Investing / Strategy

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A high return is what every investor is after, but it’s not the only factor that matters. When reviewing investments, professionals look not only at absolute return potential but also something called “risk-adjusted return.” The bottom line is that not all returns are created equal, and smart investors look to invest where they’re getting the best value for the risk that they are taking on — even if that means accepting lower returns.

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Through that lens, you might prefer an investment that pays just 2% a year over one that’s returning 20%. Why? Because if that 2% return is guaranteed, such as via a U.S. Treasury, but the path to the 20% return involves the risk of losing 40%, that steady 2% could be a better value over time, based on its low risks — especially for a risk-averse investor.

For the individual investor, this balance is all the more important. If you understand how comparing investments requires looking at both returns and the risk with equal weight, you can understand how even a tiny return can be a great deal if the investment is really risk-free.

9 Safe Investments With High Returns

Here’s a closer look at some of the safest investments with the highest returns. You’re unlikely to generate exponential growth with these, but you’re even less likely to lose the money you’re relying on to keep you and your family secure.

1. High-Yield Savings Accounts

The high-yield savings account is pretty much the gold standard of safe investments, offering you strong returns given the total absence of risk. The money you have stashed in almost any bank is insured by the Federal Deposit Insurance Corporation, meaning the government will make you whole on any losses up to $250,000.

Changing Rates

One of the few catches with high-yield savings accounts is that the rate can change in response to current market conditions. When rates are falling, as they have been the past few years, payouts can seem not as attractive.

Currently, top high-yield savings accounts pay a range of interest rates, from 0.50%-0.61%, which is a far cry from the 2%-plus of just a few years ago. However, with the national average savings rate hovering at just 0.06% as of Jan. 18, high-yield savings accounts are still a great deal.

Although perhaps not as exciting as potential stock market returns, high-yield savings accounts are very liquid investments, meaning it’s easy to access without penalty if you need it quickly. That makes stashing your emergency fund — something you better have if you’re really looking to limit your financial risk — a pretty decent investment under the circumstances.

Bottom Line: Federal Deposit Insurance Corp. insurance means your money is 100% safe. It’s easy to get a hold of in a pinch, and rates are well above the national average savings account rate.

Best For: Stashing your emergency fund; investors looking for options without any risks

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2. Certificates of Deposit

Certificates of deposit are almost identical to savings accounts. Most are FDIC insured and so there’s zero risk involved. However, they are still liquid.

With a CD, you accept a time horizon when you invest — usually anywhere from one month to up to 10 years. Although a few CDs allow you to withdraw the money early without consequence, you generally must pay a penalty if you access your cash before the CD term ends. On the one hand, that makes CDs much less valuable for your emergency fund or savings.

On the other, it should mean you’ll get paid a higher rate of return in exchange for that loss of easy access. Basically, banks will have an easier time reinvesting your savings if you’ve promised to leave them alone for a set amount of time. In return, you should be getting a better rate.

Before you get a CD, consider the following:

1. Whether or not you might need that money before the CD’s maturation date. If the answer is yes, you’ll want to look elsewhere.
2. Whether you really are getting a better interest rate than is available with high-yield savings accounts. Your only advantage with a CD over a savings account is getting better returns, so if you can find a savings account that pays better than the CD at your banks, there’s just no point.

That said, an FDIC-insured CD’s returns might seem modest, but they’re pretty stellar in the context of the near-total absence of any risk to you of losing money.

Bottom Line: CDs should offer higher returns than most savings accounts, but that comes at a loss of flexibility as you’ll owe a penalty for pulling your money out early.

Best For: Money you can be sure you won’t need for the prescribed time frame; investors with a stable financial picture looking to avoid any risk in their investments

3. Money Market Accounts

Money market accounts operate on similar principles to the CD or savings account. They usually offer better rates than savings accounts, but they also come with more liquidity and might even let you write checks or use a debit card with the account, allowing for greater flexibility when used alongside a savings account.

If you’re using the account just to make deposits and write a monthly rent check, for instance, the MMA could be ideal. However, it has everything to do with the return, so shop around and compare the options not just with other money market accounts but with CDs and high-yield savings accounts as well.

