To be middle class in America is to make two-thirds to double as much as the median income of the average worker, meaning you’re likely to have more income at your disposal. Middle class folks, however, are also working class, so they’re often busy and may not spend much time on financial literacy or investment education, leaving those decisions to chance.
But financial experts recommend that middle class people be directed and strategic about their investments, since they’re in a good position to grow their money. Here are some of the best investments for the middle class:
Direct Stock Purchase Plans
Direct stock purchase plans offered by certain companies allow investors to buy shares directly from the company, often with lower fees than traditional brokerages, according to John Browning, financial advisor and founder of Guardian Rock Wealth. “This is an excellent way to accumulate shares in well-established companies over time,” Browning advised.
Learn: How To Invest In Gold
Micro-investing apps have gained popularity for their ability to help individuals invest spare change, Browning said.
These apps, which include ones like Plynk, Acorns, Robinhood and Webull, round up everyday purchases to the nearest dollar and invest the difference. It’s a convenient way for the middle class to start investing with minimal effort. These can also be good for younger investors.
Dividend Reinvestment Plans
Dividend Reinvestment Plans (DRIPs) allow investors to automatically reinvest dividends received from stocks into additional shares of the same company, Browning explained. “This strategy can accelerate the growth of your investment portfolio over time, as it compounds returns.”
Your Company Stock Plan
Gareth da Cunha, financial expert in growth and analysis at V2 Markets, suggested you look to your employer’s stock plan, if they have one. “Almost always, companies will throw in a sweetener for any participant in their stock plan, and it’s almost always worth it. More than once, I saw clients become millionaires because their employee stock took off and they’d maxed out their employee stock plan.”
While he has not personally seen anyone lose significant money in this way, for transparency, he did say it could happen, theoretically. Nonetheless, it’s likely to be a good investment.
Invest in Alternatives
The worst kind of investing, da Cunha advised, is “something that isn’t the 60/40 that your Ed Jones guy put you in for cheap.” In other words, turning over all your investing to a financial advisor and not paying much attention to it, isn’t going to bring exciting rewards
He added, “I don’t care if it’s fine art, whisky barrels, real estate portfolios or venture capital! We constantly see headlines that the rich tripled their wealth when the average American broke even.” He said people that increase their wealth quickly are investing in alternatives to traditional methods. “They are off the beaten path and [do] some research. They often have long time horizons and can sometimes have fees but… it’s what differentiates highly successful investors from middle class investors.”
Invest in a Home
If you’ve already bought a house, you’re ahead of the game, according to Christina Prostano, a licensed associate real estate broker with Compass.
“The most important thing people in the middle class can do to create wealth in the long term is to buy the home they plan to live in, especially if they plan to stay there for a long time,” she said.
Not only will most people see appreciation in the value of their home, which also means increased equity, but their monthly costs will remain fixed over time as opposed to subject to the whims of the rental market or to inflation.
“Having control of the timing of any future moves is also incredibly important for navigating market fluctuations or larger economic changes,” Prostano said. “Having that control means that you will not be forced to move [at] times that don’t make sense for you financially.”
You can go a step further and purchase a multifamily property and rent out the units you don’t live in. “Not only will you control your own living space, but you will be receiving income to help cover the cost of the mortgage, taxes, maintenance costs and more. Over time, your liabilities will remain fairly fixed, but your income can grow substantially.”
More From GOBankingRates
This article originally appeared on GOBankingRates.com: Building Wealth: The 6 Best Investments for the Middle Class