To enjoy a comfortable financial future, investing is absolutely essential for most people. As the coronavirus pandemic demonstrated, a seemingly stable economy can be quickly turned on its head, leaving those who weren&#x;t prepared for tough times scrambling for income.

But with bonds and CDs yielding so low, some assets at astronomical valuations and the economy struggling with surging inflation, what are the best investments for investors to make this year? One idea is to have a mix of safer investments and riskier, higher-return ones.

The best investments in

1. High-yield savings accounts
2. Short-term certificates of deposit
3. Short-term government bond funds
4. Series I bonds
5. Short-term corporate bond funds
6. S&P index funds
7. Dividend stock funds
8. Value stock funds
9. Nasdaq index funds
10. Rental housing
11. Cryptocurrency

Why invest?

Investing can provide you with another source of income, fund your retirement or even get you out of a financial jam. Above all, investing grows your wealth &#x; helping you meet your financial goals and increasing your purchasing power over time. Or maybe you&#x;ve recently sold your home or come into some money. It&#x;s a wise decision to let that money work for you.

While investing can build wealth, you&#x;ll also want to balance potential gains with the risk involved. And you&#x;ll want to be in a financial position to do so, meaning you&#x;ll need manageable debt levels, have an adequate emergency fund and be able to ride out the ups and downs of the market without needing to access your money.

There are many ways to invest &#x; from very 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&#x;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 &#x; that is, safer &#x; portfolio.

Overview: Best investments in

1. High-yield savings accounts

A high-yield online savings account pays you interest on your cash balance. And just like a savings account earning pennies at your brick-and-mortar bank, high-yield online savings accounts are accessible vehicles for your cash. With fewer overhead costs, you can typically earn much higher interest rates at online banks. Plus, you can typically access the money by quickly transferring it to your primary bank or maybe even via an ATM.

A savings account is a good vehicle for those who need to access cash in the near future.

Best investment for

A high-yield savings account works well for risk-averse investors, and especially for those who need money in the short term and want to avoid the risk that they won&#x;t get their money back.

Risk

The banks that offer these accounts are FDIC-insured, so you don&#x;t have to worry about losing your deposit. While high-yield savings accounts are considered safe investments, like CDs, you do run the risk of losing purchasing power over time due to inflation, if rates are too low.

Where to open a savings account

You can browse Bankrate&#x;s list of best high-yield savings accounts for a top rate. Otherwise, banks and credit unions offer a savings account, though you may not get the best rate.

2. Short-term certificates of deposit

Certificates of deposit, or CDs, are issued by banks and generally offer a higher interest rate than savings accounts. And short-term CDs may be better options when you expect rates to rise, allowing you to re-invest at higher rates when the CD matures.

These federally insured time deposits have specific maturity dates that can range from several weeks to several years. Because these are time deposits, you cannot withdraw the money for a specified period of time without penalty.

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. It pays to shop around online for the best rates.

Because of their safety and higher payouts, CDs can be a good choice for retirees who don&#x;t need immediate income and are able to lock up their money for a little bit.

Best investment for

A CD works well for risk-averse investors, especially those who need money at a specific time and can tie up their cash in exchange for a bit more yield than they&#x;d find on a savings account.

Risk

CDs are considered safe investments. But they do carry reinvestment risk &#x; the risk that when interest rates fall, investors will earn less when they reinvest principal and interest in new CDs with lower rates, as we saw in and The opposite risk is that rates will rise and investors won&#x;t be able to take advantage because they&#x;ve already locked their money into a CD. And with rates expected to rise in , it may make sense to stick to short-term CDs, so that you can reinvest at higher rates in the near future.

It&#x;s important to note that inflation and taxes could significantly erode the purchasing power of your investment.

Where to buy a CD

Bankrate&#x;s list of best CD rates will help you find the best rate across the nation, instead of having to rely on what&#x;s available only in your local area. Alternatively, banks and credit unions typically offer CDs, though you&#x;re not likely to find the best rate locally.

3. Short-term government bond funds

Government bond funds are mutual funds or ETFs that invest in debt securities issued by the U.S. government and its agencies. Like short-term CDs, short-term government bond funds don&#x;t expose you to much risk if interest rates rise, as they&#x;re expected to do in

The funds invest in U.S. government debt and mortgage-backed securities issued by government-sponsored enterprises such as Fannie Mae and Freddie Mac. These government bond funds are well-suited for the low-risk investor.

These funds can also be a good choice for beginning investors and those looking for cash flow.

Best investment for

Government bond funds may work well for risk-averse investors, though some types of funds (like long-term bond funds) may fluctuate a lot more than short-term funds due to changes in the interest rate.

Risk

Funds that invest in government debt instruments are considered to be among the safest investments because the bonds are backed by the full faith and credit of the U.S. government.

If interest rates rise, the prices of existing bonds drop; and if interest rates decline, the prices of existing bonds rise. Interest rate risk is greater for long-term bonds than it is for short-term bonds, however. Short-term bond funds will have minimal impact from rising rates, and the funds will gradually increase their interest rate as prevailing rates rise.

However, if inflation stays high, the interest rate may not keep up and you&#x;ll lose purchasing power.

Where to get it

You can buy bond funds at many online brokers, namely those that allow you to trade ETFs or mutual funds. Most brokers that offer ETFs allow you to buy and sell them at no commission, while mutual funds may require you to pay a commission or make a minimum purchase, though not always.