Also, note that the main caveat with a money market account is that you’re limited by law to six transactions a month. Exceed that and you’ll be fined; keep exceeding it and the bank will have to convert your account to a checking account, or perhaps even close your account.

Bottom Line: Money market accounts are very similar to savings accounts but offer the option to write a limited number of checks each month.

Best For: Money you might need to use infrequently; investors looking for a little more flexibility than their savings account offers

Good To Know

The FDIC insurance limit of $250,000 is applied per bank, per person — not for each account. So, if you have a savings account, CD and MMA at the same bank that have a combined $300,000 in them, you’re not insured on $50,000 of that money.

4. Treasury Bonds

Even though a 0.50% return on a high-yield savings account is more than you’re likely to get at your bank, you will probably need at least some investments that are taking a bit more risk if you want to build a strong portfolio. The next tier up from banking products in terms of higher risk and higher returns are bonds, which are essentially structured loans made to a large organization

Treasury bonds, also known as T-bonds, are guaranteed by the full faith and credit of the U.S. government depending on how long they take to mature. On your end, treasuries will act just like a CD in many ways. Here’s how it works:

• You invest with a set interest rate and a date of maturity anywhere from one month to 30 years from when you buy the bond.
• You’ll get regular “coupon” payments for the interest while you hold it and then your principal is returned when the bond matures.

While your coupon payments are completely predictable and secure, the face value of your bonds will rise and fall over time based on the prevailing interest rates, stock market performance and any number of other factors. Granted, that could work out in your favor, but only because you’ve taken on additional risk. So, if you aren’t reasonably certain you can hold the bond to maturity, they’re definitely a riskier investment.

Keep in Mind

Unlike a CD, you can’t pull out your money before the maturity date, not even for a penalty. That doesn’t mean you’re stuck — you can easily go out and sell the bond on the secondary market. But at that point, you’ve gone from buying and holding treasuries to maturity, which tends to be incredibly safe, to trading bonds — vastly less safe. 

Bottom Line: Debt issued by the Treasury is backed by the full faith and credit of the U.S. government, making it similarly as free from risk as FDIC-insured bank accounts.

Best For: Money you know you won’t need prior to the maturity date of the bond; funds in excess of the $250,000 insured by the FDIC; investors willing to give up some flexibility in search of slightly better returns

5. Treasury Inflation-Protected Securities

Many people turn to Treasury Inflation-Protected Securities, or TIPS, in response to inflation. Your interest payments are going to be considerably lower than what you would earn on a normal treasury of the same length. However, you’re accepting that lower rate because your principal will increase, or decrease, in value to match inflation as measured by the Consumer Price Index. If inflation suddenly spikes to 5%, anyone with TIPS is sitting pretty while people who bought bonds at a fixed 2% rate are basically losing 3% a year.

Like any other treasuries, you expose yourself to all sorts of additional risk if you have to sell them before they mature, so you should make sure you won’t need to access that money prior to maturity.

Bottom Line: TIPS offer lower yields, but the principle will increase or decrease in value based on the prevailing inflation rates while you hold the bond.

Best For: Money you know you won’t need prior to the maturity date of the bond; funds in excess of the $250,000 insured by the FDIC; investors looking for treasuries but interested in removing inflation-based risk from their portfolio

Read: 13 Investing Rules You Should Break During the Pandemic

6. Municipal Bonds

Municipal bonds, which are issued by state and local governments, are a good option for slightly better returns with only slightly more risk. There’s almost no chance the U.S. government defaults, but there are definitely cases of major cities filing for bankruptcy and losing their bondholders a lot of money.

But most people are probably aware that a bankruptcy by a major city is pretty rare — though if you want to be extra safe you could steer clear of any cities or states with large, unfunded pension liabilities.

And because the federal government has a vested interest in keeping borrowing costs low for state and local governments, it has made interest earned on munis tax-exempt at the federal level. In some cases, munis are except from state and local taxes as well. So not only are they usually still safe, but they come with the added bonus of reducing your tax bill when compared with many other options.

