With interest rates fluctuating and economic uncertainties lingering, where to invest money in 2024 is a pressing question for many. Whether you’re looking to diversify your portfolio or explore new investment opportunities, having a solid strategy is crucial for financial growth.
In this comprehensive guide, we’ll explore the top 8 smart choices for investing your money in 2024, including high-yield savings accounts, long-term certificates of deposit (CDs), corporate bond funds, dividend stocks, REITs, ETFs, real estate, cryptocurrencies, and more.
High-yield Savings Accounts
Here is the cited content for the section “High-yield Savings Accounts” of “Where to Invest Money in 2024: Top 10 Smart Choices for Your Financial Growth” in markdown format:
The best high-yield online savings accounts currently offer APYs (annual percentage yields) of up to 5% or more, which is significantly higher than the national average savings rate of 0.46%. Some of the top high-yield savings accounts featured include:
Bank | APY | Minimum Balance |
---|---|---|
SoFi Checking and Savings | 4.60% | – |
American Express High Yield Savings | 4.25% | – |
Barclays Online Savings | 4.35% | – |
CIT Bank Platinum Savings | 5.00% | $5,000 |
EverBank Performance Savings | 5.15% | – |
Capital One 360 Performance Savings | 4.25% | – |
High-yield savings accounts offer higher interest rates than traditional savings accounts, but may have higher minimum balance requirements. Compared to other options like money market accounts and CDs, high-yield savings accounts provide easier access to funds while still earning a competitive rate.
Top High-Yield Savings Accounts for May 2024
- BrioDirect – 5.35% APY
- TAB Bank – 5.27% APY
- UFB Direct – 5.25% APY
These accounts offer detailed features, including minimum balance requirements, monthly fees, and other account details. The national average savings account APY is currently 0.57%.
High-yield savings accounts offer higher interest rates than traditional savings accounts, with easy access to your money. However, there is a potential risk of loss of purchasing power due to inflation if rates are too low. The rewards include earning much higher interest rates than brick-and-mortar banks, with easy access to your money. Online banks typically offer the best rates for high-yield savings accounts.
Long-term Certificates of Deposit (CDs)
Long-term certificates of deposit (CDs) offer higher interest rates than savings accounts, but require locking up your money for a set period. This means you cannot access your funds until the CD matures, which can range from several months to several years.
Risks and Rewards
Risks of long-term CDs include:
- Reinvestment risk if interest rates fall during the CD term, locking you into a lower rate.
- Inability to take advantage if interest rates rise, as your money is locked in at the existing rate.
Rewards of long-term CDs include:
- Earning regular interest payments, typically paid monthly or annually.
- Getting your principal back at maturity, provided you don’t withdraw early.
Finding the Best CD Rates
To find the top CD options, Bankrate’s list of best CD rates can be a useful resource. This list compares CD rates across various terms and minimum deposit amounts from banks and credit unions nationwide.
For example, here are some of the top 5-year CD rates as of May 2024:
Bank | 5-Year CD APY | Minimum Deposit |
---|---|---|
Bread Savings | 4.75% | $1,500 |
First Internet Bank | 4.66% | $1,000 |
Marcus by Goldman Sachs | 4.60% | $500 |
Ally Bank | 4.50% | $0 |
Discover Bank | 4.45% | $2,500 |
While long-term CDs offer higher rates, it’s important to consider your liquidity needs and potential interest rate movements before locking up funds for an extended period.
Long-term Corporate Bond Funds
Long-term corporate bond funds invest in bonds issued by corporations, providing higher returns than government bonds, but carry the risk of companies defaulting. It is recommended to adopt a flexible, diversified multi-sector approach in fixed income, with a focus on higher-quality credits and modestly extending duration.
Risks and Rewards
Risks of long-term corporate bond funds include:
- Not being FDIC-insured
- Risk of companies defaulting on bonds
Rewards of long-term corporate bond funds include often providing higher returns than government and municipal bond funds.
