Got between $5000 and $10,000 to invest? Here are two ideas for investing your $5000 to $10,000 to get the most bang for your buck during this bear market.
Series I savings bonds are relatively unknown and are being called “inflation proof” because they are inflation-indexed and are considered virtually risk-free. Series I savings bonds are currently paying a whopping 9.62% interest rate through October 2022, the Washington Post reports.
You can hold the bonds for up to 30 years and cash them out any time after one year, but after five years without penalty.
Because of their overwhelming popularity, the Treasury Department has set up a limit, only allowing individuals to purchase up to $10,000 in electronic I bonds each calendar year. You can also buy up to $5000 in paper I bonds using your federal income tax refund.
To purchase Series I savings bonds, it starts by setting up an account at TreasuryDirect.gov.
There are some other stipulations: You must be a US citizen, or US resident, or civilian US government employee. Trusts and estates can purchase the bonds in some cases, but not corporations, partnerships, or other organizations, according to Bankrate.
You can’t cash an I bond for at least a year and if you cash the bond before 5 years, you lose the previous three months of interest. You must pay federal income taxes on the interest.
Get more info from the Treasury Department here: Series I savings bonds
Investing legend Warren Buffett has endorsed Vanguard S&P 500 ETF (VOO) as the investment for his estate upon his passing, which speaks volumes. With stocks currently in a bear market, it makes an opportune time to buy into Vanguard with the share price down roughly $30 since the beginning of June. The expense ratio of Vanguard is a very low 0.0 3%, about $3 on a $10,000 portfolio annually.
ETF stands for “exchange-traded funds.” An EFT is a collection of pooled investments in the S&P 500 stock exchange and is traded on an exchange just like stocks are, according to Investopedia.
An EFT is a great choice for beginning investors because it allows you a buy-in on a basket of highly reputable US large-and mid-cap companies, US News reports.
Historically, the S&P 500 has delivered a 10% compound annual growth before inflation.