You can use investments to supplement your income, finance your retirement, or even get yourself out of a tight spot financially.


Image Via Pixabay

Investors may be in a panic in 2022 following a period of high inflation and a swift increase in interest rates by the Federal Reserve. Investors may believe there is no viable area to invest given that stocks spent the majority of the year declining, even approaching a bear market. However, if you extend your time horizon for investments, 2023 can position you for future gains.

So, which investments are the finest this year? The list below offers you a balanced combination of growth and safety during what appears to be a challenging market situation by starting with safer options and moving on to those that should give better returns but may be more erratic.

Why invest?

You can use investing to supplement your income, finance your retirement, or even get yourself out of a tight spot financially. Above all, investment increases your money, enabling you to reach your financial objectives and gradually boosting your purchasing power. Or perhaps you recently sold your house or received a windfall. Choosing to put your money to work for you is a good choice.

While investing can help you accumulate wealth, it’s important to weigh the risks and potential rewards. And you’ll want to be in a position to accomplish that financially, which means you’ll need sustainable debt levels, a sizeable emergency fund, and the ability to ride out market ups and downs without having to use your money.

There are a variety of investment possibilities, ranging from low-risk selections like certificates of deposit and money market accounts to medium-risk ones like corporate bonds and even higher-risk ones like stock index funds. That’s fantastic news since it means you can select investments that meet your risk tolerance and give a range of rewards. Additionally, it implies that you can mix investments to build a balanced, diversified, and hence safer, portfolio.

Overview of January 2023’s best investments:

High – Yeild Savings Accounts:

Image Via Ramsey Solutions

You get interest on your available funds when you have a high-yield online savings account. High-yield internet savings accounts are accessible vehicles for your money, just like a savings account earning pennies at your local bank. For whom are they useful? For people who may soon require access to money, a savings account is a suitable option. For risk-averse investors who wish to eliminate the possibility that they won’t get their money back, a high-yield savings account is a good option.

Risks: Since the FDIC insures the banks that provide these accounts, you need not be concerned about your deposit being lost. Although high-yield savings accounts are regarded as safe investments, similar to CDs, if rates are too low you face the danger of losing purchasing power over time due to inflation. Benefits: Online banks often provide substantially higher interest rates because they have lower overhead costs.

Additionally, you can frequently access the funds by immediately moving them to your main bank or sometimes even using an ATM. Where to find them: For the best rates, check out Bankrate’s list of the best high-yield savings accounts. A savings account is available from banks and credit unions in lieu of this, albeit you might not obtain the best return.

Certificates of deposit for brief periods:

Overview: Banks produce certificates of deposit, or CDs, which often have greater interest rates than savings accounts. And if you anticipate an increase in interest rates, short-term CDs can be a better choice because they allow you to reinvest at a greater rate when the CD matures.

For whom are they useful? Retirement investors who are able to lock their money away for a while and don’t require immediate income may find CDs to be a viable option because of their safety and greater returns. Risk-averse individuals who need money quickly and are willing to tie up their cash in exchange for a little bit higher income than they would get from a savings account can consider a certificate of deposit (CD).

Risks: CDs are regarded as secure investment options. They do, however, come with reinvestment risk, which is the danger that, as we saw in 2020 and 2021, investors may lose money if they reinvest their principal and interest in new CDs with lower interest rates as interest rates fall.

The risk that rates may increase, but investors won’t be able to benefit since their money has already been committed to a CD, is the contrary. Stick with short-term CDs so that you can reinvest at higher rates in the near future because rates are predicted to rise even further in 2023. It’s crucial to remember that taxes and inflation may severely reduce the purchasing power of your investment.

Benefits: When you have a CD, the financial institution will periodically pay you interest. You receive your initial money back along with any accumulated interest once it matures.

Series I Bonds:

Overview: Individual investors can purchase savings bonds from the U.S. Treasury, and the Series I bond is becoming more and more well-liked. This bond contributes to the construction of inflation protection. In addition to paying a base interest rate, it also includes an inflation-based component. As a result, the dividend increases along with inflation. The interest rate will decrease if inflation does, though, and vice versa. Every six months, the inflation adjustment is reset.