Top Long-Term Corporate Bond Funds
Here are some of the top-ranked long-term corporate bond funds based on performance and expense ratios:
Fund | Category | 1-Year Return | Expense Ratio |
---|---|---|---|
SPDR® Portfolio Long Term Corp Bd ETF (SPLB) | Long-Term Bond | 0.02% | 0.04% |
iShares 10+ Year Invmt Grd Corp Bd ETF (IGLB) | Long-Term Bond | 0.02% | 0.04% |
Vanguard Long-Term Corporate Bd ETF (VCLT) | Long-Term Bond | 0.01% | 0.03% |
Invesco Taxable Municipal Bond ETF (BAB) | Long-Term Bond | 0.01% | 0.28% |
iShares Core 10+ Year USD Bond ETF (ILTB) | Long-Term Bond | -0.02% | 0.06% |
Additionally, the iShares iBoxx $ High Yield Corporate Bond ETF (HYG) has a yield (TTM) of 5.7% and a 5-year annualized return of 2.7%.
Dividend stocks
Dividend stock funds invest in stocks that pay dividends, providing both capital appreciation and income, but still carry market risk. It is recommended to favor dividend-grower stocks, high-quality companies with strong free cash flow and profit margins, offering consistent income and less volatility. These funds invest in stocks that pay dividends, providing both capital appreciation and regular income.
Risks and Rewards
The risks of dividend stock funds include still being subject to stock market volatility, and companies can cut or eliminate dividends. However, the rewards include earning regular dividend payments in addition to potential capital gains.
Dividend stock funds are available as ETFs or mutual funds through most brokers.
Top Dividend Stocks and Funds
Here are some top dividend stocks and funds to consider:
Stock | Dividend Yield |
---|---|
Prologis Inc. (PLD) | 3.8% |
American Tower Corp. (AMT) | 3.7% |
Welltower Inc. (WELL) | 2.6% |
Public Storage (PSA) | 4.6% |
Realty Income Corp. (O) | 5.7% |
Crown Castle Inc. (CCI) | 6.6% |
An article lists 15 top dividend stocks for 2024, including National Storage Affiliates Trust, Tyson Foods, United Micro Electronics, and others, highlighting their business fundamentals, growth potential, and dividend yields. The current market volatility makes it a good time to consider adding some defensive dividend stocks to portfolios.
- Enterprise Products Partners (EPD) offers a reliable 7% yield, with a cash-generating business model.
- Ares Capital (ARCC), a business development company, provides a 9% dividend yield by providing loans to mid-sized businesses.
The average dividend yield of some top dividend stocks is 12.69%. Investors can invest directly or through dividend funds/ETFs. Some of the highest-yielding dividend stocks right now include AOMR (13.54%), BKE (13.36%), and INSW (11.66%).
Dividend aristocrats, S&P 500 stocks increasing dividends for 25+ consecutive years, offer lower-risk dividend investing. Comcast Corp. (CMCSA), Bristol-Myers Squibb Co. (BMY), Altria Group Inc. (MO), Marathon Petroleum Corp. (MPC), Diamondback Energy (FANG), and VICI Properties (VICI) are some of the best dividend stocks for May 2024 based on factors like valuation, analyst ratings, and yield.
Dividend ETF | Yield (TTM) | 5-Year Annualized Return |
---|---|---|
iShares International Select Dividend ETF (IDV) | 6.6% | 4.3% |
Schwab U.S. Dividend Equity ETF (SCHD) | 3.3% | 11.6% |
SPDR S&P Dividend ETF (SDY) | 2.5% | 7.9% |
Vanguard High Dividend Yield ETF (VYM) | 2.8% | 9.5% |
WisdomTree U.S. Quality Dividend Growth Fund (DGRW) | 1.6% | 13.2% |
JPMorgan Equity Premium Income ETF (JEPI) | 7.6% | 7.6% (3-year) |
Vanguard Dividend Appreciation ETF (VIG) | 1.8% | 11.5% |
REIT Funds
REIT index funds invest in a diversified portfolio of real estate investment trusts (REITs), providing exposure to the real estate market and the potential for both dividend income and capital appreciation. However, there are risks involved as REIT prices can fluctuate, especially when interest rates rise.
