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Top 10 Investments with 10% Returns

Published Sep 21, 2023
Author
Investor
Reviewed by Doug Blanton, CFA
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If buying into an S&P 500 index fund and earning 7% doesn't seem like enough to you, or if you're looking to grow a portion of your portfolio fast, you're not alone.

Outside of Treasury bills, there's no such thing as a guaranteed return on investment.

And if someone is promising you a guaranteed 10% return on investment, don't believe them — there's no such thing (and if there was, they wouldn't be telling you about it).

But that doesn't mean you can't earn a 10% return.

If you're comfortable with the volatility and risk, there are plenty of investments that have the potential to generate double-digit returns.

Here's my list of the 10 best investments to get a 10% return on your investment.

Disclaimer: I've given each investment below an overall rating, as well as a risk score of 0 to 5. These are personal opinions. Actual results may vary. Be sure to conduct your own due diligence.

Summary of the best investments with 10% ROI

  1. Private credit
  2. Individual stocks
  3. Real estate
  4. Fine art
  5. Debt
  6. A business
  7. Private startups
  8. Cryptocurrencies
  9. Collectibles
  10. Junk bonds

1. Private credit

  • Overall rating: ⭐⭐⭐⭐⭐
  • Risk level: 3/5
  • Best for: Accredited investors who want short-term income and diversification outside of public markets

Unlike public companies, which can simply sell more stock or issue bonds, it's much more difficult for private companies to get financing. Private companies must turn to private markets to fund growth, operations, and more.

Because the money is harder to come by, private companies must offer investors more favorable terms. Private credit deals typically:

  • Are secured by machinery, land, loan portfolios, or other assets.
  • Have shorter durations, with average maturities of 9 months.
  • Offer higher yields (deals on Percent have generated a 12.92% historical-weighted average APY).
  • Are largely uncorrelated with public equity and debt markets.

Historically, private credit has only been available for institutional-level investors. Now, Percent has opened the door for accredited investors to access the $7 trillion market.

You can qualify as an accredited investor if you have $200,000 (individual) or $300,000 (jointly) in annual income, or a net worth of $1,000,000 excluding your primary residence.

Percent Banner

If you're an income-seeking accredited investor, try Percent and discover why 89% of new investors reinvest after their first deal. You can also get a welcome bonus of up to $500 through our links.

Why I'd choose it: Short-duration income and diversification outside of public markets.

2. Individual stocks

  • Overall rating: ⭐⭐⭐⭐⭐
  • Risk level: 3/5
  • Best for: Everyone who has an interest in investing in individual stocks

While I'm a proponent of investing in index funds for diversification, it does limit your upside. In every market, a few high-performing stocks are responsible for the bulk of an index fund's returns.

From 1926–2009, stocks returned 9.6% per year on average. Over that 83-year period, the 25% best-performing stocks averaged 50% per year. If you excluded the top 25% of stocks, annual returns would have been slightly negative.

If you can consistently identify stocks that are set to outperform, you can achieve extraordinary results

Kris (the founder of StockAnalysis) and I both invest by pairing investments in index funds with individual stock positions.

This gives us the best of both worlds — easy diversification and lower risk with the bulk of our money while allowing us the freedom to overweight stocks we believe will outperform. We call this the Barbell Strategy.

We decided to launch The Barbell Investor, a 2x per month investing newsletter that covers how we invest and manage our money.

You can see our exact portfolios, which stocks we own, which stocks we're thinking of adding to our portfolios, financial education, market commentary, and more. You can learn more about the service and get a free sample issue here.

If you don't already have one, you will need a brokerage account to invest in stocks. I like Public, which gives you access to stocks, ETFs, Treasuries, cryptocurrency, and other alternatives on its well-designed website and mobile app.

If you want stock picks with big upside potential delivered straight to your inbox, you may want to subscribe to a paid investing newsletter. I recommend Motley Fool Stock Advisor (my favorite), Alpha Picks, or TickerNerd.

Why I'd choose it: Investing in individual stocks requires careful due diligence and can be risky, but it's one of the most accessible ways to generate a 10% ROI (or higher).

3. Real estate

  • Overall rating: ⭐⭐⭐⭐⭐
  • Risk level: 2–3 out of 5
  • Best for: Long-term investors who want to diversify their portfolios outside of public markets

Since 2000, private real estate has outperformed the S&P 500 by about 1.7% per year:

Real Estate Chart

Real estate has created more millionaires than any other asset class. It gives investors multiple ways to win:

  • Price appreciation
  • Rental income
  • Tax advantages

Historically, it's also been less volatile than the stock market and a good store of value during periods of high inflation.

The primary drawback to real estate investing is the upfront capital necessary to purchase properties. That, however, has changed in recent years.

Real estate crowdfunding platforms allow you to invest in real estate with as little as $100. These platforms will take care of the due diligence, purchasing process, maintenance, and management of every deal.

