involves risk. It is not guaranteed you will always gain a return over some specific investment, especially the markets could easily go volatile. That said, when you wish to invest with USD, combining different USD investment options to form a diversified investment portfolio would help prepare investors for a successful investment career.
This article will guide you through different USD investment options, sharing from a lower-risk investment to a higher-risk investment. Let us explore the best investment options that you can fit in your portfolio during this challenging economic time.
The level of risk and the level of return are always directly affecting each other. So remember, the more return you can accept, the more risk you need to experience. You should always evaluate the associated risk level before investing in any of the investment options!
Individual Stock – Brings you the great potential of return
It is suitable for those investors who want to take a little more risk, as individual stocks bring you the great potential of return, but also with a high level of volatility and risk. To make it clearer, any stock investments or dividend stocks come with risks, but still, they are comparatively safer than growth stocks or other non-dividend stocks. Even so, the individual stock is not as scary as you think. For individual stocks, you can hold approximately 5%-10% of your overall portfolio and buy a whole collection of them to reduce the risk. You can also see the maximized performance on your long term dividend investment.
Therefore, investing in individual stock can generate cash in the short term. Also, it can generate a potential profit in the long term.
Exchange-traded Funds – The Cost-effective USD Investment Options
Investors do not have to put a huge amount of money while investing exchange-traded funds (ETFs), which makes it a low-cost investment. As sometimes the share price of ETF is lower than the minimum investment requirement for mutual funds, investors can buy it at a lower cost. ETFs also have a global outlook, owning hundreds or thousands of stocks across various industries, or a particular sector.
According to Investopedia, the amount of cash invested in ETFs has been increasing since 2008, rising from less than $1 trillion to almost $ 5 trillion in 2018. The market of ETFs has become increasingly popular among investors, showing a good future outlook for this investment.
Corporate Bonds – Investment with fixed-income security
A corporate bond is a type of medium-risk investment option and is usually invested as a long-term investment. It works like a government bond, but you make a loan to a company instead of the government. It will pay investors interest based on the loan you have over a period of time. But unlike the government bonds, it is a riskier option as the bonds are not backed by the government.
If you are to own an investment with fixed-income security, like corporate bonds, you can have a higher return than a government bond and a more stable investment than investing in stocks.
When you invest in corporate bonds, you should also avoid junk bonds that do not have an investment-grade credit rating as the risk of losses is way higher than investment-grade corporate bonds.
Cryptocurrency – The Alternative USD Investment
Apart from the traditional investment options like stock or bond investments, more investors would like to have a slice of the crypto pie in recent years. Cryptocurrency is a kind of digital asset which works differently from other traditional investments. So, investors have to be wary of the volatile price of cryptocurrencies. For example, Bitcoin swung between US$900 to US$20,000 back in 2017. It carries a degree of risk, but also provides you a high potential to grow in price.
A good strategy for investing in cryptocurrency is to diversify in different crypto coins. To maximize the reward ratio and to prevent the sudden collapse of one token. It is common to see a big drop in the price of one coin. But it is unlikely to see few coins drop in price at the same time. So, play it safe and wise, separate your risk across 2-15 crypto coins, depending on your budget.
Finally, never invest anything based on hype and noise. It is an unreliable and risky move that you may end up with a terrible loss. And always consult with a professional before making any investment decisions.
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