Advantages of REIT Index Funds
- Diversification: REIT index funds offer diversification by investing in a basket of REITs across various real estate sectors like residential, commercial, healthcare, and more.
- Dividend Income: REITs are required to distribute at least 90% of their taxable income as dividends, making REIT index funds a potential source of regular dividend payments.
- Liquidity: REIT index funds, available as ETFs or mutual funds, provide liquidity and easier access to the real estate market compared to direct property ownership.
- Professional Management: REIT index funds are managed by professional portfolio managers, eliminating the need for individual investors to research and select individual REITs.
Top-Performing REIT Investments
REIT Stocks
REIT Stock | 1-Year Total Return (as of May 2024) |
---|---|
Diversified Healthcare Trust (DHC) | 162.86% |
SL Green Realty Corp. (SLG) | 129.09% |
Uniti Group Inc. (UNIT) | 88.43% |
REIT Mutual Funds
REIT Mutual Fund | 1-Year Return (as of May 2024) |
---|---|
Baron Real Estate Income Institutional (BRIIX) | 5.32% |
JHancock Real Estate Securities R6 (JABIX) | 4.04% |
Cohen & Steers Real Estate Securities (CSDIX) | 2.50% |
REIT ETFs
REIT ETF | 5-Year Return (as of May 2024) |
---|---|
Pacer Industrial Real Estate ETF (INDS) | 6.26% |
Real Estate Select Sector SPDR Fund (XLRE) | 3.48% |
Nuveen Short-Term REIT ETF (NURE) | 3.47% |
Additionally, the Schwab U.S. REIT ETF (SCHH) and the Vanguard Real Estate ETF (VNQ) are popular low-cost REIT ETF options, with expense ratios of 0.07% and 0.12%, and 12-month dividend yields of 3.4% and 4.1%, respectively.
When investing in REITs, it’s essential to consider factors such as the REIT’s management strategy, use of leverage, and focus on specific real estate segments like data centers, retail, or a broader portfolio. REITs focused on single-family homes may be a good option given the current housing shortage. Overall, REITs provide an easy and liquid way to gain exposure to real estate without the responsibilities of direct property ownership.
Exchange-traded funds (ETFs)
S&P 500 Index Funds
S&P 500 index funds provide broad market exposure by investing in the 500 largest U.S. companies, making them suitable for beginning investors and those looking for diversified stock market exposure. These funds invest in a broad index of the 500 largest U.S. companies.
Risks and Rewards
While S&P 500 index funds are subject to stock market volatility, they are generally less risky than investing in individual stocks. The potential reward of these funds is the opportunity for higher returns than more traditional investments.
Top S&P 500 Index Funds
S&P 500 index funds are available as ETFs or mutual funds through most brokers. Here are some of the top-performing S&P 500 index funds:
Fund | Expense Ratio | 5-Year Annualized Return |
---|---|---|
Fidelity ZERO Large Cap Index (FNILX) | 0% | 13.6% |
Vanguard S&P 500 ETF (VOO) | 0.03% | 13.5% |
SPDR S&P 500 ETF Trust (SPY) | 0.095% | 13.4% |
iShares Core S&P 500 ETF (IVV) | 0.03% | 13.5% |
Schwab S&P 500 Index Fund (SWPPX) | 0.02% | 13.5% |
Other Popular Index Funds
In addition to S&P 500 index funds, other popular index funds include:
- Nasdaq-100 Index Funds: The Shelton NASDAQ-100 Index Direct (NASDX) has a 0.52% expense ratio and an 18.4% 5-year annualized return. The Invesco QQQ Trust ETF (QQQ) has a 0.20% expense ratio and an 18.5% 5-year annualized return.