Bottom Line: These debts issued by state and local governments are a little riskier than treasuries but come with the bonus of being untaxed at the federal level.

Best For: Taking on marginally more risk in pursuit of marginally better returns; investing while also keeping your tax bill as low as possible; investors looking for relatively safe bonds

7. Corporate Bonds

Like governments of various sizes, corporations will also issue debt by way of selling bonds. Like munis, this can mean you’re still in safe territory, but it’s also no sure bet. Plenty of corporations that are teetering on the edge of solvency will offer high yields for the high risk — usually referred to as “junk bonds” — and those aren’t a great call if you’re looking for something really safe.

Although corporate bonds are inherently riskier than treasuries and often riskier than munis, if you’re sticking to major, blue-chip public companies and holding the bonds to maturity, they’re still in the realm of being very safe.

Fortunately, you’re not left to guess how financially sound a company is. Public companies regularly issue financial reports detailing assets, liabilities and income, so you can get a clear sense of where it stands.

And if you, like most people, don’t really know your way around a balance sheet or income statement, you can rely on rating agencies like Moody’s or S&P Global Ratings. In most cases, an AAA-rated bond represents minimal risks if you hold it to maturity.

Bottom Line: These debts issued by corporations are just a bit riskier than munis, but usually offer just a bit more interest income.

Best For: A measured increase in your portfolio’s risk to improve returns; investors looking to diversify their bond holdings

8. S&P 500 Index Fund/ETF

Stock markets can be incredibly volatile, and on any given day you might gain or lose a big chunk of your investment. And given that a GOBankingRates survey of non-investors found that the primary factor keeping more people from buying stocks is a lack of funds to commit, it’s hard for many families to put at risk money they only freed up for saving by making major sacrifices elsewhere.

Diversifying Your Portfolio

Using index funds or exchange-traded funds can build diversification into your portfolio. Any one company can befall a disaster, but if you own shares of a fund holding stock of different companies, you’re spreading that risk out by a lot. All the better if you’re getting shares in large, stable companies that are known as “blue-chip stocks” in investing parlance.

One company might sink due to a disaster, but a few hundred at the same time? It’s highly unlikely.

Owning Stocks for the Long Term

Another strategy is to defray much of the risk of stock investments is to own stocks for a very, very long time. While stock markets are incredibly chaotic over any one week, month or even year, they actually become remarkably predictable when you start to look at them in terms of decades.

Over its history, the S&P 500 has returned roughly 10% a year. And although there have been years where stocks plunged 30% or even 40%, the markets have always rebounded over the following years.

Good To Know

If you had owned an S&P 500 ETF during the 2008 financial crisis, your investment would have lost almost half its value in just a few months, but over the next eight years, your investment would have averaged 18% per year. So, if you’re treating stock investments as being illiquid and only investing money you can be confident you won’t need to tap into for a few years, you’ll have the flexibility to wait out a nasty downturn in the economy and recover.

Why Choose the S&P 500 Index?

The S&P 500 is one of the most popular options for index investments. The index includes almost all blue-chip stocks, and has that long history of returning roughly 10% a year — an incredible return for how little risk is involved over a long time frame. You might also consider the Russell 1000, which is made up of the 1,000 most valuable American companies — giving you double the diversification.

Bottom Line: Stocks are riskier than bonds, but by purchasing large funds that represent hundreds of stocks and holding them for very long time periods, you can mitigate much of that risk and enjoy strong returns compared with bonds.

Best For:Long-term investments you won’t be cashing in for years or even decades; younger investors with plenty of time to be patient with the fluctuating markets; investors interested in growing their money at a faster rate than bonds and banking products can provide

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9. Dividend Stocks

Dividend stocks present some especially strong options for a few reasons. A dividend is a regular cash payment issued to shareholders — really the most direct way a stock can direct business success back to its investors. It also, typically, means some important things for the risk profile of that stock.

