The goal of investing is to have your assets appreciate at a higher rate than your money would sitting in a savings account. Many consider a “good” investment to be around 7% per year, based on the S&P 500’s historical average return, adjusted for inflation.
But what if your goal is an even higher return, such as 10% or more? While no investment is guaranteed to secure that significant of a return, many investments have and are likely to continue to do so in the future.
Below are some of the best options to consider if you want a great return on your investment (10% or more).
How Do I Earn a 10% Rate of Return on Investment?
For almost all types of investments, the longer you can hold the investment, the more valuable it becomes. Long-term investments tend to perform better because they account for short-term fluctuations.
You never want to sell an investment when the value is down, but for many investments that have dips, they recover and then become worth more than before the dip. In my view, you always want to buy low, sell high.
Stocks and real estate are usually the first to come to mind when people think of investments, and these are good options, but other alternative investments can sometimes perform even better.
1. Invest in Stocks for the Long-Term
Long-term investments tend to carry less volatility than short-term ones. Even stocks that may have volatile movements on a daily basis can produce stable returns in the long run. Additionally, you earn a tax advantage for holding stocks for at least one full year.
Currently, you pay no taxes on long-term capital gains if your income falls below $40,400. If you earn more than that, but less than $445,850, you pay 15% of your gains. If you earn a higher income, those gains get taxed at 20%.
Meanwhile, short-term capital gains count as ordinary income, which takes a much larger cut of your profits. Long-term investing can sometimes also save people money from transaction costs.
Another advantage comes when you purchase stocks that pay a dividend. In this scenario, you have the option to reinvest your earnings. This acts as an excellent way to compound your profits over time.
Finding growth stocks that outperform the market year after year can lead to outsized gains over the long-term. By adding a small part of your portfolio to quality growth stocks, you can additional returns that compound more over time.
With enough additional return held over many years, you can add a significant amount of value to your net worth. You have plenty of investing apps like Robinhood, Webull, M1 Finance and others to buy these stocks.
I’ve had great success purchasing a subscription of Motley Fool’s Rule Breakers service and investing in some growth stocks for almost the last decade. This stock picking service and investment newsletter has elevated my overall portfolio return.
My returns have outpaced the market and I’ve earned more than I otherwise would have by only investing in index funds, my preferred investment.
The investment research tool screens stocks they believe will lead their respective industries for years to come. You can read their recommendations and choose whether you would like to invest using your brokerage of choice.
2. Invest in Stocks for the Short-Term
While long-term stock investments give you a better chance at making a profit, some people can make significant gains through short-term stock trading.
Day trading, when people buy and sell stocks within a day’s volatility or short period of time, can be extremely lucrative. When a stock rapidly gains momentum, the price can rise in a short amount of time.
For example, Gamestop’s stock has a 52-week low of $2.57 and a 52-week high of $483 (as of publication). Even within single days, the price soared.
For expert day traders, and more beginner traders who got lucky, the profits were substantial. However, while a lot of the people who made money by buying and selling Gamestop for short-term gains did so by paying attention to the financial news, this isn’t always a sound strategy.
For every person who made major gains with the stock, others came out at a deficit. Often, by the time we hear about a stock soaring, the markets have already reacted.
The same appears to happen in cryptocurrency markets. To learn more about this asset type, take a look at these cryptocurrency statistics.
If you’re interested in getting into day trading, first make sure you have a thorough understanding of moving averages, stock cycles, and market trends.
You can develop these skills through use of a stock analysis app and learning with free stock trading apps that have paper trading features like Webull. This app even gives away free stocks for signing up.
3. Real Estate
Real estate is one of the most popular investment options and there are many ways to get involved in it. Real estate acts as an inflation hedge and can create multiple sources of income.
For those who can afford it, buying and running a rental property can provide you with a great return. If you’re looking to invest in apartment buildings, you may want to team up with a partner or invest through a real estate syndication arrangement.
Alternatively, you could purchase a second home to rent out. Renting to a reliable tenant means you get a return on your investment every month and you can often still sell the property for an additional profit later. More affordably, you could rent out a single room in your home, whether long-term directly or short-term through a service such as Airbnb.
Another option is to work with a real estate crowdfunding company. Real estate crowdfunding platforms let you invest in properties you couldn’t afford on your own and allow you to invest passively without the need for extra time or expertise.
Depending on the opportunity, you may receive dividends monthly, quarterly or annually. Alternatively, you could get a piece of the profits from the property’s sales. Often, you get both.
The following three platforms have received high praise from investors for their returns and accessibility:
- Fundrise is known as the first company to successfully crowdfund real estate. They have more than 150,000 active investors with over $100M net dividends earned by investors. It’s still one of the more affordable platforms.
- EquityMultiple is another crowdfunded investment company to consider. It boasts 14.5% annualized total historical returns. EquityMultiple focuses mainly on commercial real estate.
- DiversyFund is an excellent option for anyone who wants to invest in multifamily real estate. The company was created with the belief that “everyone deserves access to the same wealth-building tools that have long been used by the 1%.” You can get started with as little as $500.
