- What's going y'all, welcome back to the channel
Wealth Hacker Labs,
as you can see we have another special edition
of The Wealth Board.
And today as you can see we are talking about
investments that give us high return
with little to low risk.
But the one thing you have to realize is that
risk is relative.
So, what is risky for you may not be risky for me,
what is risky for me, vice versa.
And for me, one of the ways I've always
found this out with working clients
and just talking to people that are wanting to invest
and understand what risk means,
is you've got to quantify it.
You have to figure out what does that mean, dollarwise.
So if you're investing $100,000 and you say that
you can stomach a lot of risk, like you don't mind risks,
you just wanna put all your money into risky investments,
and yet if the market is down
or your investment is down say, 20%,
so that you lose $20,000 like now we're talking real money,
and that's one of the simple ways
that I have quantified for people
trying to understand, like,
what is risk and how is that relative to them.
All right so with that being said we're gonna take a look at
eight different investments that can offer you high return
with little to low risk.
And once again, risk is relative and we'll talk about that
as we look at each of these investments.
But the first one as you can imagine,
the first few are gonna be somewhat boring,
but the first one that we have are high-yield savings,
you could throw a high-yield check in there,
I mean typically as you can see,
I mean that's not going to pay you a lot of money,
I talked about this on another Wealth Board video.
But right now, you can expect to make anywhere between 1.8,
maybe as high to 2% or in some high-yield savings.
One of the ones I've mentioned before is Goldman Sachs
has their Marcus savings account currently paying
at the time of this recording about 1.9%,
and then you have Robinhood,
it's not so much a high-yield savings
but they have their cash management program
that's paying, once again at the time of this recording
about 1.8, 1.85%, and there are several others out there
that are going to pay you something similar.
So yes, is that high return?
Well, compared to the 0.05% that some banks are paying,
yes, that is high return but not the 20, 30% return
that many people are hoping to make in the market.
Looking at number two.
So number two we are looking at short-term bonds.
And once again, these are not super sexy.
♪ You sexy thing, sexy thing you ♪
- They're kinda boring but they can pay a little bit more,
and there's a few different ways that you can go about this.
Now when I first started in the industry
as a financial planner,
many people bought short-term individual bonds.
So we're talking short-term corporate bonds,
like three to five years,
there typically weren't muni bonds
that were short-term, but it could've been government bonds,
like Fanny May, Freddie Mac, those type bonds,
in that three to five year range.
You can also buy mutual funds.
Mutual funds have short-term bond funds that you can buy,
you can also buy short-term bond ETFs.
And I would say these are probably
the more popular options that you are going to see nowadays.
So some of the options that you can buy,
iShares has their short-term bond fund,
Vanguard's got a few short-term bond funds,
so I'll give you one symbol that you can take a look at.
It is BIV.
So that is the Vanguard intermediate-term bond fund,
and at the time of this recording once again,
it's paying you about 2.52%.
So yes, a little bit more than high-yield savings,
not a lot more, you are,
I would say, tying up your money
it's not like we're putting money to the CD,
but you can still stand to see some risk
'cause if we see some moved interest rates,
if interest rates start creeping back up
you may see a small dip in your principal
so please keep that in mind.
So those are the first two options that we're looking at.
The third option are TIPS.
And no we're not talking
if you are a server or waitress, waiter at a restaurant
getting those tips if you're a valet driver
we're not talking about those types of tips,
we're talking about
Treasury Inflation-Protected Securities.
So typically with these there are a few different ways
that you can get these as well,
you can go and buy them online @treasury.gov.
Typically they are going to be released
in five, ten, 30 years.
Now, if you're gonna tie up your money for 30 years,
I don't think I'm doing that with a TIP, I'm just saying.
Especially right now, with low interest rates.
And you could also buy,
there are ETFs that you can buy,
there are mutual funds that you can buy,
so there are several different ways that you can buy.
But right now interest rates really on these
aren't all that impressive.
You're still looking at that one and 1/2 to 2% range
depending on how long that you tie it up for.
There was a time that these were more impressive.
They are meant to keep up with inflation
so there's that obviously you've got the backing
of the government
and however you want to, however you feel safe with that,
you know there's some people like, no, that is not safe.
But either way it is backed by the government
so that is an option that can give you high return
with basically no risk.
All right the fourth option now we're talking about options
that are probably a little bit more exciting.
We have dividend paying stocks.
So now we're talking getting into the stock market,
trying to make some money.
Making that money investing the stocks, but we're looking
at dividend paying stocks so for those that aren't familiar
with the dividend.