Here are some factors to consider when assessing a stock’s risk:

1. That dividend is much more consistent and gets paid out whether the stock is up or down. Even if your stock is underperforming in terms of its share value, you’re still getting something back, making it easier to hold onto the stock and wait out a downswing.
2. The dividend acts as something of a bulwark against falling share prices. Dividends are set as a per-share payment, but investors typically focus on the “dividend yield,” which is the percentage of a company’s share price that will be returned as dividends in a given year. As stock prices fall, you’re paying less for that same dividend.
3. The higher that yield gets, the harder it’s going to be for bargain-hunting dividend investors to pass it up. That’s not going to mean much for a company that’s obviously headed for bankruptcy — a bad investment regardless of the dividend yield — but it will help prop up the share price for a company that’s just going through some tough times.

Companies can and will slash their dividends in times of extreme hardship. It’s rare, as it usually results in the stock plunging — consistency is what people like about dividends, so they tend to react very poorly when a dividend appears less secure — but dividend payments are less secure than the coupon payment on a bond, for example, which is fixed.

That said, if you shop around for companies that not only offer a strong yield but have a long track record of consistently increasing their dividend on a regular basis — sometimes referred to as “dividend aristocrats” — you can mitigate a lot of that risk.

Bottom Line: Owning stock in an individual company is much riskier than the other options, but dividend stocks will provide a steady return whether markets are up or down.

Best For: Long-term investments that still produce passive income; investors looking to invest in order to create a regular income stream; younger investors reinvesting dividends to maximize growth

How Safe Investments With High Returns Compare

The ideal portfolio is one with both minimal risk and maximum returns. There’s always some compromise necessary to find the right balance. Although the relative certainty provided by your savings account is great, the returns it will provide aren’t quite enough on their own to really build wealth.

Likewise, while the returns provided by an S&P 500 fund are much better over the long run, it’s important to look at them in the context of the risk that you must accept — most notably, the risk of double-digit percentage losses over the short-term — that insured banking products just don’t have.

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Daria Uhlig, Cynthia Measom and John Csiszar contributed to the reporting for this article.

Unsettled, volatile markets can shake your faith in risky investments like stocks. That’s why many investors move their money into safe investments when volatility strikes. More stable, lower-yielding safe investments help protect your cash—and may even provide modest growth in difficult times.

If you’re looking for safe havens from tough markets, these eight safe investments offer lower risk than stocks—not to mention peace of mind for your investments.

High-Yield Savings Accounts

High-yield savings accounts are just about the safest type of account for your money. These Federal Deposit Insurance Corporation (FDIC)-insured bank accounts are highly liquid and immune to market fluctuations. Just keep in mind, if inflation is higher than your annual percentage yield (APY), your money could lose purchasing power.

Interest rates are generally low across the board for deposit accounts—and they’ll stay that way for the foreseeable future. However, you can earn modest returns with the best savings accounts, even if they won’t always keep up with inflation.

Certificates of Deposit

If you don’t need immediate access to your cash but you’d like to earn a bit more than a savings account, certificates of deposit (CDs) are a good choice, says Kevin Matthews, a former financial advisor and the founder of investing education website Building Bread. Plus, CDs enjoy the same FDIC insurance amounts as other types of deposit accounts.

As with savings accounts, CDs are likely to see low rates for the next couple of years. While the rates can be higher on longer-term CDs, remember that they lock your money up, reducing your liquidity, and they generally charge penalties if you withdraw your cash early (usually a few months of interest). While there are no-penalty CDs, these generally come with lower yields.

Gold

Many investors consider gold to be the ultimate safe investment. Just remember, it can experience similar drastic price swings as stocks and other risky assets over the short term. Research suggests that gold may hold its value over the long term.

According to David Stein, a former fund manager and author of the investment education book “Money for the Rest of Us,” there are a few things to keep in mind with gold as a safe investment, depending on your needs.

“It can be a safe haven in that it’s protected against inflation over the long term, but it doesn’t protect you every year,” he says. “It’s a monetary asset, though, so it can help you diversify away from dollar-denominated assets, if that’s what you’re interested in.”

U.S. Treasury Bonds

U.S. Treasury bonds are widely considered the safest investments on earth. Because the United States government has never defaulted on its debt, investors see U.S. Treasuries as highly secure investment vehicles.

