Are you looking for ways to earn 20% or possibly more on your money?
Well, there is only one way I know of that one can earn this kind of “return” safely.
Paying off high interest debt is a great way to earn a no risk return. According to LendingTree, the average credit card has an interest rate of 21.59% in 2022.
According to WalletHub Credit Card Advisor, First Premier Bank Credit Card has an interest rate of 36%. These cards are designed for those with poor credit.
When one holds a balance on their credit card at 20% and can pay the balance off, it is like getting a 20% return.
Is it as sexy as investing in stocks, bonds, or Bitcoin? No, but high interest debt carries no risk of loss of principal like these volatile investments.
Don’t keep a balance on your credit cards? Do you have other loans such as a car loan or student loan? By paying these loans off, you are effectively earning the interest rate of the underlying loan.
Many times, these types of debt also carry late fees which can further boost your return by paying them off.
Rick’s Tip: Before paying off any federal student loans, investigate if you are eligible for loan forgiveness first.
Here are some other ideas to earn a higher return on your money without taking on any risk.
I Bonds are U.S Treasury issued bonds that are currently paying an annual return of 9.62%. The rate is tied to inflation (The reason the rate has jumped recently) and is reset every six months. One needs to hold these bonds for a minimum of 12 months and unless you hold them for at least 5 years, you will lose the previous 3 months of interest. There is also a limit of up to $10,000 per year per person when buying these.
If you have money you don’t need for at least a year, I Bonds are worth looking into.
FDIC insured high yield online savings accounts are currently paying over 2% and can be totally liquid and have no fees. As the Fed’s raise rates, the interest rate on these accounts can go up. Read the small print as some do impose some restrictions.
CD’s or Certificate of Deposits are sold through banks and carry FDIC insurance. They may pay more than the high yield savings accounts but generally your money is tied up longer.
Looking for ways to make sure your optimizing your savings while minimizing debt?
Feel free to reach out to me if you have any questions. I’m here to help.
Here’s another blog article that might be of interest. https://planwithfps.com/blog/how-will-the-inflation-reduction-act-help-me
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All the best.
Rick Fingerman, CFP®, CDFA™, CCPS®
Financial Planning Solutions, LLC (FPS) is a Registered Investment Advisor. Financial Planning Solutions, LLC (FPS) provides this blog for informational and educational purposes only. Nothing in this blog should be considered investment, tax, or legal advice. FPS only renders personalized advice to each client. Information herein includes opinions and source information that is believed to be reliable. However, such information may not be independently verified by FPS. Please see important disclosures link at the bottom of this page.