- Small-Cap Index Funds: The Vanguard Russell 2000 ETF (VTWO) has a 0.10% expense ratio and a 6.2% 5-year annualized return.
- Growth Index Funds: The Invesco QQQ Trust (QQQ) has an expense ratio of 0.20% and a 10-year annualized return of 18.60% as of May 1. The Vanguard Growth ETF (VUG) has an expense ratio of 0.04% and a 10-year annualized return of 15.07% as of May 1.
Other notable growth index funds include the iShares Russell 1000 Growth ETF (IWF), iShares S&P 500 Growth ETF (IVW), Schwab U.S. Large-Cap Growth ETF (SCHG), SPDR Portfolio S&P 500 Growth ETF (SPYG), and iShares Core S&P U.S. Growth ETF (IUSG).
- Long-Term Performance: For long-term performance, the Vanguard Growth ETF (VUG) has a 0.04% expense ratio and a 16.3% 15-year annualized return. The Invesco QQQ Trust (QQQ) has a 0.20% expense ratio and a 19.4% 15-year annualized return.
Other top-performing long-term index funds include the Schwab US Large-Cap ETF (SCHX), Invesco S&P 500 Top 50 ETF (XLG), Vanguard Mega Cap Growth ETF (MGK), Schwab US Large-Cap Growth ETF (SCHG), and iShares Russell 1000 Growth ETF (IWF).
Real Estate
Private Real Estate Opportunities
Experts believe private real estate markets are at an inflection point, with opportunities in U.S. medical office and global senior housing properties.
Local Residential Investing
- The decline in institutional investor participation is creating opportunities for individual local investors in lower- and middle-income residential properties.
- Look for cities with older homes needing renovations and strong demand for cost-effective housing, such as Houston, Raleigh, Atlanta, Denver, Austin, and Raleigh.
- Consider cities with job growth, favorable business environments, and lower cost of living like Austin and Atlanta, which have experienced rapid population growth.
Market Considerations
- Unique characteristics of each market, including vacancy rates and repair costs, can impact cash flow and should be considered.
- Investing close to home can allow for better management of rental properties.
Real Estate Outlook 2024
Metric | Forecast |
---|---|
U.S. Economy | A moderate recession is expected in the U.S. starting in late 2023 and extending into early 2024. |
Multifamily Vacancy Rates | Rising interest rates and an increase in new multifamily units will likely reduce rental demand in the short term, pushing vacancy rates closer to 6% by year-end. |
Housing Price Growth | Housing prices are expected to continue rising in 2024, but at a slower annual rate of 3.4% compared to 2022. |
Multifamily Rent Growth | Multifamily rent growth has slowed from record levels of 15.2% in 2022 to pre-pandemic averages of 2.6% in Q2 2023, with forecasts showing negative rent growth of -2% in 2024. |
Multifamily Cap Rates | Multifamily cap rates are likely near their peak at 5.3%, with Fannie Mae anticipating an increase between 5.5% and 6.2% in 2024. |
Borrowing Costs | Borrowing costs are sitting above 7% for a 30-year mortgage, the highest rate in over 20 years, creating a potential imbalance and negative leverage depending on the deal. |
Emerging Opportunities
- Preferred equity investments in multifamily real estate can help reduce the overall cost of capital while maintaining consistent returns.
- The build-to-rent (BTR) housing demand has accelerated, with high occupancy rates and steady rent growth expected to continue increasing investment and construction in the BTR sector.
- Opportunities for deals on properties may arise as distress starts to set in, with default notices, auctions, and bank repossessions up 34% from last year.
- Emerging neighborhoods might have distressed properties or fixer-uppers priced below market value.
Alternative Real Estate Investments
- Buying and leasing out a rental property can provide passive income and tax deductions, but also comes with high start-up costs and responsibilities as a landlord.
- “House hacking” by renting out a room, basement, or accessory dwelling unit can provide extra income to offset housing expenses.
- Online real estate investing platforms allow investors to pool capital to fund real estate projects, often with as little as $500.
