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Best Investment Options for $10,000: Generating High Income with Minimal Risk

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Best Investments for Generating Income with Low Risk

Treasury Bills

Financial advisor Mitch Goldberg suggests investing in Treasury bills (T-bills) for the best and safest way to earn income. T-bills yield over 5% and are a reliable option for short-term investments. By laddering T-bills of various maturities, investors can take advantage of declining yields or wait for rates to increase for higher yields. Additionally, the interest earned on T-bills is tax-free for residents in high-tax states.

Treasury Notes

Certified financial planner Ian Weinburg recommends Treasury notes with maturities between one year and five years. The choice of the maturity depends on the investor's time horizon and income objectives. By going further out on the yield curve, investors can potentially capture higher yields before they start to decline. For those with a shorter time horizon, a one-year Treasury note may be sufficient.

Certificates of Deposit

Yields on certificates of deposit (CDs) have also increased as the Federal Reserve raised rates. Investing in a CD for five years or more can yield attractive returns. Some banks and credit unions offer CDs with yields above 5%, making them a viable option for income generation. However, investors should research the financial institution before making a decision.

Preferred Securities

For investors willing to take on a bit more risk, preferred securities can offer higher yields. These securities trade on exchanges like stocks but resemble bonds in terms of paying dividends. The ICE BofA Fixed Rate Preferred Securities index currently has a yield to maturity of 7.1%. Tim Ghriskey recommends considering floating-rate preferreds and fixed-to-float preferreds, which have attractive yields and near-term conversion possibilities.

Corporate Investment-Grade Bonds

Investment-grade corporate bonds are another option for generating income. These bonds offer relatively high yields while maintaining a low level of risk. Tom Graff suggests focusing on the three to seven-year maturity range for the best balance between locking in high yields and earning current income. Investing in a bond fund, such as the Vanguard Intermediate-Term Corporate Bond Index Fund ETF, can provide diversified exposure to a portfolio of corporate bonds with a dollar-weighted average maturity of five to 10 years.

With the current economic environment offering attractive yields across various investment options, investors have the opportunity to generate income without taking on excessive risk. By evaluating their time horizons and income objectives, they can choose the investment avenue that suits them best.

Opportunities for New Businesses in the Low-Risk Investment Market

The current landscape of low-risk investments with attractive yields presents an interesting opportunity for new businesses. By understanding the preferences and needs of investors seeking income generation, these businesses can position themselves to cater to this specific market segment.

Offering innovative investment platforms or services focused on Treasury bills, Treasury notes, certificates of deposit, preferred securities, or corporate investment-grade bonds could be a winning strategy. By providing easy access, educational resources, and personalized guidance, new businesses can help investors navigate the low-risk investment market with confidence.

Additionally, new businesses could leverage technology to automate and streamline the investment process, reducing costs and enhancing efficiency. Providing advanced analytics and tools that enable investors to build diversified portfolios aligned with their risk tolerance and income objectives would be highly beneficial.

Collaboration with established financial institutions or partnering with proven financial advisors could also strengthen the credibility and reach of new businesses in this space. Establishing trust and credibility is crucial for attracting investors who prioritize safety and reliability when seeking income-generating opportunities.

Furthermore, new businesses should emphasize transparency and thorough due diligence when selecting investment options for their clients. By conducting research on the financial institutions offering CDs or vetting preferred securities, businesses can ensure that their clients' investments are secure and reliable.

Overall, the low-risk investment market presents a promising opportunity for new businesses to carve out a niche and cater to investors seeking income generation. By understanding investor preferences, leveraging technology, and prioritizing transparency, new businesses can thrive in this space and provide valuable solutions to investors in search of stable, lucrative opportunities.

Article First Published at: https://www.cnbc.com/2023/07/12/where-to-invest-10000-right-now-for-the-most-income-and-least-risk.html

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