Anytime you come up with a significant amount of extra cash it’s a good idea to invest unless you have a debt to pay off, in which case debt always comes first. However, if you don’t have debt looming over you, investing your new-found cash is a great way to gain more financial freedom later.
How you invest is a very individualized experience. When investing you should consider your appetite for risk, your investing strategy, and your long-term goals. There’s an investment out there for everyone and below are the hottest choices for 2018.
- Online Real Estate Investing
Online real estate investing is a great way to invest in one of the most popular markets without the responsibility of a landlord. Many sites exist that specialize in online real estate investments. One of our favorites is Fundrise.com. To invest in Fundrise, you need $500 minimum to get started. Through this site you can invest in major markets like L.A. and Washington D.C. Fundrise also offers plans that support supplemental income and plans that offered balanced investing and long-term growth. Fundrise was created in 2010 and has produced returns ranging from 8.76% to 12.42%.
If this doesn’t appeal to you, you can also invest in real estate online through RealtyShares, another real estate crowdfunding platform. You may have seen the name before in the Wall Street Journal, Bloomberg, and Forbes. It is used nationwide and requires small initial investments. Investors are also able to browse investment opportunities and asset types through the platform, and they can track their investments through the investor dashboard.
- Peer-to-Peer Lending
If online real estate investing doesn’t interest you, you could try peer-to-peer lending. Lending Club is one platform that supports peer-to-peer lending and lets you earn interest by cutting out the traditional bank. Lending Club allows you to spread your investment accord hundreds of loans in increments as low as $25 and offers returns of 4-6% per year after accounting for defaults. Opportunities for a higher return rate are available, but require you make riskier loans. You can get started with $1,000 and can automate your investments through a pre-selected strategy or manually select loans.
- Health Savings Account (HSA)
HSAs are available to individuals and families with high deductible health plans, and they offer many tax benefits. For example, the money you put into an HSA is deductible on your federal loan and can grow tax-free until you are ready to withdraw to cover a healthcare expense. HSAs can also be withdrawn from tax-free when the investor turns 65.
However, there is a limit on how much you can invest. Families can contribute $6,900, and individuals can invest $3,450. Those who are 50 or older can invest an additional $100 dollars each year.
- Roth IRA
IRAs is nothing new, but if you qualify for a Roth IRA and don’t have one, you need to get one. You can contribute $5,500 per year to your IRA and let your money grow tax-free until your retirement. However, Roth IRAs aren’t available to everyone. Phase-outs begin at $189,000 for couples and $120,000 for singles. Also, Couples and Singles who earn over $199,000 and $135,000 can’t invest directly into an IRA.
It is never a bad idea to invest in yourself. Whether that means going to a conference or returning to school. Investing in yourself is the best way to make more money in the future.
Don’t leave your money just sitting or spend it on something frivolous. Make your money work for you and set yourself up for a comfortable financial future.