Apart from having the highest Gross State Product (GSP) at $3.4 trillion, making it the biggest economy in the United States, there are many business opportunities in California that investors who are planning to expand their investment portfolios can look into.
Do you want to talk about the consumer market or the effective regulatory environment? There are good reasons to invest in California. For instance, the government of California have a handful of incentives, financing options, as well as grants to help startups and businesses.
This post explores the business investment opportunities in California, a state with an impressive consumer market and that also excels when it comes to research and development.
These investment opportunities are of various forms and types, picked from various sectors, and of various degrees of risk too. You can engage some of them for as low as $50, while others will need hundreds of dollars to get your desired Return On Investment (ROI).
Table of Contents
California bonds
Government bonds can be aptly regarded as fixed-income security since they are backed by the full faith of the government of the United States of America.
Consider yourself giving a loan to the government for a defined period of time, while they in return pay you interest. However, government bonds are only usually suitable for conservative investors, since they don’t offer high returns compared to several other investment types.
There are several options available for an investor interested in purchasing California government bonds.
General obligation bonds, traditional revenue bonds, and lease revenue bonds are the three major types of bonds issued by the state of California which is available for investors within and out of the state.
They can be obtained directly from an investment bank, or a broker. You can buy directly from TreasuryDirect, with a minimum of $100.
Gold
Gold as a commodity whose price is primarily hinged upon its scarcity as well as political actions (plus several other external factors), you can make profits.
Some of the areas you might want to look at for gold investment in California include Sierra Nevada and Northern California.
The practice of investing in gold has been around for so many years in different parts of the world. It quietly grew beyond a means of hedging one’s resources against growing global inflation. Right now, it is a popular investment vehicle which you can start with just $20.
However, it is necessary to note that there are tax laws attached to precious metals like gold in California. An investor selling the commodity for a profit is required to file a tax report for the Federal Capital Gains Tax, according to GoldBroker. Nevertheless, you can get an exception if you bought more than $1,500 worth of gold from a single dealer.
High-yield savings account
There are many proven online savings account available that offers higher rates of return to their customers since they have lower overhead costs unlike traditional banks with physical branches.
You can consider this avenue as an investment medium, particularly if you simply want to keep an amount of money that you only need to access occasionally.
In the same vein, you can decide to go for cash management accounts, belonging to brokerage firms. Aside from offering impressive interest rates (which can be easily higher than that of traditional banks), they can also come with debit cards as well as a great deal of flexibility.
There are several superb firms offering high-yield savings accounts, for instance, CitBank offers an Annual Percentage Yield (APY) of around 1.65%.
Although no minimum deposit is attached to maintaining this account, to get a reasonable return, you may want to start with anything above $25,000.
Certificate of deposit
A certificate of deposit is a savings account that is insured by the federal government and is thus usually reliable. While investing in a certificate of deposit, it is necessary to go for the one with a term length you are sure is suitable for your financial plans.
In other words, if you are going for a CD that would last for two or five years, be sure that you won’t have any reason to want to get your money out of it early. If you do this, you may have to pay a fee.
Therefore, while a certificate of deposit helps investors safely grow their money for a specific time frame, it shouldn’t be approached with money they may be needing soon.
Additionally, investors can get some of the best CDs (in terms of good rates) at credit unions and online banks.
You can purchase a CD online from CapitalOne (2.50% APY) or Banesco (2.15% APY). To grow your investments at a reasonable pace, it is recommendable to start with $1,500
Money market funds
Your investment is utilized to get various superb corporate or government debt. Interestingly, even if you will be needing the money soon, you can still decide to invest in money market funds since you are permitted to get to your capital anytime you like.
However, you should know that this investment medium rarely has higher returns. Aside from buying from banks or mutual fund providers, you can also purchase directly from an online discount brokerage based in California recommendable provider is Marcus (by Goldman Sachs), offering 1.20% Average Propensity to Save (APS)
Corporate bonds
This works like government bonds. A core difference here is that you are giving a loan to a corporate organization. Therefore, the rates are usually higher since there are more risks attached to such.
Hence, investors are expected to seek professional opinions about the organization before they boldly go for their offerings, to mitigate risks.
While a struggling company will likely want to offer higher yields, stronger organizations will usually offer a realistic lower yield. Investors can purchase these bonds through an investment broker.
While you have several options, with a minimum of $1000, you can invest in corporate bonds in California through Fidelity Investments online.
Mutual funds
As an investor in a mutual fund, you get to easily diversify and spread your resources across many investment channels.
The fund managers are experts in utilizing the resources pooled together from different investors to invest in various profitable and safe investment vehicles.
Therefore, you can be exposed directly to multiple investment opportunities (including the stock market) in a very safe way.
Simply, you learn from the stands while the experts do the actual work on your behalf. We should also add that investors don’t necessarily need to have a very huge amount of money at a time before they invest in mutual funds. You can directly contact the companies that manage them.
Some of the best online brokers for mutual funds include Ally Invest, Charles Schwab, Fidelity Investments, and Merrill Edge
Index funds
This shares some similarities with the traditional mutual fund, as it can even be regarded as one of its types. It has a reputation for being one of the best investment opportunities available for long-term savings plans.
Unlike traditional mutual funds, however, index funds are not paying a professional to curate their holdings, and as such is cost-effective because of their lower fund management fees.
Some professionals would easily recommend index mutual funds to young investors who won’t mind leaving their money in it for up to 30 years.
These funds are available at fund providers. Investors can also obtain them through a discount broker, such as Vanguard Total Stock Market Index Funds.