“Treasuries have become less attractive recently because of their low yields,” says Matthews. “However, you can get some inflation protection when you choose TIPS, which are inflation-protected Treasury bonds.”

You can buy government bonds directly from the U.S. Treasury or on secondary markets, via an online brokerage platform. Matthews cautions against the secondary market, since resellers often tack on added costs whereas you can buy U.S. Treasuries free of fees at TreasuryDirect.gov.

You can also invest in mutual funds and exchange-traded funds (ETFs) that exclusively hold U.S. Treasuries. This frees you from the complications of purchasing individual bonds and removes the hassle of reselling the on the secondary market if you need cash before the bond matures.

Series I Savings Bonds

If you want to fend off inflation as well as earn an interest rate, check out Series I Savings bonds, government bonds whose yield can’t go below zero. They have a leg up on TIPS, which can actually post negative yields, says Stein.

For I Bonds, “there’s a composite rate of about 1.6% for the next six months, which is better than you’d see with many high-yield savings accounts,” Stein says. “Unfortunately, you can only invest $10,000 a year per Social Security number, although you might be able to get around it by instructing your tax return to be used to purchase I-Bonds in addition to making a separate purchase.”

An important caveat, though: I Bonds earn interest for up to 30 years. You must hold them for at least a year before you can liquidate them with the government, and if you cash them out before you’ve held them for at least five years, you forfeit three months of interest, similar to many CDs.

Corporate Bonds

If you want higher yields, consider corporate bonds. They generally offer more appealing interest rates but also carry more risk as few companies have the repayment record of Uncle Sam.

To ensure you’re making a safe investment, it’s important to review the rating on bonds. Matthews suggests looking at corporate bonds that are rated as investment grade, which usually means a rating of AAA, AA, A and BBB. Anything else might have even higher yields but also much greater risk.

It’s possible to purchase bonds via an online broker, but Matthews warns that many bond transactions charge higher fees than stock transactions.

To avoid fees and reduce the risk any one company defaults, look to bond mutual funds and bond ETFs, which invest in hundreds or thousands of company bonds. Most index-based ETFs and mutual funds will be available without trading fees from most brokerages these days, but it’s important to double check as well as to look out for load fees on mutual funds.

Real Estate

Real estate may be considered a safe investment, depending on local conditions. In addition, real estate may offer pretty decent income—again, depending on local market conditions.

“Whether it’s commercial property or a rental property, you’re likely to get consistent income, keeping you out of stock market ups and downs,” says Matthews.

Long-term real estate appreciation remains relatively low, with a 25-year average of about 3.8%. Real estate also comes with a variety of additional costs other safe investments lack, like maintenance fees and property taxes, and it may require a large upfront investment.

Some people may suggest investing in real estate investment trusts (REITs) in order to get exposure to real estate with greater liquidity and lower costs. But REITs are risky assets, and they can’t really be recommended as safe havens for you money in volatile markets.

Preferred Stocks

Preferred stocks are hybrid securities with features of both stocks and bonds. They offer the income potential of bonds, thanks to guaranteed dividend payments, plus the ownership stake and appreciation potential of common stock.

The potential appreciation of preferred stocks cuts both ways, however. You may see stronger increases in market value over time than bonds—as well as larger potential decreases in value when the market falls. So why are they safe investments? Because preferred stock dividends are guaranteed in nearly all cases, meaning you’ll get income no matter what the stock is doing.

“These might not be safe haven investments in the sense of market risk because capital appreciation is an issue in a down market,” Stein says. “However, you might see a degree of income protection because of the higher dividends.”

Bottom Line

There are no such things as completely risk-free investments. Even the safe investments listed above come with risks, like loss of purchasing power over time as inflation rises. The key is to consider your own individual needs and put together a portfolio that offers sufficient stability while still allowing you to take advantage of growth over time.

