(Newswire.net — December 18, 2018) — If you have built up a certain level of wealth, then you may be ready to invest some of your spare cash. That is a great idea as it will put your money to work and build up a nice little nest-egg over time. Whether you plan to use it to pay for your children’s college fees, to maintain a comfortable lifestyle when retired or to help pay off your mortgage, investing your spare money is a wise move. While it is fun to use extra cash for treats, if that is all you do then you will not be in a sound financial situation when you decide to finish working.
The problem is that for many investors the sheer range of asset classes and investments to select from can be somewhat overwhelming. Whether it is stocks, currency, real estate or fine wine, there are many places to put your money. This can lead to worries about about choosing the wrong one, something that often stops people from investing altogether. If you find yourself in this situation then it is vey common. Do not let it stop you from investing though because when done right it can help your capital grow substantially over the longer term.
Low-risk investments are available
All investments carry some form of risk, but some have less than others. For a lot of investors, it is the low risk investment types that they like to focus on. The investments cause less stress about the possibility of losing your initial outlay and the returns do build up each year. While you may not see the higher returns that riskier assets provide, they are satisfactory and dividends and interest will accumulate nicely over time. This will let you earn a higher interest rate on your investment as well.
Here are some of the best low-risk investments to consider.
- Certificate of deposits – these are THE ultimate low risk investment to keep your money safe. To invest, you buy a certificate of deposit from an approved investment brokerage, bank or credit union for a set term. Once the maturity date is reached, you will get your money back plus the agreed amount of interest. What makes this so attractive is that the risk is zero! You are guaranteed to get your money back, whatever happens over the agreed timeframe.
- High-interest savings account – another ultimate low-risk way to invest is with bank savings accounts. The issue with standard ones is that the very low interest rates do not make it worthwhile. That is why finding a high yielding savings account to park your money in makes sense. This gives all the security of saving with your bank but with a rate of return that makes it attractive.
- Peer to peer lending – although this may sound risky, it is actually a comparatively safe short-term investment opportunity. It means that you lend money to start-up companies via online lending platforms like Prosper. Once the loan period is up then you get your initial investment back plus some interest. The average return can be around 6% which is pretty good. The other great thing about P2P lending is that you can spread any risk by investing small amounts in a number of companies.
- Money market funds – this is a comparatively little-known investment type but is good for those seeking low-risk strategies. It is basically a mutual fund that is created to protect investors’ principal outlay and ensures you do not lose money. While the interest you receive on completion of the investment is on the low side, the minimal risk does make it attractive.
- Stocks that pay dividends – investing into the stock market is a viable and popular way of making your spare money work harder. However, it is not exactly what you would call low-risk if you go the usual route of investing in individual stocks. One way to reduce this risk to a more acceptable level is by buying shares in well-established companies. The big household names also pay out regular dividends to their shareholders.
All investing relies on selecting the best strategy to use that delivers not only the rewards you would like but also takes into account the level of risk you are willing to bear. As investment expert Peter Mallouk advises, finding the best investing strategy for you is vital in this regard.
Invest your money wisely
For most people, low risk investing is the way to go. It not only helps to protect your money but also increases the capital that you have saved up for the future. While higher risk strategies can be tempting due to the bigger payoffs, you must always factor in what the effect would be it it did not work out. With that in mind, many investors opt for low-risk investing strategies when considering where to place their money.