Secret Strategy Surpasses Certificate of Deposit CD Rates
The Role of Mutual Funds and ETFs
Mutual funds and exchange-traded funds (ETFs) offer another viable alternative to traditional CDs. By pooling money from multiple investors, these funds invest in a diversified portfolio of stocks, bonds, or other securities. This diversification can help mitigate risk while offering the potential for higher returns. According to Morningstar, the average annual return for a diversified stock mutual fund over the past decade has been around 8%4. ETFs, which trade like stocks on exchanges, often have lower expense ratios than mutual funds, making them a cost-effective choice.
Real Estate Investment Trusts (REITs)
Real Estate Investment Trusts (REITs) provide an opportunity to invest in real estate without the need to purchase property directly. REITs are companies that own, operate, or finance income-generating real estate across a range of property sectors. They are required by law to distribute at least 90% of taxable income to shareholders, often resulting in attractive dividend yields. Historically, REITs have offered average annual returns of approximately 10%5, making them a compelling option for income-focused investors.