The best options for investment would depend on the duration of your financial objectives. A long term period would be more than 10 years and a short term period would be less than three years. Here are the best options for both, long-term and short-term horizons:

Mutual Funds

When it comes to long term wealth creation to achieve financial objectives like retirement or buying a home, equity mutual funds are the best options amongst the other. The reason being the best performing mutual funds in the equity category have generated annualised returns of approximately 20% in the last 10 years and Rs. 1 lac invested by retail investors has now become Rs. 6 lacs.

However, to maximise the potential of mutual funds, it is advisable to either go online and select the right mutual fund based on past performances or take the assistance of an independent financial consultant.

You must also analyse your risk appetite as there are various types of mutual funds based on risk such as large cap funds, mid cap funds, and small cap funds. There are thematic funds like pharma funds. Small cap funds are riskier than mid cap funds and so on. Even after the re-introduction of long term capital gains tax for equity, these are still more tax efficient and provide better returns than other asset classes. Certain mutual funds like Equity Linked Savings Scheme also give you tax benefits under section 80C.

Real Estate

What makes this asset class attractive is the correction in prices over time. This would be a good long-term investment option. Regulatory Body like the Real Estate Regulatory Authority (RERA) have ensured greater safety and transparency for buyers. Fraudulent operators are fewer in number today. Real estate is growing again thanks to rapid urbanisation, greater consumerism, and easier access to home financing options. The affordable housing segment has the potential for high returns in the long term. There are a lot of tax benefits if you take home loans under Section 80C and Section 24 of the Income Tax Act, 1961.

Stock Market

If you have a clear understanding of stocks, then they are the best way to generate good returns. You need to identify stocks which are trading at a price which is lower than its actual value. Then you should buy small quantities of such stocks and create wealth over the long term.

NPS

This government-sponsored scheme ensures a minimum pension for the subscriber. There are benefits up to Rs. 1.5 lacs per year and an additional Rs. 50,000 under section 80CCD (1B). There are different investment options here and in order to get good returns you can choose the aggressive option where 50% is invested in equity, 30% in corporate bonds, and 20% in gilt funds.

PPF

A PPF or a Public Provident fund account is backed by the Government of India and can be purchased at post offices and banks. It has a 15-year tenure, though you can make withdrawals from the 7th year onwards. The principal invested, the interest, and maturity amount are all tax free. The rate of interest is revised every quarter and is based on government bond yields.

Initial Public Offerings

When a company offers its shares to the public for the first time, it is known as an IPO. It is important to understand the fundamentals and future prospects of the company before investing in it. Investors in IPOs of strong companies like Infosys have multiplied their initial investment several times.

Systematic Investment Plans

Systematic investment plans are a facility offered by mutual funds that allow individuals who cannot invest a huge lump sum in one go to invest small amounts on a daily, weekly, or monthly basis. This allows them to participate in the wealth creation process in the long term by investing in equity markets. You can start with as low as Rs. 500 per month and increase your monthly contribution when your salary goes up. This investment type gives you the benefit of rupee cost averaging (lowering your average purchase price).

Summary: In this article, RealWealth® Co-CEO Rich Fettke shares his views on the best places to invest money right now (in the Coronavirus Age). Learn about financial tips to protect yourself during these tough times as well as potential deals for investors.

What Are the Best Places to Invest Money Today?

With the outbreak of the Coronavirus pandemic sweeping the globe, many of us are asking: where are the best places to invest money right now? It’s a tough question to answer given that we have never been in this situation before. The entire world is about to go on a “time-out”. Even if there is a cure soon, and life returns to relatively normal, things may never return to exactly the way they were. And some even believe the air has come out of the bubble and that we are most likely headed for recession. 

In my opinion, the best places to invest or keep your money right now due to Coronavirus are in (1) gold and silver, (2) cash in a safe in your home, (3) a maximum of $250,000 in FDIC insured banks, (4) Bet against commercial lending, (5) farmland, (6) affordable rental properties, or (7) paying off your home. I’ll also talk about helpful financial tips during these tough times. 

Here are 7 of the best places to invest money right now… in the age of Coronavirus.

#1 – Gold and/or Silver

I recommend that you invest about 10% of your net worth in gold or silver. The reason for owning gold or silver, is that it acts as an insurance policy. That is, actual, physical gold, not ETFs. It’s best practice to keep your gold and silver in a safe storage by a reputable company. It’s also a good idea to keep some physical gold in your own safe at home for worst case scenarios. 