If a company reaches a point where they are cash solvent,
as a reward to the share holders they can pay
in the form of a dividend.
You have two different ways to make money in the stock,
you have appreciation, you buy stock for $10
it goes up to $20, that's appreciation.
You also have the dividend.
So here are some examples of some dividend paying stocks
that you can buy, you know typically you're looking
at stocks in the energy and utilities sectors,
typically those are not always but do have some stocks
they're going to pay higher dividends.
But just some examples you may be familiar with.
You've got Chevron currently paying about 3.93%.
And then Verizon, can you hear me now?
Can you hear me now?
- Can you hear me now?
Can you hear me now?
- Verizon currently paying 4.15%.
So that's pretty cool, right?
So you're putting money in the stocks and even if the stock
doesn't make any money,
if you buy it for $20 a share
and it stays at $20 a share for the entire year,
you didn't make any money on the appreciation part
but you did get paid in the form of a dividend.
So another strategy that's with this strategy,
dividend paying stock is that for stocks
and there are a few different names for this
but one common name that you'll hear
are the Dividend Aristocrats.
So what is that?
So basically that is looking at stocks that have a history
of not just paying a dividend but also,
increasing their dividend over time.
And I was looking up, just researching for this video
and I found a list on Kiplinger's.
I think it was 15 or 16 stocks that have never decreased
their dividend in like the last 55 or 65 years.
I'll have a link to that article in the show notes
so you can take a look at that.
But just some examples of companies that have not only
paid a dividend but have never not paid a dividend
or cut their dividend.
So some big companies you are probably familiar with
Johnson and Johnson is one,
I'll just put J and J.
And then you got Coca-Cola, Coca-Cola Classic and right now
so their dividends are paying, Johnson Johnson is 2.6%
and then Coca-Cola is 3.5%.
It's not that bad right, we've got stocks
that not only pay dividends,
but have a history of increasing that dividend.
So you're just increasing that paycheck that you're getting.
Now, I do have to say, cue the editor, put the disclaimer
at the bottom here.
Past performance does not guarantee future results.
So, just because they've always increased their dividend
doesn't mean their always going to, but nonetheless it still
gives you some peace of mind knowing that they have a solid
history of doing so.
All right, moving on to number five, we do have stocks again
but a different type of stock.
We have preferred stocks.
So what is the difference of a preferred stock
as opposed to some of the dividend paying stocks
I was talking about before.
Well so, these types of stocks
are what we could call common stock.
And with the preferred stock they do have some VIP status
when it comes to shareholders.
So with the preferred stock you don't get any voting rights.
So you know if you are a shareholder and you buy Coca-Cola,
you buy any of these stocks and you have voting rights,
but with preferred stock you don't have voting rights,
but you do have access to those dividends.
So if a company is going to cut the dividends
typically the common stockholders
are going to get to get dividends cut first.
Preferred stockholders are going to get paid first.
And a preferred stock is a hybrid between a stock and a bond
debt of that company.
So if you can kind of think of it like that, like
it's a stock but it also pays a dividend.
And typically is going to pay a higher dividend
than what you're going to see with other common stock.
And here is the other kicker too,
is that just as an example,
Alcoa is a company right now
that if you buy their common stock, there is no dividend,
so all you can hope to make money on is that appreciation.
But if you buy the preferred stock right now,
the coupon payment is 5.375%.
So, just under five and 1/2% you're gonna get
on the dividend payment from the preferred stock,
but if you own the common stock you get those voting rights
but you don't get dividend.
So, however you want to slice it.
Whatever you're looking for a lot of people do like
having that preferred stock
just to get that reoccurring payment of that dividend.
All right, moving on to number six,
number six are annuities.
Whooo!
If you are 30 years or younger, watching this video,
don't buy an annuity, you don't need annuity.
I don't care who is selling it to you.
I don't care how much you like them,
you don't wanna buy annuity, it's not for you.
There're a few different types of annuities
that you can buy out there.
You'll hear, fixed is what we're talking about here.
There's also the index annuities.
You've got variable, deferred,
I mean, there are tons and tons of them.
I could do a whole other Wealth Board video on annuities
and I may well do so because I see
a lot of bad information out there.
But with the annuities,
let's just talk about fixed annuities.
Right now a fixed annuity is similar to a CD
in that you are guaranteeing a certain type of interest rate
for a certain period of time.
But, and there's a huge but
and please editor can you put a B-U-T really big right now.
