What’s the answer? Depending on your tolerance for risk, the amount of money you have to invest (or lock away), and other personal factors, some of the better choices include holding at least a portion of your wealth in cash, opting for high-yield stocks, eliminating credit card debt, allotting an amount to REITs (real-estate investment trusts), starting a small e-business, ramping up retirement accounts, taking a look at precious metals, and exploring the volatile world of cryptocurrency.

Here are some details about each approach for investors and consumers who want to get the highest possible return, in interest or ROI, on their assets in an uncertain economy.

Retirement Accounts

One of the most innovative things to do when interest rates are dismal is to ramp up your retirement accounts. Of course, there are limits to how much you can contribute each year, but make sure you at least reach the maximum on those. Then, after hitting your IRA ceiling, consider setting aside whatever is left in one of the other seven items on this list.

Real Estate

If you don’t want to get directly involved in the complex business of buying, owning, and managing real estate, consider REITs, real-estate investment trusts. These popular financial vehicles are ideal for people of all income levels because you can purchase as many or as few shares as you wish, based strictly on how much you want to allocate toward the RE market.

Stocks

Stocks, in general, are usually not a good play during a volatile or weak economy. However, there are several ways to cherry-pick certain kinds of shares for excellent results. Potentially, so-called “dividend aristocrats” and growth stocks are choices that can help you get through a tough couple of years.

Aristocrats are high-quality corporate shares that have a long history of paying regular dividends, which you can promptly reinvest directly into the stocks. Growth companies are entities that don’t pay dividends but offer investors the chance to take part in rising share values over time. Both kinds of shares are popular during sluggish financial times.

Cash

Cash is the default option for people who have almost no tolerance for risk. But, it’s often helpful to hold somewhere between 10 and 30 percent of your portfolio in cash if you think the stock market is approaching a major correction. That way, you’ll be able to use the cold cash to buy up bargain shares after the drop-off. Some of the world’s most well-heeled and famous investors use this tactic to their great advantage.

Debt Reduction

An economic downturn is an opportune time to eliminate any high-interest credit card or other debt on your personal books. Rather than earning interest on a portfolio, consider getting rid of those high card rates that are eating into your overall financial health.

Cryptocurrency and Precious Metals

If you like alternative investments, both crypto and gold (or silver) are apt selections when stocks are under-performing, inflation is rising, and the general monetary outlook is volatile. Both gold and crypto are forms of “safe haven” investments where people park assets during bad times.

E-Business

When the best interest rates you can find in traditional savings accounts, on bonds, and in CDs are hovering around the one-percent mark, starting a new small business can be a wise way to use the financial assets you have available. Don’t expect quick returns, but consider the big picture when starting an e-commerce business.

Many folks begin small as resellers or with digital products, like downloadable reports and specialty product reviews. In fact, one of the fastest-growing online business niches is in the review area. To get started, find a product line that you know a lot about and enjoy reviewing. Then, get busy posting objective, well-written, long-form reviews about the top sellers in the segment. Later, after you build up a solid readership, you can earn income by selling ads on the site.

The Bottom Line for Money Ideas in a Bottomed-Out Economy

There’s more than one way to skin a cat, as the old saying goes. Sometimes, it makes no sense to seek out passive, interest-bearing accounts like those offered at banks and S&Ls. Instead, try putting your money to work for you in creative ways that have at least a chance of turning a small investment into a worthwhile one.

What Are the Current Real Estate Trends?

According to the National Association of Realtors, the current year’s figures look promising for investors. In 2020, total U.S. Home sales rose 22.2% over 2019 numbers. This equals 6.76 million homes sold over the year. Home prices also rose 12.9% when compared to the previous year. This is because demand is outpacing supply, and the current market has been at its highest level of annual growth since 2006. It is higher than it was just before the housing bubble burst in 2007.

What Is The Market Condition Like Out There?

Right now, it is a sellers’ market, and for those who are looking to buy and flip, there is some potential for making quick cash as long as current market conditions hold. Of course, this means that acquiring the property will probably cost you more, but with the current rate of rising prices, the quicker you can turn the property around, the quicker you will have money in your bank account. In addition, many people are choosing to take advantage of low mortgage interest rates.

In Maryland, one realtor reports that it is common for sellers to get around 15 qualified purchase offers within three days of putting their house on the market. To cut down on competition, they are listing with a tight offer deadline. Market conditions favor cash buyers and those who have a sizeable down payment. Those who are approved for financing before they make the offer also have an advantage. In this competitive market, those that only have the 5% down are at a disadvantage and often lose out.

Will This Housing Market Trend Last?

With memories of 2007 still dancing in their heads, many people wonder if it is an excellent time to buy or if they should wait for another bubble to burst. For the short term, at least through the rest of 2021, many experts feel that this trend will continue and that prices will be driven higher. So, if you have a home you were thinking of selling, now is an excellent time to do so. However, if you are looking to buy a home, you will face stiff competition on properties of interest to you.

You make money when you buy low and sell high, but it is difficult to buy low in the current market conditions. So if you do happen to find a property that looks like a good bargain in terms of price, it is an excellent time to use caution and make sure that there is not a legitimate reason for the price drop.

This is especially true if the asking price is well below other houses in the neighborhood. For the average investor, this would signal extreme caution, but if you are an expert and can spot what the problems are, you might have stumbled onto a lucrative opportunity. Again, this is especially true if you can perform the repairs yourself.

A Word of Advice About Real Estate Investments

When it comes to whether this is an excellent time to buy real estate or whether you should wait out for a change in the market depends on your experience and your long-term plan for the property. It is certainly not a market for the weak at heart. If you decide to enter the market, make sure you know your maximum allowable offer before you place a bid. Also, make sure that you do not overpay on your home.

Fast and loose lending was the driving force behind the 2007 housing market crash. Lenders were allowing those with substandard credit scores and no money down to purchase homes they couldn’t afford. After the crisis, new rules were put in place, and the conditions that led to the crash do not exist today. This is not to say that a bubble burst could not happen, but it is not likely, at least to the degree that it occurred in 2007.

So, does this mean that the housing market is safe? One thing to consider about real estate investing is that it is regarded as a long-term investment. Therefore, you should always do your research and think about your investments long and hard before deciding to leap real estate investing in any market condition.