Investing can provide people with a good source of income, fund their retirement, get people out of a financial jam, and more. As per Kavan Choksi investing can help people to grow their wealth. It would enable people to meet their financial goals, as well as increase their purchasing power over time. However, even though investing can build wealth, one would also want to balance potential gains with the risk involved. Therefore, investing in the right investment vehicles is extremely important.
Kavan Choksi sheds light on a few of the top investments for 2025
Even though high-yield savings accounts are technically not an investment, due to their high rates, such accounts can significantly help people to grow their wealth. A high-yield online savings account pays interest on a cash balance. They are ideal for people who would want to access cash in the near future and have a short-term goal. These accounts especially work well for risk-averse investors.
Today investing in a CD ladder has emerged as a popular trend. A CD ladder basically implies to a series of certificates of deposit at staggered maturities. Investors, for instance, may open five CDs that are staggered across five years, with one CD maturing every year. This approach provides liquidity to the investors, while lowering the reinvestment risk. A CD ladder would especially be an attractive investment avenue for people who are not sure which way interest rates may move down the line, and therefore are effectively diversifying risk. It is a good strategy for risk-averse investors who are looking for ways to generate consistent reliable income. It essentially is an alternative to investing in bonds that may provide similar yields. However, as CDs are not exposed to market risk, their value does not fluctuate over time.
Medium-term corporate bond funds are another good investment vehicle for risk-averse investors who want more yield than government bond funds. At times, corporations tend to raise funds by issuing bonds to the investors. These can be packaged into bond funds. These funds own bonds issued by potentially hundreds of corporations. Medium-term bonds are known to have an average maturity of about three to eight years. They are ideal for investors looking for cash flow or the ones who aim to lower their overall portfolio risk yet earn a return.
Dividend stock funds are another investment instrument that is expected to be pretty popular in 2025. Dividends simply are portions of the profit of a company that is paid out to the shareholders, generally on a quarterly basis. Therefore, dividend stocks simply are the stocks that offer a cash payout. Dividend stock funds packages up only dividend stocks into a single easy-to-buy unit.
As per Kavan Choksi, buying individual stocks, regardless of whether they pay dividends or not, would be fine for intermediate and advanced investors, but can be confusing for newbies. Hence, it is often a smart choice to buy a group of them in a stock fund and lower the overall risk involved. Dividend stock funds would be a good option for almost all investors, but are particularly advantageous for those who are looking for income.