You have $100,000 but want to earn at least a 5% return on your money with as little risk as possible.
There could be several reasons why earning a safe and sound 5% return on your 100k is a better strategy than chasing more aggressive returns.
In this article, I'll share the best ways to get a 5% or greater return on your money with little to no risk. These are simple investment strategies that anyone can use as long as you have 100k and an internet connection.
These strategies include:
- Investing in high yield dividend stocks
- Investing in high yield ETFs or Index Funds
- Staking cryptocurrency and earning interest
- Investing in dividend paying REITs
- Earning interest on your money by loaning it out
1. High Yield Dividend Stocks
Dividend stocks are probably the easiest way to get a 5% return on your 100k without risking too much of your principal. There are literally hundreds of high quality companies on the public stock market exchange that pay higher yields to shareholders.
You simply purchase these stocks using an online broker like Webull then receive regular dividend payouts every 3 months. It's as simple as that. Dividends are taxable income so be sure to prepare your taxes correctly when tax season comes around. If you own dividend paying stocks in a Roth IRA then your dividend income is tax-exempt.
Here's a good list of quality companies paying at least 5% annual dividends:
- AT&T (NYSE: T): 7%
- WP Carey (NYSE: WPC): 6%
2. High Yield ETFs or Index Funds
If you want to take a more passive approach then consider investing in high yield ETFs or index funds. ETFs are called exchange traded funds that trade on major stock exchanges. You can invest in a basket of stocks and only pay a small expense ratio aka portfolio management fee.
My favorite high yield ETFs are:
- Global US Preferred ETF (PFFD): 5%
3. Staking Cryptocurrency
Cryptocurrency staking is another simple way to earn a nice 5% yield on your 100k. Companies like Gemini will pay you 6 to 8% APY on your Bitcoin by loaning it out to other people. In return, you receive daily accrued interest in the form of Bitcoin or cash. These APY far outperform the low yields of traditional savings or checking accounts.
4. High Yield REITs
Real estate investment trusts aka REITs are companies that generate income from real estate and are required by law to pay at least 90% of the income in the form of a dividend. REITs are one of the safest income generating assets because real estate is in limited supply and demand remains stable. Many REITs trade on major publicly traded stock exchanges and can be purchased using your favorite online stock trading app.
My favorite REITs are:
- Realty Income (NYSE: O): 5% yield
- Iron Mountain (NYSE: IRM): 7% yield
5. Crowdsourced Loans
Peer 2 peer loan platforms offer investors a chance to generate stable income with very little risk. Companies like Prosper let you loan out money to many different borrowers to diversify your risk and you can earn a return too.