The start of 2023 has not been a stellar time for investors. The economy is a rollercoaster ride with so many ups and downs, inventors are feeling queasy!
As we head into February, here are 3 trendy investment strategies gaining popularity in 2023.
Please keep in mind that we are not advising you in any direction – this article is a starting point, and we always recommend you do further research before making any investment decisions.
Dividend Stock Funds
Oftentimes when investors own stocks of public companies, they may receive dividends. You can own stocks through mutual funds, exchange-traded funds (ETFs), or you can own the underlying shares directly with the company. Keep in mind that not all shareholders receive dividends and not all companies issue shares.
A company that offers dividends will base the amount off a percentage of the cost of one share of stock. Therefore, the more stocks you own, the higher your dividend will be.
Investors often opt for dividend stock funds, because they offer a more reliable stream of income than other investing strategies.
However, it’s important to note that dividend stocks do not perform well in bull markets, and they are taxed as income.
Dividends can be “qualified” or “nonqualified.” A qualified dividend is subject to a special tax treatment, whereas a nonqualified dividend is taxed with your usual income tax rate.
High-Yield Savings Accounts
Like a normal savings account, a high-yield saving account is another place to keep your money as you build wealth. These type of bank accounts offer a higher interest rate than a traditional account; known as an annual percentage yield (APY). The higher the APY, the faster your money will grow.
Keep in mind that the APY for a given account can change at any time, while this means the rate can increase, it also means the rate can decrease, making it a risker choice than a traditional savings account.
Certificates of Deposits (CDs)
A certificate of deposit is another type of savings account. Unlike high-yield and traditional accounts, CDs hold a fixed amount of money for a fixed period of time. This time frame can be one year, or even five years, depending on your bank.
With CDs, your issuing bank pays interest on your initial sum of money. The money must stay untouched until your selected time frame is complete. If you withdraw any money early, you will be subject to penalty fees or lost interest.
After your waiting period has ended, you’re free to withdraw the amount. You will receive your initial investment plus any interest. Due to the simple nature of this investing strategy, many find it to be a safe option for growing their wealth.
It’s completely normal to be nervous about investing, but remember, the more you research, the safer your investments will be.
Remember to be mindful about tax implications when daytrading or becoming an active trader.
Start by practicing your investment strategies, risk free, on StockTrak.com. Talk to your professor about registering your class today.