Are you looking for a way to make your money work harder for you than a regular savings account at your bank? Keep reading to learn about three high yield alternatives that can make you more money.
Online Savings Accounts
Online banks have been considered risky for a very long time, but today most banks offer online services, and some operate completely online. Due to the fact that they can operate completely online, some of these banks opt out of having in-person branches. This means they have lower operating expenses, allowing them to pay higher interest rates.
For example, some online banks offer rates that are at least 2% higher than the standard rates that brick-and-mortar banks offer. Your funds are still completely liquid, so you can move money in and out as you please. It is best to do some research on whichever online bank you choose by reading their customer reviews.
High Dividend Stocks
This is a way that you can invest part of your savings instead of leaving it in your savings account. However, this comes with great risks for higher yields. Dividends will pay very highly, but they can also fall in value. This is not a great place to keep your emergency funds, but you can take a portion and invest.
High dividend stocks typically have an interest rate between 3% and 4%, and some might even pay more than that. You can use discount brokerage platforms to invest in high dividend stocks. Some will require that you pay a commission on your earnings, but there are also a couple out there that are free to use. Many online brokers offer these types of stocks as well. An example of such a broker is Moneta Markets – you can find a review of them by following the link.
Peer-to-Peer (P2P) Lending
Peer-to-Peer, or P2P, lending is a super unique way of investing. P2P lending platforms allow you to invest your money by lending it out to borrowers in need. The purpose of a Peer-to-Peer lending is to get rid of the bank to borrower arrangement. As the investor, you would then become the banker in this situation.
It is not as risky as it sounds. You won’t fund the entire portion of the loan to the borrower. You will invest what are called “notes” that are $25 increments of the loan. For example, a borrower who wants to take out a loan of $25,000 could have their loan funded by up to 1,000 different investors at just $25 each.
You can also control how much risk you are willing to take. You can invest aggressively or conservatively, whichever fits your needs.