What type of investment has the highest return

Start investing now or. Start Investing Now. Was this article helpful? Have a query? ITR Resources. Mutual Fund Resources. Terms Privacy Legal. Download ClearTax Invest App. List of Partners vendors. The U. But whether stocks are the best investment also depends on the time frame you choose to look at—and the investor's own investment horizon. Higher volatility in stock prices means shorter time periods bring greater risk. The stock market has proven to produce the highest gains over long time periods.

Of course, few people hold stocks for many decades—and plenty of people lose money in the market in the shorter term. The key is giving stocks time to run, meaning waiting out any shorter-term volatility.

For example, stocks tend to fall sharply just prior to and during economic recessions. Time the market poorly and your losses could be painful. So the longer the holding period, the more likely you are to make money. Despite the Dotcom Bubble and the Global Financial Crisis, stocks have produced solid gains over the past two decades as well. REITs gained 9. Many people consider a home an excellent long-term investment and there is good reason for that.

Home prices have risen steadily over time, particularly in recent decades, dramatically so during the housing bubble. But over the longer term, the return is less impressive. Between and , U. So what is an emergency fund? It is a contingency fund that not only helps financially during most difficult times but also prevents the derailment of your saving for long term goals.

Simply because emergencies and the ensuing financial burden cannot be anticipated. In these last couple of years, many of us have seen grave emergencies, including job loss, pay cuts, death of a family member and so on thanks to the novel coronavirus pandemic. Loss of income and medical emergencies can mean that one will have to turn to their emergency fund to tide through the tough times.

Thus, it is important to have an emergency fund to fight any exigency. An emergency fund is a contingency fund that not only helps financially during most difficult times, but it also prevents the derailment of your saving for long term goals.

An emergency could be in any form; a small one like car breakdown and a big one like job loss, which may continue for several months. In such a situation you will not only have to manage your household expenses but also continue paying your labilities like EMIs and credit card dues.

Therefore, one should at least build an emergency corpus which can at take care of months of family expenses.

The primary objective of your emergency fund is to help you when you need it the most without any delay. While some emergencies may give you a few hours or days to prepare, others may require funds immediately.

Therefore, your emergency corpus must be easily and quickly accessible in the form of cash or in the savings bank account. A part of the funds can also be invested in liquid mutual funds that invest only in money market securities and therefore carry low risk. FDs or RDs can also be considered. Here are some advisable instruments. One-month expenses as a reserve can be kept in a combination of saving bank account and cash. Though cash is highly discouraged, there are many emergencies when it is the only option.

Many natural disasters like storm, excessive snowfalls etc. Therefore, it may be a good idea to keep some amount cash to manage days expenses. Rest you can keep in your saving bank account. Bottom Line: Owning stock in an individual company is much riskier than the other options, but dividend stocks will provide a steady return whether markets are up or down.

Best For: Long-term investments that still produce passive income; investors looking to invest in order to create a regular income stream; younger investors reinvesting dividends to maximize growth. The ideal portfolio is one with both minimal risk and maximum returns. Cynthia Measom and John Csiszar contributed to the reporting for this article. We fact-check every single statistic, quote and fact using trusted primary resources to make sure the information we provide is correct.

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For our full Privacy Policy, click here. Advertiser Disclosure. By Joel Anderson November 3, Building Wealth. Need Retirement or Investment Advice?

View Offers. Last updated: Nov. About the Author Joel Anderson. Joel Anderson is a business and finance writer with over a decade of experience writing about the wide world of finance. Based in Los Angeles, he specializes in writing about the financial markets, stocks, macroeconomic concepts and focuses on helping make complex financial concepts digestible for the retail investor. Check Out Our Free Newsletters! Subscribe Now. In Case You Missed It. Fintech company Greenlight Financial Technology, mostly known as a trading app and debit card for kids, now looks to educate parents by launching Investing for Parents, a new educational investing Read More.

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