If the market crashes and all other stocks are lost, gold should follow historical trends and go up, or at least hold most of its value. Gold is a great way to protect yourself from losing everything during these times of uncertainty. 

A few recommendations for how to buy gold:

But there are several options out there as well. These are just the ones that I’ve researched and found are best for our needs.

#2 – Cash

You should also have a good amount of cash on-hand. I’d suggest that you keep around 10% of your net worth in a safe box at home. This might seem like an outrageous amount to some, but we’re in uncertain territory here. The closest thing to the Coronavirus pandemic we’ve seen is the Great Recession of 2008. And back then when everything in the finance world was in disarray, allegedly banks were just hours away from freezing all accounts temporarily in which case no one would have access to their money. In fact, this is exactly what happened in Greece when their economy crashed, causing bankruptcy.

Just last week, I visited a bank to withdraw a larger sum of money. They told me the most I could withdraw was $5,000! That’s why having cash in a safe at home is a great insurance policy in case this happens. Plus, since banks pay almost zero interest, it’s not like you would be missing out on all those interest payments.

#3 – FDIC Insured Banks & Accounts

Spread your money out in smaller amounts in FDIC insured banks. Never put more than $250,000 in any one bank, because the FDIC will only insure “$250,000 per depositor, per insured bank, for each account ownership category.”

What the FDIC Covers

• Checking accounts
• Negotiable Order of Withdrawal (NOW) accounts
• Savings accounts
• Money market deposit accounts (MMDA)
• Time deposits such as certificates of deposit (CDs)
• Cashier’s checks, money orders, and other official items issued by a bank

What the FDIC Does Not Cover

• Stock investments
• Bond investments
• Mutual funds
• Life insurance policies
• Annuities
• Municipal securities
• Safe deposit boxes or their contents
• U.S. Treasury bills, bonds or notes*

*These investments are backed by the full faith and credit of the U.S. government.” [Source: FDIC.gov]

However, it’s important to note that FDIC insurance may change if COVID-19 leads to a complete financial meltdown… 

In the past, during dire circumstances, the government has adjusted how much the FDIC would insure. If our national economy continues to decline with the outbreak of Coronavirus, there is a small chance the government could change how much they will insure, or how they will insure it. 

Your best bet is to have your money in big banks (like U.S. Bank & TD Ameritrade), because they have tons of capital. In fact, recently the Fed stated that big banks have $2.9 trillion in high quality liquid assets, plus $1.3 trillion in common equity. 

Since the Great Recession of 2008, regulatory minimums and buffers of capital and liquidity have been raised substantially. According to the Fed, “These capital and liquidity buffers are designed to support the economy in adverse situations and allow banks to continue to serve households and businesses.” In recent days, the Federal Reserve has launched unlimited QE in order to keep the banks liquid in these uncertain times. They have also lowered reserve requirements.

Financial expert and writer, Harry Dent suggested looking into a brokerage account at Ameritrade.

#4 – Bet Against Commercial Lending

Many investing experts are saying the U.S. commercial real estate market is going to implode, much like the housing market did in 2008

In an effort to contain the spread of the Coronavirus Pandemic, many conferences and events have been cancelled or postponed indefinitely, affecting the U.S. lodging, travel and tourism sectors. Additionally, closures of retail centers, restaurants, and office buildings has become widespread.

Because of this, commercial real estate may be in big trouble. Billionaire investor Carl Icahn explained that the 2008 housing market bubble is happening all over again because of loans made to shopping malls and other retail centers in 2012.

Many banks sold mortgages on commercial real estate, and “when they did those mortgages, [the banks] sliced and diced them and put them in something called a ‘CMBX,’ an index.” They then sold their clients bonds against these mortgages.

According to Icahn, the reason COVID-19 makes this such a big issue is because commercial real estate will likely default on these loans due to their recent closers.

Consequently, “[a] lot of these bonds now are in grave danger…it’s like selling insurance to someone who’s going to go to the electric chair in a couple of months.”