My favorite real estate platform for accredited investors is Yieldstreet, which has invested more than $3.8 billion since its inception and has unparalleled access to real estate developers. 

Yieldstreet's real estate deals have earned a 9.6% net realized annual return since its inception. Plus, in addition to real estate, Yieldstreet offers access to 10 other private asset classes.

For retail investors who want to get started in real estate, I recommend Arrived. Arrived invests in single-family homes for both long-term and short-term rentals. As of Q2 2023, Arrived properties were paying annualized yields of up to 10.1%.

Why I'd choose it: Real estate has a proven track record of creating wealth while providing consistent income, has been an excellent inflation hedge, and is a good way to diversify outside of public markets.

4. Fine art

  • Overall rating: ⭐⭐⭐⭐⭐
  • Risk level: 4/5
  • Best for: Investors looking for diversification outside of public markets and are interested in a collectible with a track record of solid performance

Over the last 27 years, contemporary art has outperformed the S&P 500 by 3.6% per year:

Art vs Assets Chart

Furthermore, art has also proven to be an excellent inflation hedge. During periods of heightened inflation, contemporary art sold at auction registered an average gain of 13.5%, versus 5.5% for stocks over the same time period.

Like real estate, art has historically only been available to the ultra-wealthy. But Masterworks changed that.

Masterworks is a crowdfunding art investing platform.

Its team analyzes art and predicts which artists and paintings are gaining momentum, sources and purchases artwork, and then “securitizes” the artwork, which allows users to buy individual shares in each painting.

When the company decides to sell a painting, any appreciation is distributed to its shareholders.

Investors have realized net returns of 14%, 27%, and 35% from recently sold offerings.

Why I'd choose it: Art is another asset class with a strong track record of returns and has historically had a low correlation with stocks, bonds, and gold.

5. Paying off high-interest debt

  • Overall rating: ⭐⭐⭐⭐⭐
  • Risk level: 0/5
  • Best for: Those with credit card or other high-interest consumer debt

Ok, this one isn't really an “investment,” per se, but it deserves to be on this list.

If you're carrying a balance on your credit card with a 21% APR, paying off that card is equivalent to earning a 21% rate of return. It's also a guaranteed return.

It always surprises me how many people want to start investing while having credit card debt. Other than a 401(k) match, there is no higher guaranteed return on investment than paying off your high-interest loans.

If you have any debt with an interest rate of about 7–8%, I recommend paying that off before making any investments.

Why I'd choose it: If you have high-interest loans, paying those off is the highest guaranteed return on investment you could make.

6. Buying a business

  • Overall rating: ⭐⭐⭐⭐
  • Risk level: 2–4 out of 5
  • Best for: Anybody willing to take on the risk and extra work of owning a business

When looking for investments, people hardly ever consider buying an existing business.

However, many local businesses sell for between 2–5x profits. That can equates to a 20–50% annual return if the company's profits remain stable.

Yes, it's much less passive than buying a stock, but it also gives you more control over the fate of your investment. You could increase the revenue and/or profitability and make your investment instantly more valuable.

But it's not easy. There is much more work required if you go down this route than any of the other investments on this list.

Plus, like real estate, getting started can be capital-intensive and lead to idiosyncratic risk (a lot of money tied up in a single investment).

You can find businesses to buy on sites like LoopNet, Craigslist, or Flippa. If you're looking to buy a local business, you can also walk into a business you like and ask the owner if they're interested in selling or will be in the future.

Why I'd choose it: If you're not afraid to get “hands-on,” buying businesses gives you control over the fate of your investments and can lead to huge ROIs.

7. Private startups

  • Overall rating: ⭐⭐⭐
  • Risk level: 4–5 out of 5
  • Best for: Accredited investors who want to invest in private, VC-backed companies at past valuations

Private equity investors and venture capitalists know the real money is made before a company's IPO, not after.

While it can be highly speculative, an early-stage investment in tomorrow's hottest tech startup can result in a massive ROI.

Equitybee makes it possible for any accredited investor to invest alongside the PE firms, VCs, and hedge funds. You can invest in private startups like monday.com, Stripe, OpenAI, ByteDance, and more:

Equitybee Chart Accredited

Equitybee connects accredited investors with employees who have stock options in privately held companies.

These employees, who receive stock options as part of their compensation, sell some or all of their options to investors who would otherwise be unable to invest.

The valuation at which shares are traded is typically the valuation of the latest funding round, meaning you're investing at the same price as the PE firms.

In exchange for funding the options, you will receive a percentage of future proceeds from any successful liquidity events.

Get started on Equitybee with an investment in Zipline stock or Miso Robotics stock today.

Why I'd choose it: To make speculative, high-risk/high-reward investments in your favorite private companies.

