Investing is pretty much like gambling – you could either win or lose. Of course, losing money is the last thing any investor will want, but the sad truth is that it does happen.
While putting in money in extremely low investment options like saving bonds may seem like a good fit, they are rarely worth the stress.
Unless your sole aim for putting away money is to save for the future, you will surely want to invest in profitable ventures. Thankfully, there are several investments you can try out today without fearing to lose your capital. Are they completely risk-free? Not by a long shot! But their risk is within tolerance limit.
1. Certificate of Deposit
For the conservative investor, Certificate of Deposit – CD for short – is the way to go. Basically, investing in a CD involves giving your money to the bank to trade with for a certain period of time. In the end, you principal will be given back to you with interest on top of it.
How much can you make out of CD? Simple: as much as you can invest. Also, the maturity period of the invested money also determines the interest you make. A CD of 4 year maturity period is worth more than of 2 year maturity period.
The drawback with CD is that you can’t easily withdraw your money whenever you want to. Even if you do, a penalty may apply.
2. Fixed Annuities
Fixed Annuities are somewhat similar to CDs, only this time you will be giving your money to an insurance company and not a bank. This type of investment will be a great fit if you are a prospective retiree looking to build up an investment portfolio, safely.
Like the CD, a penalty tax will be levied on you should you initiate withdrawals before the maturity period of the investment. Only investors that have crossed 59½ years of age are exempted from this.
The returns that can be made off Fixed Annuities is largely dependent on the insurance company. If it has a robust market cap, you will most likely earn more.
Economic upheavals may cause even the most stable and secure investment to kaput. Gold, unlike most other investments, is barely affected by inflation and other economic downturns.
But that doesn’t mean investing in gold doesn’t have its downsides too. For instance, identifying real gold from the fake ones can be a problem for beginner investors.
4. Government bonds
Consider bonds as a loan of some sort which you lend to the government when they are in need of funds. Government bonds, especially Municipal bonds, has lots of perks, one of which it is tax-free.
Done rightly, Municipal bonds can fetch you passive stream of income, but that will depend on the laws governing the state or county you live in.
Talking about safety, Municipal bonds are very safe. The reason for this is that even if the government fails to raise money to repay the loan, she can easily raise new debt to make up for the unpaid one.
5. Utility stock
Utility stocks are basically stocks purchased from utility companies like those that supply gas and electricity. They have been around for decades now, but sadly only a few people know of them. Even some of those who know about it do not know that it is perfectly safe.
What makes utility stock safe? No matter how bullish the economy may become, people will always have the need for basic life necessities which utility company supply. This steady demand means utility stocks will always remain safe.
Additionally, investing in utility stocks tend to be more profitable than investing in treasury securities.
Like other types of stocks, utility stocks has its own set of risks. For instance, a major increase in interest rates can cause it to lose its value. So, it makes sense to keep such risks in mind before taking a dive.
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