1. Buy Land
You can join the majority of people who become millionaires in the USA through real estate. Real estate has proven to be one of the safest investments over time, steadily gaining in value and rarely losing it. When an area goes through a buyer's market, it is a good time to look for properties to purchase, rent or hold until prices increase. Obtain a real estate license if you plan to buy and sell a large number of properties. This will help you better understand the marketplace and save money on transactions. Your return on investment in real estate varies by the location of the property.
2. Play It Safe With CDs
Certificates of Deposit, or CDs for short, involve you giving the bank a specified amount of money for an agreed-upon period of time. In essence, you are loaning the bank money, which it uses in turn to fund loans for other customers. The interest rate you receive depends on the market, the loan rates set by the Federal Reserve, the amount of money provided and the length of the time for the CD. You can specify the time of a CD from 6 months to 10 years or more, with interest rates ranging from 2.75 percent to 7 percent. CDs are safe, because up to $100,000 of the funds are insured through the FDIC. At 4 percent, a typical CD rate, $10,000 will become $12,210 when compounded monthly over 5 years.
3. Use Bonds to Diversify
Bonds are a type of loan to a specific corporation, organization, local government, state government or the U.S. government. You purchase bonds, up to $30,000 on paper and/or electronically, with a fixed interest rate for a set number of years. You can get bonds lasting between 13 weeks and 30 years, depending on the length of term you want. Interest rates vary between 3 percent and 7 percent and can go higher. Typically, your bonds will earn interest monthly, with the interest being compounded every six months. For example, $10,000 at 6 percent will earn $50 per month for the first six months, for reach a total of $10,300. Over the next six months, you get $10,300 at 6 percent to earn $51.50 per month. At the end of the year, you earn a total of $10,609, with an actual yearly interest rate of 6.09 percent. In five years, $10,000 would become $13,439.35 on interest alone. Bonds rise and fall in value, which can increase or decrease your investment. The value of bonds tends to change in the opposite direction of inflation. You are subject to the company's ability to pay back the loan when it matures. U.S. government bonds are the most reliable bonds for investment. You can purchase tax-free bonds to avoid paying taxes on the interest you earn each year.
4. Invest in the Stock Market
Historically, the stock market provides an 11-percent gain annually. Over five years, a $10,000 investment would become $16,850.58 if you had an 11-percent gain each year. Unfortunately, the stocks you buy aren't on a fixed gain. You could experience a small gain of 3 percent for three years, and then experience 23 percent gains for two years on the same stock, which would give you a total of $16,531.86. The ever-changing values of stocks make the stock market a riskier investment, but the returns on investment are usually higher than other traditional ways to invest money.
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