Exchange-traded funds
This is another unique type of mutual fund, as several investors get their resources gathered together to purchase a collection of securities.
However, unlike traditional mutual funds, exchange-traded funds always require investors to buy shares. While it still generally operates like a traditional mutual fund, with an ETF, you can get onboard with lesser resources.
Some of the top equity ETFs include iShares MBS ETF (MBB) offered by a New York-based investment firm blackrock with offices across the United States including California which is located at 2951 28th St, Santa Monica, CA 90405, United States and Vanguard Short-term Bond ETF (BSV)
Dividend stocks
There are profitable companies all around that usually pay their shareholders cash payments at agreed intervals.
So, while investors can keep receiving fixed income due to these regular dividends, they can still benefit from the long-term profitability of rising share prices.
As an investor, you can simply purchase dividend stocks via an online broker such as TD Ameritrade, for just $50.
Individual stocks
Investing in stocks can be very lucrative quite alright, but it also exposes your resources to a huge platform of volatility. This is because there are several factors that can influence the price and value of shares. Therefore, it is very important to be careful while investing in stocks.
While there are several online platforms to engage this, you can start with Robinhood with as little as $20. Robinhood Financial LLC is located at Menlo Park, California.
Cryptocurrency
Cryptocurrencies are digital currencies meant to be used as an innovative medium of exchange. However, it became a famous investment option in recent times, particularly due to the fact that its prices keep fluctuating.
And while some have lost the value of their original capital, many cryptocurrency investors have actually made a lot of money, taking advantage of its volatile nature.
The most popular cryptocurrency right there is Bitcoin. And if you are new to the concept of investing in cryptocurrency, then you should start with the digital assets that have been tested over time, coins that have survived the storm.
However, wisdom demands that you only jump into this with a small part of your resources, while you keep learning its technicalities. You can invest in cryptocurrency via platforms like Binance U.S and coinbase. or any other exchanges with a high volume of trade that are legitimate to operate in California.
Property
Here is one prominent investment option that can be recommended to investors with some dollars to invest in for the future.
According to reports, there are still over 10 million homes in the State, and a million of them are sold each year. So, if you have a lot of money, you can invest in California property.
You can choose to invest in some of the expensive California metros where it cost thousands of dollar to acquire a home. You can invest in rental homes for those who are not financially buoyant enough to buy a house.
Some of the top real estate companies in California include the Bienstock Group and Corcoran Global Living.
Individual Retirement Account (IRA)
One of the peculiarities of an individual retirement account as an investment tool is that you can avoid paying tax from the yields. Any interested investor can set up an IRA themselves and gain control over where they invest their money.
A Roth IRA is usually recommended since the investor can be in charge of what direction they want their investment to go, and also see how it grows tax-free.
In recent times, there have been changes to IRA accounts. Right now, account owners can only contribute a maximum of $6,000 per annum.
Even if you should decide to establish more than one account, you will have to contribute the maximum amount ($6,000) amongst them.
You can open an IRA via a bank like the Bank of America.
Annuities
You can enter a deal with an insurance coy, paying a good amount of money in exchange for periodic payments from the insurer. If you find a good deal, annuities will prove very useful particularly during retirement, since you can always expect a steady monthly payment.
There are several insurance companies you can work with, including the likes of Nationwide Life Insurance Company and Jackson National.
Mobile Apps
The App market is very huge big, and as an investor, you can consider the ways to get involved. According to statistics, total revenue is projected to get to US111.80bn this year alone. You can start your own app development firm or invest in an existing one around.
Depending on the type of app you are building, you can invest in this sector for less than $500, and can go big if your app should become successful.
Personal Shopper Service
You can invest in a coy that offers personal shopping services, helping busy people and folks who don’t like shopping.
The market is not too bad in a place like California too, since you can also serve organizations that hire these services for the sake of getting gifts for their prospects, customers, employees, and so on. With less than $1000, you can kickstart your company.
Uber
You can invest in a good vehicle and join the Uber network, earning good money for driving. This can even be a sort of side hustle for you if you want. Alternatively, you can be a full-time investor, getting a driver to ride for you.
You can get a good recent car like the 2022 Toyota Venza for approximately $40,000 and register on the platform.
Cake and Cupcake Bakery
You can invest in a business that makes and sells cakes and cupcakes in California. There are always different reasons people will usually patronize cake sellers, and you can keep making good money doing this.
With less than $1000, you can run a business like this one.
Real estate investment trust
If you have a great interest in real estate without having the required resources to buy your property directly, you can look towards a REIT. Here, just like with mutual funds, the managers are going to assemble resources from various investors and invest them in several properties in the Golden State because it is one of the most profitable investments in the state.
There are several firms offering this service, such as Cardone Capital.
In Conclusion
While there are several other investment opportunities in California you can embrace, you can start with any of the ones highlighted above.
If you are planning to set up your business, you have to follow the procedure of starting a sole proprietorship business in the U.S. It’s important to point out that the cost of living in the state is high, but investing in CA is worth it.
References
- Featured image: Oxnard, CA, United States by Lewis McNeal
- Trem Global (May 31, 2021). “Why Invest In The USA?” tremglobal.com. Retrieved July 14, 2022
- Gold Broker. “Taxes in California.” goldbroker.com. Retrieved July 18, 2022
- Ingo Winzer (January 27, 2021). “What You Need To Know To Invest In California Real Estate In 2021.” forbes.com. Retrieved July 24, 2022.