For whom are they useful? Series I bonds, like other government-issued securities, are appealing to risk-averse investors who don’t want to take any default risks. For investors who wish to safeguard their investment against inflation, these bonds are an excellent choice. Investors may use up to an additional $5,000 of their yearly tax refund to buy Series I bonds, but they may only purchase a total of $10,000 in a single calendar year. (There is also a little-known trick to get past that annual cap.)

Risks: The Series I bond shields your money against inflation, a major drawback of buying most bonds. These bonds are regarded as among the safest in the world against default risk, much like other government-issued securities.

Rewards: If Series I bonds are not redeemed for cash within 30 years, they will continue to earn interest, although the rate will change based on the current inflation rate.

Where to purchase them: The U.S. Treasury is where you can purchase Series I bonds by going to You won’t be assessed a commission by the government for doing so.

Short Term Corporate Bond Funds:

Image Via

Overview: Companies occasionally sell bonds to investors as a means of raising capital. These bonds can then be pooled together into bond funds that might potentially hold bonds from hundreds of different companies. Since short-term bonds typically have maturities between one and five years, they are less prone to interest rate changes than intermediate- or long-term bonds. For whom are they useful? For investors seeking cash flow, such as retirees, or who wish to lower their total portfolio risk while still earning a return, corporate bond funds can be a great option. For risk-averse investors looking for a little bit more income than government bond funds, short-term corporate bond funds can be beneficial.

Risks: Short-term corporate bond funds are not FDIC-insured, as is the case with other bond funds. There is always a potential that businesses will have a fall in their credit rating or experience financial difficulties and make bond defaults. Make sure your fund is comprised of top-notch corporate bonds to lower that risk. Investment-grade short-term bond funds frequently provide investors larger returns than municipal and government bond funds. However, the higher profits come with more risk.

Where to get them: Any broker that lets you trade ETFs or mutual funds will let you buy and sell corporate bond funds.

Dividend Stock Funds:

Overview: Dividends are sums of money that can be distributed to shareholders, often once every three months, from a company’s profits. Dividend stocks are therefore those equities that offer a cash payout, which is not true of all stocks, while a fund combines solely dividend stocks into a single, convenient unit.

For whom are they useful? Individual stock purchases, dividend-paying or not, are better suited for experienced and intermediate investors. However, you can lower your risk by purchasing a number of them in a stock fund. For practically any type of stock investor, dividend stock funds are a fine option, but those seeking income may prefer them.

Risks: Investing in dividend stocks carries risk, just like any other type of stock. Although they are regarded as being safer than growth stocks or other non-dividend stocks, you should take care when selecting them for your portfolio.

Instead of choosing firms with the highest current yield, make sure you invest in those with a track record of dividend increases. That might portend impending trouble. However, even well-regarded corporations are susceptible to financial crises, so a positive reputation is ultimately no guarantee that the company won’t cut or eliminate its dividend. By purchasing a dividend stock fund with a diverse portfolio of assets, you can lessen your dependence on any one firm and remove many of these dangers.

Value Stock Funds:

In general, these funds invest in value equities, which are more affordably priced than other stocks. For whom are they useful? When stock prices rise, as they occasionally do, many investors question where they should put their money. Value stock mutual funds might be a wise choice. Value stock funds are a fantastic choice for individuals who don’t mind the volatility that comes with stock investment. To weather any market hiccups, stock fund investors must have a longer-term investment horizon of at least three to five years.

Risks: Value stock funds, which tend to be cheaper than other stock fund types, may vary much more than safer assets like short-term bonds because they still consist of equities. Government insurance does not exist for value stock funds either.

Rewards: As interest rates increase, value equities often perform better and growth firms lose relative appeal. For many investors, another draw is the fact that many value stock funds also pay dividends. Where to purchase them ETFs or mutual funds are the two main categories of value stock funds. Most significant online brokers often provide ETFs commission-free and without a minimum purchase requirement.