Note that real estate investments, whether bought on your own or through crowdfunding, are illiquid investments where you can’t quickly pull out your funds.
4. Invest in REITs
A real estate investment trust (REIT) is a business that owns cash flow-producing real estate and pools investors’ money to obtain and manage real estate properties.
Usually, these are high-end or commercial properties. Unlike most other types of real estate investments, REITs are a liquid investment you can sell at any time. They pay out dividends to investors.
You can purchase REITs through major brokerage firms, such as M1 Finance. M1 Finance is a great option for buying publicly-traded REITs because they charge no commissions or management fees.
Another option, Streitwise, gives both accredited and non-accredited investors the opportunity to invest in private REITs. The current minimum investment for non-accredited investors is around $1,000 and all investors receive dividend payments.
5. Starting Your Own Business
They say one of the best investments you can make is in yourself. If you have a knack for business and some money to get started, creating your own business has endless potential for high returns. It doesn’t have to be a huge business.
For example, if you’re currently a graphic designer, you can start a graphic design company where you do some work and outsource some to other designers. You would receive a cut of the profits for connecting the client and designer.
6. Investing in Fine Art
Between the years 2000 and 2018, blue-chip art outperformed the S&P 500. Blue-chip art by artists such as Picasso or Claude Money carries exceptionally high price tags and the vast majority of people can’t afford these pieces.
Even if the average person found the money to buy fine art, they would still need the proper connections to sell it for a profit. However, investing in fine art has now become achievable with less money and connections.
The art investment company Masterworks allows you to purchase a fractional share of fine art for a minimum of $1,000. The art experts at Masterworks choose strategic artwork to purchase for reselling later. In return, they receive 1.5% from investors in annual management fees and 20% of the profit for sold paintings.
Note that fine art is an illiquid investment. Don’t invest money you may need in the near future.
7. Investing in Wine
Fine wine has less long-term market volatility compared to most other investments, including real estate and gold. There is a finite supply of wine from different regions and years, so the supply can only go down and you’re almost guaranteed demand will go up. Between 2005 and 2015, fine wine delivered 13.6% annualized returns.
However, you need to store wine in ideal conditions that prove challenging to replicate in your own home. Therefore, it’s useful to use a wine investment company, such as Vinovest.
The minimum balance to invest is $1,000. In exchange for a 2.85% annual fee (2.5% for balances of $50,000 or greater), they provide an authenticity guarantee, storage, labor, portfolio rebalancing and insurance. Learn more about the service with our Vinovest review.
8. Investing in Silver, Gold and Other Precious Metals
While mining gold may seem to be a thing of the past, people still actively mine it today. There is even a show called Gold Rush following several mining companies’ journeys. While gold prices fluctuate, long-term, it’s a solid investment.
Although gold gets more attention, silver is a favorite of many investors. It’s more volatile than gold, but that means with the proper timing you can end up with substantial gains. Plus, it’s more affordable than gold if you’re starting out.
For exposure to more precious metals, consider precious metals ETFs. In the past year, the S&P GSCI Precious Metals Index has had a respectable return.
As a way to grow your money over time, consider a quick calculation like the Rule of 72 to understand how long it will take to double your invested capital.
9. Junk Bonds
Bonds are categorized as either investment grade or junk bonds. Junk bonds are high yield, higher risk bonds. They come from companies with lower credit ratings than those of investment-grade bonds.
The higher the risk profile of the bond you choose, the greater the return to justify your investment. If you’re nervous about individually picking a junk bond, consider a high-yield bond fund. These bond funds decrease your risk by diversifying portfolios across multiple bonds.
10. Peer-to-Peer Lending
Peer-to-peer lending is when an investor gives an individual a loan, much like a bank would. Sometimes people are unable to secure loans from banks or would prefer to borrow from another person.
The investor receives interest on the loan as well as repayment. However, this system does carry the risk of default.
Constant requires collateral, in the form of cryptocurrency, to back all loans on the platform. This investment isn’t an FDIC-insured high-yield savings account, so the high rate of return comes with risk. However, since the company launched in 2019, no investors have lost their principal.
If you want to help others who need money, while profiting yourself, this is a great alternative investment option.
When it comes to investing, it’s essential to find a reasonable balance between risk and reward. In general, long-term investments will make you more money, with less risk.
Remember that a diversified portfolio is key, so choose a few different investments with varying risk factors to stay balanced.
About the Site Author and Blog
In 2018, I was winding down a stint in investor relations and found myself newly equipped with a CPA, added insight on how investors behave in markets, and a load of free time. My job routinely required extended work hours, complex assignments, and tight deadlines. Seeking to maintain my momentum, I wanted to chase something ambitious.
I chose to start this financial independence blog as my next step, recognizing both the challenge and opportunity. I launched the site with encouragement from my wife as a means to lay out our financial independence journey and connect with and help others who share the same goal.
I have not been compensated by any of the companies listed in this post at the time of this writing. Any recommendations made by me are my own. Should you choose to act on them, please see the disclaimer on my About Young and the Invested page.