- Buying a discounted property, fixing it up, and reselling it for a profit requires strong project management, cost-estimating, and cash flow skills.
- Real estate investment groups (REIGs) are clubs of private investors who pool money and expertise to buy income-generating properties.
Top Rental Markets 2023
Metric | Cities |
---|---|
Most Rent Growth | Fayetteville, AR, Fargo, ND, and Knoxville, TN |
Lowest Vacancy Rates | Columbia, MO, Appleton, WI, and Burlington, VT |
Highest Cap Rates | Youngstown, OH, Fond du Lac, WI, and Fargo, ND |
Most Home Price Growth | Fond du Lac, WI, Wichita Falls, TX, and Allentown, PA |
The top 60 up-and-coming real estate markets for 2024 are located primarily in the Midwest, Mid-Atlantic, New England, and South Central regions of the U.S..
Cryptocurrencies
Top Cryptocurrencies in 2024
Bitcoin (BTC) remains the most popular and valuable cryptocurrency, with a market cap of $1 trillion and a 129% year-over-year return. Ethereum (ETH), the second-largest cryptocurrency, has a market cap of $369 billion and a 66% year-over-year return. It has transitioned to a more energy-efficient proof-of-stake system.
Cryptocurrency | Market Cap | Year-over-Year Return |
---|---|---|
Bitcoin (BTC) | $1 trillion | 129% |
Ethereum (ETH) | $369 billion | 66% |
Binance Coin (BNB) | $87.4 billion | 87% |
Solana (SOL) | – | 631% |
XRP (XRP) | $29.6 billion | 23% |
Dogecoin (DOGE) | $22.7 billion | 110% |
Toncoin (TON) | $20.5 billion | 195% |
Cardano (ADA) | $16.1 billion | 22% |
Shiba Inu (SHIB) | $14 billion | 163% |
Avalanche (AVAX) | $14 billion | 131% |
- Binance Coin (BNB), issued by the Binance exchange, has a market cap of $87.4 billion and an 87% year-over-year return.
- Solana (SOL) had the best performance with a 631% year-over-year return, but has faced network outages that have undermined its credibility.
- XRP (XRP) got a boost from a court ruling that it is ‘not necessarily a security’ in certain circumstances, with a market cap of $29.6 billion and a 23% year-over-year return.
- Dogecoin (DOGE) continues to be popular due to its simplicity and high-profile supporters like Elon Musk, with a market cap of $22.7 billion and a 110% year-over-year return.
- Toncoin (TON), a fast blockchain developed by Telegram, has a market cap of $20.5 billion and a 195% year-over-year return.
- Cardano (ADA) aims to be a more efficient proof-of-stake blockchain, with a market cap of $16.1 billion and a 22% year-over-year return.
- Shiba Inu (SHIB), a ‘meme’ altcoin built on Ethereum, has a market cap of $14 billion and a 163% year-over-year return.
- Avalanche (AVAX), a smart contract platform compatible with Ethereum, has a market cap of $14 billion and a 131% year-over-year return.
Conclusion
In summary, investing in 2024 presents a diverse range of opportunities, each with its own set of risks and rewards. Whether you opt for the stability of high-yield savings accounts or CDs, the potential growth of stocks and funds, the income of dividend stocks and REITs, or the speculative nature of cryptocurrencies, it’s crucial to align your investment choices with your financial goals, risk tolerance, and time horizon. By staying informed, diversifying your portfolio, and exercising prudence, you can navigate the ever-changing financial landscape and position yourself for long-term success.
Ultimately, the decision of where to invest money in 2024 is a personal one, requiring careful consideration of your individual circumstances. Seeking guidance from financial professionals and conducting thorough research can help you make informed decisions and craft a well-rounded investment strategy tailored to your unique needs and aspirations. With a disciplined approach and a commitment to continuous learning, you can capitalize on the opportunities that 2024 has to offer and work towards achieving your financial objectives.