Top 11 Investments for Making Money in 2023

Stock chart showing profits

Attempting to select a single investment or two that will maximize your returns in 2023 can be a daunting task. The economic landscape’s future remains uncertain, with potential scenarios ranging from a recession to a robust recovery. Given this unpredictability, it’s wise to diversify your investments across various options that can collectively offer income, security, and growth prospects.

1. Diversified Growth Stock Fund

In today’s market climate, growth stocks have faced significant challenges. However, if you opt for a diversified stock fund encompassing high-quality growth stocks, there’s a likelihood of a rebound over time. While another down year for growth stocks is plausible, there’s also a decent chance of a resurgence in the first half or even the first quarter of 2023. Diversification through mutual funds or ETFs can mitigate risk compared to investing solely in a single stock.

2. Nasdaq-100 ETF

The Nasdaq composite index endured the brunt of the 2022 bear market, experiencing a 33% drop. Generally, the Nasdaq, filled with major technology players, exhibits higher volatility than the broader market, explaining its more substantial 2022 loss compared to the Dow Jones Industrial Average or the S&P 500 index. However, when the Nasdaq rebounds, it typically does so vigorously. If you can tolerate the Nasdaq’s volatility and have a risk-tolerant profile to own an index with the potential for a 33% or more annual decline, a Nasdaq-100 ETF may offer profitable opportunities.

3. S&P 500 ETF

The S&P 500, like other significant market indices, has consistently recovered from bear markets and reached new all-time highs. While past performance can’t guarantee future results, its impressive track record makes investing in an S&P 500 ETF a robust long-term strategy. While a full recovery may not materialize in 2023, stocks tend to appreciate over the long haul, making it a sound strategy to invest when the index is down roughly 20%.

4. High-Yield Savings Account

For conservative investors, there are few better times to park your funds in a high-yield savings account than the present. With the Federal Reserve aggressively raising interest rates to combat inflation, high-yield savings accounts now offer substantially higher yields. Whereas the best high-yield savings accounts offered approximately 0.50% returns in 2020, current accounts provide yields of 3.80% or even more. This represents a significant yield for an insured savings account and serves as a secure haven if you’re concerned about potential stock market turbulence in 2023.

5. Dividend Aristocrat Fund

During periods of economic uncertainty, companies that consistently offer high dividends tend to exhibit resilience. To sustain a high dividend, a company must possess a dependable revenue stream—qualities investors value when economic growth slows. Dividend aristocrats are firms that have increased dividends for at least 25 consecutive years. Investing in a fund consisting of dividend aristocrats provides diversification, a stable income source, and protection against volatile market segments.

6. Real Estate Investment Trust

Real estate investment trusts (REITs) utilize investor capital to purchase various property types managed by professionals, with earnings distributed to shareholders. This strategy offers real estate exposure without the responsibilities of management or substantial down payments. REITs often provide generous dividends and typically exhibit lower volatility compared to the broader stock market, serving as a hedge in potentially challenging market conditions in 2023.

7. Rental Properties

To diversify away from traditional stock and bond markets, consider investing in rental properties in 2023. Despite a softening housing market, robust rents persist. As interest rates and inflation cool down, there may be increased support for home prices. Rental properties offer long-term investment potential, featuring a predictable income stream that grows over time, helping combat inflation and potentially delivering long-term capital gains.

8. Value Stock Fund

In 2022, growth stocks fell out of favor, making value stocks more attractive. This trend could persist into 2023, as the cyclical nature of value stocks tends to extend over multiple years. Even if nothing else, value stocks are likely to be more defensively positioned in the 2023 market, as investors exhibit reluctance to pay premium prices for stocks with high valuations.

9. Short-Term Bond Fund

While a short-term bond fund may not offer significant upside potential, it can act as a defensive strategy against potential stock market downturns in 2023. Short-term bond funds deliver a moderate income stream in exchange for the security of capital preservation at maturity.

10. CDs

Certificates of deposit (CDs) can frequently yield more than high-yield savings accounts or even short-term bond funds, all while providing FDIC insurance. Although purchasing a CD involves a lock-in period, many offer maturities of one year or less. In the uncertain economic and market climate of 2023, waiting in a high-yielding CD could potentially yield greater returns, thanks to the Fed’s efforts to increase interest rates.

11. Dollar-Cost Averaging

Dollar-cost averaging isn’t exactly an investment, but it’s a valuable strategy for capitalizing on opportunities in 2023. If you hold stocks that experienced declines in 2022, consistently investing fixed amounts each month can help lower your average purchase price by acquiring more shares when prices are lower. Given the uncertainty surrounding the stock market in 2023, maintaining a consistent investment approach can mitigate the impact of price volatility.