Have you ever wondered if you can make more money by placing your finances in someplace other than a traditional banking institution? With over 5,000 banks and 5,100 credit unions in the US alone, there are undoubtedly other options these days to traditional banking.
If you feel like you can make more money and get a better return on your investment than plowing money into savings accounts that don’t actually boost your savings much, then we have some alternatives to traditional banks.
Online Only Banking
If you need an account to have a salary or other deposits put into, choosing an online bank can be a good option. If you don’t really use cash or have to pay cash into an account, an online-only bank could offer you more flexibility than a standard bank.
High dividend stocks
High dividend stocks will lose value even if they pay high dividends. You won’t want to invest any of your emergency funds in these stocks. However, you could invest a portion of your savings in them to boost your overall savings yield.
High dividend stocks, for example, typically pay 3 percent to 4% in dividends, with some paying even more. Dividend Aristocrats are a category of high-dividend stocks that are considered elite.
Although even high dividend yield stocks will indeed lose value, they can also gain value. And some of the stocks with the highest long-term growth prospects are those with a history of raising dividends regularly. As a result, you will not only receive a high dividend yield, but you will also have the opportunity for the stock to appreciate over time.
Blended Portfolio
If you are serious about being unbanked, a blended portfolio can get you a higher return on your savings. A blended portfolio comprises both stocks and bonds, usually in the 80/20 ratio of 80% bonds and 20% stocks. This is a riskier way of investing but an alternative to consider.
Peer to Peer Lending
This is just another type of investment that entails some risk. You invest in personal loans provided to consumers through peer-to-peer lending. There is always the possibility of loan default. When you invest in P2P lending, though, you’re just buying notes, not whole loans. The notes show individual loans of $25. With a $1,000 deposit, you can put your money into 40 different loans. This will allow you to reduce the risk.
The profits from peer-to-peer lending are remarkable. LendingClub claims that average returns range from 4% to 6% per year, but many people report even higher returns.
Real Estate Investment Trusts
When it comes to investing, few people consider real estate. However, there is a way to use real estate as a high-yield investment vehicle. REITs, or real estate investment trusts, are similar to mutual funds that invest in real estate. Retail space, office buildings, warehouses, and massive apartment complexes are all examples of commercial real estate.
REITs pay dividends. In reality, they are required by law to distribute 90% of their profits to their shareholders in dividends. Over the years, the returns have been generous, averaging 10% a year.
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