Icahn also believes (and I agree) that while the Coronavirus may have catalyzed the market’s initial drop, it still has a lot farther to fall. 

Long story short: now is not the time to invest in commercial real estate. It’s the time to bet against it. One way to do this is to invest in Inverse Real Estate ETFs.

#5 – Farmland

A recent report by Hancock Natural Resource Group showed that there will be widespread economic consequences from the Coronavirus. However, with the constant demand for food, agriculture commodities are expected to remain more stable than others.  

Our company owns 800 acres of farmland in Costa Rica where we planted over 10,000 fruit trees and a fully operational farm based on cutting edge permaculture practices. We are also building a residential community for people who prefer to live near the food they grow, with clean air and plenty of fresh water streams and waterfalls. For more information, you can visit www.RiseCostaRica.com or join our network for more information on how to own your own parcel of farmland.

A few more ways to invest in farmland:

1. AcreTrader (An online platform that allows you to purchase shares in farmland)
2. Farming Equities (Crop Producers, Seed Equities, etc.)
3. Commodities (ie: Soybeans or Corn)
4. Farming Mutual Funds & ETFs
5. Farming REITs

#6 – Rental Properties

Due to the Coronavirus, more and more people are rethinking how they would like to live. For example, being cooped up in a New York City apartment during a quarantine is less than desirable. 

Demand for single family homes appears to be increasing as city residents move out to the suburbs in order to have more space and back yards. There’s also still a huge lack of supply in the affordable housing market.

Generally during challenging times, more people are forced to rent, which could offer a great opportunity for investors looking for rental income from single family homes. 

If you have money saved up already, now might be the perfect opportunity to buy a rental property for the following reasons:

• Rental demand for single family homes could increase, along with rents
• Interest rates remain low (3.88% interest on a 30-year fixed rate)
• There’s not a huge amount of competition because many people are afraid to invest right now

While I don’t expect mortgage interest rates to drop below record lows in the next couple of months, there’s a good possibility they will continue to remain low.

Because a lot of people are hesitant to invest right now, this may be a great time to buy a rental property on the cheap and turn it into a cash flowing investment.

Investor tip: Look to attract higher net worth tenants who will pay several months in advance for added security.

#7 – Pay Off Your Home

Another option is to take your cash and pay off your home. The three percent interest you will no longer be paying may be a great option.  But, only do this if you won’t have to pour all of your cash into paying off your mortgage right now as you’ll become more vulnerable during these times of financial unknowns. 

If there is any chance of job loss, it might be more prudent to refinance your home and take cash out to set aside for reserves.

More Financial Tips for These Tough Times

Move To More Affordable Places & Hunker Down

For those who have a nest egg and have lost your job, consider moving to more affordable places and hunker down. It’s possible for many people to buy a house outright in more affordable places. 

For example, an A class property in a A+ school district in Cleveland, Ohio may cost less than $150,000. And if you prefer warmer weather, you might find a B+ home in Dallas, Houston, Atlanta, Tampa or Jacksonville, Florida for under $200,000.

Have Some Liquidity

One of the best financial strategies during this period of fear, panic, and volatility is to stay as liquid as possible–while using good judgment. By having physical cash, it doesn’t matter what the banks do. You would still have YOUR cash in YOUR hands and it would be ready to go in case you really needed cash for any reason.

What to Do Next?

Many of the best places to invest money right now have shifted, just in the last two weeks.  Keep in mind that there could be a lot of deals in commercial real estate over the next couple of years if we head into a global recession. Keeping some cash in hand for opportunity is always a good idea. The commercial market, along with stocks, have finally corrected, which like it or not, was much needed. The strongest companies will rise to the top. The question is, which companies? We will keep our eyes on how it unfolds and share it with you.

In 2021, the economy has already changed rapidly and will continue to change as we face the impacts of the COVID-19 pandemic. At RealWealth®, we help investors acquire affordable rental housing that provides positive monthly cash flow. No matter what the economy is like, people still need a place to live. 

With that said, I would probably short commercial lending, as it will be headed for difficult times ahead.