But the big difference is that
if you buy a CD from a bank
and you decide to cashout early,
the only thing that you have to pay like your penalty
is you are giving up any interest
that you would have accrued.
With an annuity a buy from an insurance company,
you may be giving up your principal.
And that is a big difference.
We're not talking about giving up interest,
we're talking about giving up principal.
You don't wanna do that.
You don't want to pay a surrender charge
just to get your money back.
But, that is typically the case
for a lot of these annuities.
So please be careful, make sure you read the fine print.
And right now I just checked
looking at some different rates.
There's a five year option and a 10 year option.
And I think they're about the same.
This is the funny thing.
So, the five year option is 3.9%.
So if you are in that age demographic
where an annuity makes sense,
and you are totally fine making 3.9% for five years.
Make sure you compare that to a bank, an online bank,
I don't care.
And find out make sure that
this is paying substantially more.
Because I'd rather go with a CD than the annuity
but check this out.
If you want to buy the 10 year,
like, you think you'd get paid more, right?
But currently right now, the 10 year annuity, fixed annuity,
is paying about, excuse me 4%.
So hmm, five years 3.9, 10 at four.
Which one am I going to do?
I hope you know the answer to that.
So yes, this is another option we can get high return,
now with the index, the variable.
There are other, there's so many different moving parts
but these, the idea is that you can have some
market participation, and limit your downside risks.
That's kind of the pitch with these.
I want to be careful with that
because there are, as I mentioned,
there're a lot of moving parts.
It can get confusing.
Most people that buy annuities have no idea
what they're buying
because they were mis-sold, misrepresented.
I need to do another video on that.
So I will.
All right, so moving on, number seven.
Number seven, this is one that I've had my money in
for quite some time, and that is with Lending Club.
Otherwise known as P2P,
peer-to-peer lending.
So I have a few different accounts with Lending Club.
And the oldest one that I've had,
I went from being conservative
to a little bit more aggressive.
And as of right now I have one account
that has paid me about 5.36%.
I have a few other accounts that are greater than 7%.
I don't know if enough time has passed to some of the loans
to default on that to affect that rate.
So keep that in mind, but I have talked to other people,
actually many of you that have commented
on other YouTube videos talking about
how well you've done with Lending Club.
I like, I mentioned Lending Club again
just because at some point in time
like we're gonna have a correction, right?
Like the market is gonna have a pullback
and if you're making between five and 7%
in what I would call the equivalent of a bond
or some sort of bond equivalent,
like that's not too bad.
So that is just one area to consider.
Lending Club, peer-to-peer lending,
there are others out there
but, there's no question that Lending Club still
and is still the leader in that peer-to-peer lending space.
Right, the last one, fundrise.
Let's have some fun with it.
So we talked about peer-to peer-lending,
now we're talking about crowdsourcing
with real estate investing.
And I have other videos on fundrise,
you can check those out.
And I've had a few different fundrise accounts.
I think the longest one I've had, it's been a few years now
and when I looked at the return,
you know I'll have a screenshot you can check out here,
like the different type of investment strategy
that they have.
But the overall weight on everything, my total portfolio
has paid about 6.6%.
And I don't think it's been two years.
I think it's just, just over a year and a 1/2
that I've had that.
And with that I always remind people that,
you know once again, like the stocks,
the two different ways that you make money
are appreciation and a dividend.
And with real estate investing
the two ways you make money
is with rental income or also that appreciation as well.
And if you are investing in real estate
like, we're not flipping properties right now.
This is a long-term investment
so the fact that we made 6.6%
just off the dividend yields and payments from fundrise,
managing all the portfolios, and doing all of that
on my behalf, like that's not too bad as well.
And I know that's attractive for a lot of people.
I know many of you have tested out fundrise, you've had
good success with it.
You know with all of these,
I mean these are all just options.
Options that you have to make high return
with little to no risk.
Once again, depending on what your risk is,
for some of you this might be too risky.
Other people will be like "Wait that's all you got?
"Like, I wanna put all my money to Crypto,
"I want to put my money to penny stocks.
"You know and make hundred X return."
We need to have a talk
if that's what you think is gonna happen by the way.
But nonetheless, so these are some options
that you can make high return with low risk,
just making sure you understand what's out there.
If you found any value in this be sure to like, subscribe,
and hit that notification bell because, guess what?
I've got more videos coming showing you
how to accelerate your wealth here at Wealth Hacker Labs.
All right, y'all this is Jeff Rose reminding you
that it's your money, it's your life,
and only you can make it awesome.
Peace, poof!