These are the best financial investments for 2022.
1. High Yield Savings Account
High yield savings accounts are considered to be the safest investments for beginners. They accrue simple interest on cash balance and are accessible to everyone. The overhead costs are next to none, and you can typically earn much higher than simple saver accounts.
You can also access your funds any time through your primary bank or through an ATM. If you’re specifically someone who is risk averse, this is the best investment vehicle that you can get on. These accounts are also FDIC insured. This means you won’t have to worry about losing the deposit.
The only caution you need to take is for inflation. If the interest rate falls below inflation, then you’ll effectively be losing money.
2. Short-Term CDs
Short term certificates of deposit are one of the best financial investments you can make in 2022.
These are issued by banks to offer typically higher interest rates than saving accounts. They’re even better options to outrun inflation. They allow reinvestment when your cash certificates of deposit mature.
The maturity dates on these can range from several weeks to years. However, these are limited time deposits which you can’t withdraw money from without penalties.
This is a good option for retirees who don’t need immediate income and can lock up their money for long intervals.
3. S&P 500 Index Funds
The S&P 500 Index Funds have been lauded by many investors as being one of the safest investments ever. Warren Buffet, the grandaddy of all investors has praised the S&P 500 Index Fund as being the best. Why? It holds 500 of the largest companies in the US and is almost guaranteed to never lose money. Buffet has even instructed his estate to invest 90% of his money into the S&P 500.
Even Buffet’s own company Berkshire Hathaway is in the S&P 500. Other companies like Amazon, Apple, Microsoft, and Alphabet (formerly Google) are also there. This is just about the safest investment you can make.
4. NASDAQ-100 Index Funds
The NASDAQ-100 Index Funds is a collection of the biggest tech company stocks in the US. Think of it like a more specialized S&P 500 index fund. Again, the NASDAQ 100 contains companies like Apple, Meta (formerly Facebook), Alphabet and Microsoft. The fund offers diversification so that your portfolio isn’t exposed to the failure of any single company.
The funds also offer a very low expense ratio. They’re a very cheap way to own parts of several companies in the index. This is again one of the best financial investments you can make in 2022.
5. Series I Savings Bonds
Individual investors can invest in US Treasury savings bonds. The best option among them for 2022 is the Series I bond. The biggest advantage is that it protects against inflation. The base interest rate is paid out and added to a component based on inflation rate.
These bonds earn interest for about 30 years at a time if they aren’t redeemed for cash.
Hence, if the inflation rate rises, the payout rises too. This way, you’ll be ahead of the curve. However, the reverse is also true. If the inflation rate falls, the interest rate on your Series I will too. The inflation adjustment resets about every six months.
This is another risk averse investment. However, you can only buy $10,000 worth of bonds for any single year. You can apply an additional $5,000 for an annual tax refund as well.
6. Ethereum
This may seem like a novelty in this list, since cryptocurrencies are known for their volatility and unpredictability. However, Ethereum is quite different. Ethereum has been at the center of a lot of innovations in financial technology. Bitcoin may have started the engines, but Ethereum put to the pedal to the metal.
Ethereum has been at the center of smart contracts, decentralized apps, and more recently, NFTs. All these technologies have been developed on the Ethereum Blockchain.
All this jargon aside, Ethereum doesn’t just have value because people think it does. It has real, intrinsic value based on all the projects that grew out of it. It’s as safe an investment as you can find in the crypto world.
7. Dividend-Paying Stocks
Stock market investments are often considered risky. However, this isn’t the case if you pick stocks which pay dividends. Dividends are just portions of total profit from a company paid out to a shareholder. This is usually done on a quarterly basis. You can gain on your investment as well through long term market appreciation. The best way to go is to diversify your portfolio and invest in a mix of stocks which pay dividends.
8. Fixed Annuities
Annuities are insurance contracts which pay out over a fixed period for an upfront payment. It can be structured for a fixed period of many years until the death of a client. Fixed annuities promise to pay that sum of money over regular intervals (monthly, yearly, weekly, etc.).
Fixed annuities can pay you regularly and offer great financial security. This can come in handy when you’re not employed. Annuities also come with benefits like minimum guaranteed payouts, or death benefits.
9. Target Date Funds
Target date funds are a mix of stocks like index funds. However, they’re designed to become more conservative overtime. They’re designed to mitigate risk as close as you get to retirement. They include a year in their name to signify when they’re going to mature.
There are certain companies which offer employer sponsored retirement plans which include these target date funds.
10. ETFs (Exchange Traded Funds)
ETFs are securities which track an index or sector or commodity. This can be steel, gold, diamonds, etc. It functions like a stock, but looks at the big picture, not a single company. ETFs can be traded on an exchange unlike mutual funds.
Due to their tax efficiency, they’re great choices of taxable brokerage accounts.
With these 10 great financial investment options, you can get to investing for 2022 as soon as possible.