8. Cryptocurrency

  • Overall rating: ⭐⭐⭐
  • Risk level: 5 / 5
  • Best for: Believers in cryptocurrency and blockchain technology who don't mind the extremely speculative nature of the asset class

Cryptocurrency exploded onto the scene a few years ago, when Bitcoin climbed from around $3,500 in 2019 to over $60,000 in 2021. Ever since, crypto has been one of the most popular investments for those seeking high returns.

Digital currency is inherently a speculative investment. Unlike a stock, which is part ownership of a company that is producing revenue and (hopefully) profit, there is no underlying asset backing the value of the coin.

The only way for investors to earn a profit from a crypto investment is by selling it to another investor at a higher price (who in turn is expecting to sell it to another investor at a higher price in the future).

It's this very nature that allows it to have massive swings in price.

Personally, I don't invest in crypto, but for those who know more than I do about specific coins, projects, or events that may have a large impact on prices, it may make sense to allocate a small percentage of your portfolio to this asset class.

Why I'd choose it: If you are interested in cryptocurrency and expect it to become a bigger part of our financial system in the future, you may consider allocating a few percent of your portfolio to crypto.

However, be aware that the crypto space is full of scams and has a history of major crypto platforms going bankrupt.

For this reason, it is recommended to invest in crypto through a trusted platform that is regulated as a broker. You can invest in Bitcoin, Ethereum, and 5 other major cryptocurrencies on Public:

9. Collectibles

  • Overall rating: ⭐⭐⭐
  • Risk level: 3/5
  • Best for: Hobbyists or those with a particular affinity for a category of collectibles

I've had a growing appreciation over the last few years for hobbyists who know value when they see it, and the collectibles the astute hobbyist invests in seem to hardly ever depreciate in price.

For example, one of my friends is obsessed with watches — it seems like he can tell you about every watch ever made.

He started building a watch collection about 10 years ago as a hobby, but in the last few years, he's turned it into the best-performing portion of his investment portfolio.

He's regularly doubling his money on his watches and then using the proceeds to buy even nicer watches. The best part is that he loves it.

Investing in collectibles requires you to have a keen eye for value and conviction in your own beliefs. It's not for the faint of heart.

But for those who are seriously obsessed with a specific category of collectibles, I would strongly consider dedicating a portion of your investment portfolio to your hobby.

Why I'd choose it: If I knew a specific category of collectibles very well (if I had an “edge”), I would not hesitate to make it a chunk of my portfolio. If done right, you can earn reliable, outsized returns and have fun doing it.

You can invest in handbags, clothing, shoes, sports cards, and more on Public:

10. Junk bonds

  • Overall rating: ⭐⭐⭐
  • Risk level: 3/5
  • Best for: Income-seeking investors comfortable with the risk/reward profiles of junk bonds

Corporate debt falls into two broad categories: investment-grade and non-investment-grade, also known as junk bonds. Junk bonds are those with credit ratings below BBB/BAA, indicating the bond's issuer has an elevated degree of default risk.

Junk bonds are an excellent example of how risk and returns interact. The lowest-rated bonds pay the highest interest and are most likely to default.

Issuers of junk bonds pay higher interest rates to compensate investors for taking on the additional risk. Currently, junk bonds are paying around 8.55% interest compared to about 5.08% interest on investment-grade bonds.

Since 2001, the junk-bond default rate has averaged 3.5%. During the 2008 financial crisis, this rate climbed to 5.3% for the highest-rated junk bonds (and over 12% for highly speculative debt).

While this might not seem high, that's one default out of every 20 junk bonds issued.

Instead of buying individual junk bonds, you could invest in a junk bond ETF (like the SPDR Bloomberg High Yield ETF JNK). You can buy this ETF in your Public account.

Why I'd choose it: If you're willing to do your due diligence and are comfortable balancing the risk/reward of these investments, you may find junk bonds to be a nice addition to your portfolio.

How we chose the best investments with 10% ROIs

When evaluating investments, we consider the following:

  • Returns: How has the investment performed historically? How is it expected to perform in the future? How stable/reliable are those returns expected to be?
  • Risk: How much volatility should be expected? How much confidence can we place in the expected returns? How much downside is possible? How stable is the investment?
  • Duration: How long should the investment timeline be? Should the investment be held for weeks, months, or years?
  • Popularity: How popular is the asset among investors? Has the asset class been around for a long time or is it relatively new?
  • Accessibility: How easy is the investment to buy and sell? How simple is it to create an account and start investing? Are the recommended platforms easy to navigate?

Final verdict

That's my list of the 10 best investments that have the potential to earn you a 10% ROI or more.

Remember, every investment entails some sort of mix of risk and reward. If you're aiming for 10% returns, you're likely signing up for heightened volatility and risk and you may end up losing your money.

Because of this, you should be very comfortable and as confident as you can be in whatever investment(s) you choose — don't just throw darts and hope to get lucky. 

Diversify, do your due diligence, and take a few small, calculated risks on your favorite investments.

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