Top investment strategies for 2024 in the USA

Investing can provide you with another source of income, fund your retirement, or even help you navigate through financial hardships. Above all, investing grows your wealth, helping you meet your financial goals and increasing your purchasing power over time. Whether you’ve recently sold your home or come into some money, letting that money work for you is a wise decision. Here we are giving an insight to investment strategies for 2024 in the USA

While investing can build wealth, you’ll also want to balance potential gains with the risk involved. You should be in a financial position to do so, meaning you’ll need manageable debt levels, an adequate emergency fund, and the ability to ride out the market’s ups and downs without needing to access your money.

There are many ways to invest—from safe choices such as CDs and money market accounts to medium-risk options such as corporate bonds, and even higher-risk picks such as stock index funds. That’s great news because it means you can find investments that offer a variety of returns and fit your risk profile. It also means that you can combine investments to create a well-rounded and diversified portfolio.

1. High-Yield Savings Accounts

Overview: A high-yield online savings account pays you interest on your cash balance. Just like a savings account at your brick-and-mortar bank, high-yield online savings accounts are accessible vehicles for your cash.

Who are they good for? A savings account is a good vehicle for those who need to access cash in the near future. A high-yield savings account also works well for risk-averse investors who want to avoid the risk that they won’t get their money back.

Risks: Many banks that offer these accounts are FDIC-insured, so you won’t have to worry about losing your deposits as long as you stay within federal insurance limits. However, you do run the risk of losing purchasing power over time due to inflation if rates are too low.

Rewards: With fewer overhead costs, you can typically earn much higher interest rates at online banks than at a traditional brick-and-mortar bank. Plus, you’ll likely have easy access to the money by quickly transferring it to your primary bank or maybe even via an ATM.

Where to get them: You can browse Bankrate’s list of best high-yield savings accounts for a top rate. Alternatively, you can turn to your local bank or credit union, though you may not get the best rate.

2. Long-Term Certificates of Deposit (CDs)

Overview: Certificates of deposit, or CDs, are issued by banks and generally offer a higher interest rate than savings accounts. Long-term CDs may be better options when you expect rates to fall, allowing you to keep your money earning higher rates for years.

Who are they good for? Because of their safety and higher payouts, CDs can be a good choice for retirees who don’t need immediate income and can lock up their money for a little bit.

Risks: CDs are considered safe investments. However, they do carry reinvestment risk—the risk that when interest rates fall, investors will earn less when they reinvest principal and interest in new CDs with lower rates. The opposite risk is that rates will rise, and investors won’t be able to take advantage because they’ve already locked their money into a CD.

Rewards: With a CD, the financial institution pays you interest at regular intervals. Once it matures, you get your original principal back plus any accrued interest.

Where to get them: Bankrate’s list of best CD rates will help you find the best rate across the nation, instead of relying on what’s available only in your local area. Alternatively, many brick-and-mortar banks and credit unions offer CDs, though you’re not likely to find the best rate locally.

3. Long-Term Corporate Bond Funds

Overview: Corporations sometimes raise money by issuing bonds to investors, and these can be packaged into bond funds that own bonds issued by potentially hundreds of corporations. Long-term bonds have an average maturity of 10 years or longer, making them a better choice when interest rates are falling, as expected in 2024.

Who are they good for? Corporate bond funds can be an excellent choice for investors looking for cash flow, such as retirees, or those who want to reduce their overall portfolio risk but still earn a return.

Risks: Long-term corporate bond funds are not FDIC-insured. There is always the chance that companies will have their credit rating downgraded or run into financial trouble and default on the bonds. To reduce that risk, ensure your fund is made up of high-quality corporate bonds.

Rewards: Investment-grade long-term bond funds often reward investors with higher returns than government and municipal bond funds.

Where to get them: You can buy and sell corporate bond funds with any broker that allows you to trade ETFs or mutual funds.

4. Dividend Stock Funds

Overview: Dividends are portions of a company’s profit that are paid out to shareholders, usually on a quarterly basis. Dividend stocks are those stocks that offer a cash payout, and a fund packages up only dividend stocks into one easy-to-buy unit.

Who are they good for? Dividend stock funds are a good selection for almost any kind of stock investor but can be better for those looking for income.

Risks: Dividend stocks come with risk. They’re considered safer than growth stocks or other non-dividend stocks, but you should choose your portfolio carefully.

Rewards: With a dividend stock, not only can you gain on your investment through long-term market appreciation, but you’ll also earn cash in the short term.

Where to get them: Dividend stock funds are available as either ETFs or mutual funds at any broker that deals in them.

5. Value Stock Funds

Overview: These funds invest in value stocks, those that are more bargain-priced than others in the market.

Who are they good for? Value stock funds may be a good option for investors who are comfortable with the volatility associated with investing in stocks.

Risks: Value stock funds tend to be safer than other kinds of stock funds because of their bargain price, but they’re still composed of stocks, so they will fluctuate more than safer investments such as short-term bonds.

Rewards: Value stocks tend to do better as interest rates rise and growth stocks become less attractive on a relative basis. Many value stock funds also pay a dividend.

Where to get them: Value stock funds can come in two major types: ETFs or mutual funds.

6. Small-Cap Stock Funds

Overview: These funds invest in small-cap stocks, which are the stocks of relatively small companies. Small caps often have strong growth prospects, and many of the market’s largest companies were once small caps.

Who are they good for? Small-cap funds are appropriate for investors looking for attractive long-term returns and who can stay invested for at least three to five years.

Risks: Small-cap stocks tend to be riskier than large caps. Smaller companies are less established, have fewer financial resources, and are generally less stable.

Rewards: Small-cap stock funds can earn sizable returns over time, and the best small-cap ETFs can earn double-digit returns annually for years.