4. Series I bonds

The U.S. Treasury issues savings bonds for individual investors, and an interesting option for is the Series I bond. This bond helps build in protection against inflation. It pays a base interest rate and then adds on a component based on the inflation rate. The result: If inflation rises, so does the payout. But the reverse is true: If inflation falls, so will the interest rate. The inflation adjustment resets every six months.

Series I bonds earn interest for 30 years if they are not redeemed for cash.

Best investment for

Like other government-issued debt, Series I bonds are attractive for risk-averse investors who do not want to run any risk of default. These bonds are also a good option for investors who want to protect their investment against inflation. However, investors are limited to buying $10, in any single calendar year, though you can apply up to an additional $5, in your annual tax refund to the purchase of Series I bonds, too.

Risk

The Series I bond protects your investment against inflation, which is a key downside to investing in most bonds. And like other government-issued debt, these bonds are considered among the safest in the world against the risk of default.

Where to get it

You can buy Series I bonds directly from the U.S. Treasury at www.oldyorkcellars.com The government will not charge you a commission for doing so.

5. Short-term corporate bond funds

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. Short-term bonds have an average maturity of one to five years, which makes them less susceptible to interest rate fluctuations than intermediate- or long-term bonds.

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.

Best investment for

Short-term corporate bond funds can be good for risk-averse investors who want a bit more yield than government bond funds.

Risk

As is the case with other bond funds, short-term corporate bond funds are not FDIC-insured. Investment-grade short-term bond funds often reward investors with higher returns than government and municipal bond funds.

But the greater rewards come with added risk. 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, make sure your fund is made up of high-quality corporate bonds.

Where to get it

You can buy and sell corporate bonds funds with any broker that allows you to trade ETFs or mutual funds. Most brokers allow you to trade ETFs for no commission, whereas many brokers may require a commission or a minimum purchase to buy a mutual fund.

6. S&P index funds

If you want to achieve higher returns than more traditional banking products or bonds, a good alternative is an S&P index fund, though it does come with more volatility.

The fund is based on about five hundred of the largest American companies, meaning it comprises many of the most successful companies in the world. For example, Amazon and Berkshire Hathaway are two of the most prominent member companies in the index.

Like nearly any fund, an S&P index fund offers immediate diversification

and have been a roller coaster year for many people. Whether it was braving the second wave or finding your footing post the economically turbulent , this year was a milestone year in more ways than one. As ends and draws close, it may be best to plan ahead. A sound financial plan for can help you start a better financial journey on the right note. Here are some smart money moves you can make right now as you walk through

Tune-up Your Stock Portfolio

The year-end can be the perfect time to rebalance your portfolio. Try to keep a suitable combination of different assets classes–stocks, bonds and cash that align with your goals and risk appetite. You can also review the performance of your portfolio in the last year and see how it has fared against a volatile market. This can help you make better decisions for the future. It can also help to keep a well-diversified stock portfolio to cut risk and maximise the potential for high returns. So, if one sector goes down, the other one helps your recover. You may consult a professional financial advisor for more details and guidance.

Pay Attention to Your Retirement Savings

Retirement planning is a long-term process, one for which you must start preparing from the very beginning of your career. Retirement planning includes saving and investing for your post-retirement years. This can be done by investing in mutual funds, stocks, bonds, traditional retirement accounts like the National Pension Scheme (NPS), Public Provident Fund (PPF), etc. You can also have multiple savings bank accounts and dedicate one to your retirement needs. However, make sure to pick a bank with a high-interest rate so you can beat inflation too. In addition to this, you must also plan for your health expenses by purchasing a good health insurance policy. After all, health expenses can be a heavy financial burden when you are retired. So, it is crucial not to neglect health insurance. Retirement planning can be an intricate task, but it is essential.

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Remember Credit Card Rewards

Credit card rewards can boost your savings further. These rewards are added to your account every time you use your credit card to make a purchase. You can then redeem these points on your next purchase or when you clear your credit card dues. You can also use them to pay the annual fee of your credit card. They help you earn back every time you make a spend. IDFC FIRST Bank Credit Cards offer 10x reward points which can be redeemed anytime.

Strategise to Pay Loans Faster

Of all the smart money moves you make this year, it may be beneficial to prioritise settling debt first. High-interest debt can drill a hole in your pocket sooner than you think. But there are some ways to lower your liabilities. The first is by opting for a balance transfer on your credit card. Some credit cards offer low interest during the introductory period. You can transfer your high-interest debt to a low-interest credit card and pay back the money more efficiently. Credit cards provide the convenience of EMIs or equated monthly instalments that ease your financial burden. This also reduces your payable amount, as the total sum gets distributed to several smaller payments. Moreover, when you use a credit card to pay your dues on time, you improve your CIBIL score. This makes it easier to get a low-interest loan in the future. Another way to pay back your debt sooner is to invest more. You can invest in short-term instruments and use your earnings to speed up your debt settlements.

Maintain an Emergency Fund

Keeping the events of this year and the one before in mind, an emergency fund is vital. You can park at least six to eight months of your expenses in a savings account. This can be used if you encounter an urgent financial need due to a loss of job, a health crisis, etc. The IDFC FIRST Bank Savings Account may be ideal for this. This savings account offers an interest of 5% per annum. So, not only do you save your money, but your funds also grow with time.

To Sum It Up

These smart money moves can help you secure the next year financially. So, make sure to follow and implement them wisely.

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.