REIT Index Funds:

Image Via Outlook India 

Overview: One of the most alluring methods to invest in real estate is through a real estate investment trust, or REIT. In exchange for not paying corporation taxes, REITs distribute enticing dividends, and REIT index funds distribute those dividends to investors. A single publicly traded REIT fund may contain dozens of stocks and let you invest in a variety of subsectors, including lodging, apartments, offices, and many more. They offer investors a solid approach to gain diverse exposure to the real estate market without having to worry about the hassles of self-managing the property.

For whom are they useful? For income-focused investors, like retirees, REIT index funds offer sizable dividend payouts, which entices them. However, REITs also frequently increase in value over time, so capital growth is still a possibility. Investors must have a long-term perspective and be prepared to deal with volatility because the prices of publicly traded REITs can change significantly.

Risks: Because a REIT index fund allows for diversification and allows you to hold multiple REITs within of it, it can significantly reduce the risk associated with owning individual REITs. However, the price of the fund will change, particularly when interest rates rise. But beware of REITs or REIT funds that aren’t listed openly.

Rewards: Investors can benefit from both a rising dividend stream and capital growth. Over time, a solid REIT fund may generate returns of 10 to 12 percent annually, with some of that coming in the form of cash dividends. Where to buy them: Any broker that lets you trade ETFs or mutual funds will also let you buy REIT funds. While mutual funds may charge a commission and demand a minimum purchase, ETFs are frequently commission-free.

S&P 500 Index Funds:

An S&P 500 index fund is based on around 500 of the biggest American corporations, which includes many of the most prosperous global businesses. For instance, two of the most well-known members of the index are Amazon and Berkshire Hathaway. For whom are they useful? An S&P 500 index fund is a fantastic solution if you wish to attain larger returns than more conventional banking products or bonds, albeit it does have more volatility. For novice investors, an S&P 500 index fund is a great option since it offers extensive, diversified exposure to the stock market.

Risks: Because it is made up of the best firms on the market and is very diversified, an S&P 500 fund is one of the less dangerous methods to invest in equities. It still contains equities, thus it will inevitably be more erratic than bonds or any other bank products. Additionally, since the government does not cover it, value changes may cause you to lose money. However, over time, the index has performed fairly well. Investors may wish to act cautiously and stick to their long-term investment strategy given that the index returned ferociously following its pandemic-driven drop in March 2020, but underperformed in 2022.

NASDAQ-100 Index Funds:

Image Via YouTube

Overview: Investors who want exposure to some of the biggest and greatest tech companies without having to pick winners and losers or research specific companies can consider an index fund based on the Nasdaq-100. The fund’s 100 largest Nasdaq companies are among the most prosperous and reliable businesses. These businesses include Apple and Alphabet, each of which contributes significantly to the overall index. Another well-known member firm is Microsoft.

For whom are they useful? A excellent option for stock investors seeking growth who are prepared to put up with high volatility is a Nasdaq-100 index fund. Investors must be prepared to make a long-term commitment of at least three to five years.

Risks: This group of stocks has the potential to decline as with any publicly traded company. While some of the most powerful tech businesses are represented on the Nasdaq-100, they are also frequently some of the most expensively priced. Because of their high valuation, they are probably susceptible to a swift decline in an economic downturn, yet they might have a swift ascent in an upturn.

Benefits: You get rapid diversification with a Nasdaq-100 index fund, protecting your portfolio from the demise of any one company. The top Nasdaq index funds have extremely low cost ratios, making them an affordable way to own all of the index businesses.

Rental Housing:

Overview: If you’re ready to manage your own properties, investing in rental housing can be a smart decision. You’ll need to choose the appropriate property, finance it or buy it outright, maintain it, and deal with renters if you choose to go down this path. If you make wise purchases, you can succeed greatly. A savvy real estate acquisition may pay off in the long run as house prices begin to decline in 2023 and mortgage rates drop from their peak levels.

Risks: You won’t be able to sell and purchase assets in the stock market with only a click or a tap on an internet-enabled device. Even worse, you can occasionally get a call about a burst pipe at three in the morning.

Rewards: Despite rising mortgage rates, it might be a good moment to finance the acquisition of a new house, even though the shaky economy might make running it more challenging. When it’s time to retire, you’ll probably have a strong cash flow if you keep onto your assets over time, steadily pay off debt, and increase your rental income.