Where to get them: You can buy small-cap funds as either an ETF or mutual fund, and they’re available at any broker offering these two types of funds.

7. REIT Index Funds

Overview: A real estate investment trust, or REIT, is one of the most attractive ways to invest in real estate. REIT index funds pass dividends along to investors and can include dozens of stocks, allowing you to buy into many sub-sectors in a single fund.

Who are they good for? REIT index funds pay out substantial dividends, making them attractive for income-focused investors, such as retirees.

Risks: Owning a REIT index fund can take a lot of the risk out of owning individual REITs because the fund offers diversification. However, the fund price will fluctuate, especially as interest rates rise.

Rewards: Investors can win in two ways, with a growing stream of dividends and capital appreciation. Over time a good REIT fund could earn 10 to 12 percent annual returns.

Where to get them: You can purchase a REIT fund at any broker that allows you to trade ETFs or mutual funds.

8. S&P 500 Index Funds

Overview: An S&P 500 index fund is based on about 500 of the largest American companies, meaning it comprises many of the most successful companies in the world.

Who are they good for? If you want to achieve higher returns than more traditional banking products or bonds, an S&P 500 index fund is an excellent choice for beginning investors because it provides broad, diversified exposure to the stock market.

Risks: An S&P 500 fund is less risky than many stock investments because it’s made up of the market’s top companies and is highly diversified. However, it still includes stocks, so it’s going to be more volatile than bonds or any bank products.

Rewards: Over time, the index has returned about 10 percent annually. These funds can be purchased with very low expense ratios and are some of the best index funds.

Where to get them: You can purchase an S&P 500 index fund at any broker that allows you to trade ETFs or mutual funds.

9. Nasdaq-100 Index Funds

Overview: An index fund based on the Nasdaq-100 is a great choice for investors who want exposure to some of the biggest and best tech companies without having to pick the winners and losers.

Who are they good for? A Nasdaq-100 index fund is a good selection for stock investors looking for growth and willing to deal with significant volatility.

Risks: Like any publicly traded stock, this collection of stocks can move down. While the Nasdaq-

100 has some of the strongest tech companies, these companies also are usually some of the most highly valued.

Rewards: A Nasdaq-100 index fund offers immediate diversification, reducing reliance on any single company.

Where to get them: Nasdaq-100 index funds are available as both ETFs and mutual funds.

10. Rental Housing

Overview: Rental housing can be a great investment if you have the willingness to manage your properties. You’ll need to select the right property, finance it or buy it outright, maintain it, and deal with tenants.

Who are they good for? Rental housing is a good investment for long-term investors who want to manage their properties and generate regular cash flow.

Risks: You won’t enjoy the ease of buying and selling your assets in the stock market. Worse, you might have to endure the occasional 3 a.m. call about a burst pipe.

Rewards: If you hold your assets over time, gradually pay down debt, and grow your rents, you’ll likely have a powerful cash flow when it comes time to retire.

Where to get them: You’ll likely need to work with a real estate broker to find rental housing.

Recent News on Investments

With interest rates projected to remain higher for longer, the stock market has taken a breather in 2024 after a strong run the year before. This situation has made it a particularly good time for lower-risk investments that can still earn a relatively attractive return, such as savings accounts and CDs.

Investors looking for more attractive long-term returns are still looking at stocks. However, the situation may be more risky with stocks near all-time highs. Those just stepping into the market now may want to consider how to invest with many stocks near their peaks.

Experts in the latest Bankrate Market Mavens survey still see the market inching higher over the coming 12 months.

What to Consider

As you’re deciding what to invest in, consider several factors, including your risk tolerance, time horizon, your knowledge of investing, your financial situation, and how much you can invest.

Risk Tolerance

Risk tolerance means how much you can withstand when it comes to fluctuations in the value of your investments. Are you willing to take big risks to potentially get big returns? Or do you need a more conservative portfolio?

Conservative investors or those nearing retirement may be more comfortable allocating a larger percentage of their portfolios to less-risky investments. Those with stronger stomachs, workers still accumulating a retirement nest egg, and those with a decade or more until they need the money are likely to fare better with riskier portfolios, as long as they diversify.

Time Horizon

Time horizon simply means when you need the money. Do you need the money tomorrow or in 30 years? Are you saving for a house down payment in three years or are you looking to use your money in retirement? Time horizon determines what kinds of investments are more appropriate.

If you have a shorter time horizon, you need the money to be in the account at a specific point in time and not tied up. That means you need safer investments such as savings accounts, CDs, or maybe bonds. If you have a longer time horizon, you can afford to take some risks with higher-return but more volatile investments.

Your Knowledge

Your knowledge of investing plays a key role in what you’re investing in. Investments such as savings accounts and CDs require little knowledge. But market-based products such as stocks and bonds require more knowledge.

If you want to invest in assets that require more knowledge, you’ll have to develop your understanding of them. For example, if you want to invest in individual stocks, you need a great deal of knowledge about the company, the industry, the products, the competitive landscape, the company’s finances, and more. Many people don’t have the time to invest in this process.

How Much You Can Invest

How much can you bring to an investment? The more money you can invest, the more likely it’s going to be worthwhile to investigate higher-risk, higher-return investments. If you can bring more money, it can be worthwhile to make the time investment required to understand a specific stock or industry.

Conclusion

Investing can be a great way to build your wealth over time, and investors have a range of investment options, from safe lower-return assets to riskier, higher-return ones. That range means you’ll need to understand the pros and cons of each investment option and how they fit into your overall financial plan to make an informed decision.

Overview of Top Investment Strategies in 2024

Disclaimer

All investors are advised to conduct their own independent research into investment strategies before making an investment decision. In addition, investors are advised that past investment product performance is no guarantee of future price appreciation.