10 Low Risk Investments Reaping High Returns

With the rising cost of living, it’s very crucial that we put our money in something that will benefit us in the future. One way to do that is to invest our hard-earned cash in financial plans that will reap the highest returns possible. But a common misconception is that if you want to generate a higher return, you should invest in higher risk investment. But this isn’t true all the time. The following are some of the low risk investments, which have potential high return value. 

Certificates of Deposits

A certificate of deposit (CD) is a savings certificate entitling you, the payee, to receive interest. With the CD, you give your money to a financial institution for a specific length of time. In exchange for this, you get a fixed set of interest rate over a specific term period. If you choose to withdraw your funds before the term of CD terminates, you will be charged a penalty fee, which usually equals to three month’s worth of interest. 

Treasury Inflation Protected Securities

Also known as TIPS, these types of bond investments are designed to protect the investors against the negative impact of inflation. With TIPS, you’re guaranteed that you get your principal back, along with the interest rate. TIPS can be purchased directly from the government, or through banks and financial brokers. The minimum investment is $100, with $100 increments. 

US Savings Bonds

US savings bonds are one of the safest and low risk investments available, since they are backed up by the federal government. They offer a fixed rate of interest over a certain period of time, and are not subject to income taxes. There are two types of US savings bonds: the Series I and the Series EE bonds. The Series I bond works similarly with TIPS – the fixed rate is never changed, but the inflation return rate is adjusted every six months. The Series EE, on the other hand, has a fixed interest rate that is automatically added to the bond at the end of each month. 

Annuities

An annuity is a trade investment, wherein the insurance company pays you a guaranteed income at your retirement in exchange of your large sum of money. It works almost similar with CD. However in annuities, the interest rate is tax-deferred. There are many types of annuities, each of which has varying benefits and disadvantages. Talk to your financial advisor to know more about them. 

Money Market Accounts

Money market account is a type of savings account that offers competitive interest rate in exchange for a larger sum of deposits. This is a great investment option for those who want to gain higher returns. However, you may be required to maintain a certain balance to qualify for higher interest value, which is usually $1000. 

Cash Value Life Insurance

This is a type of life insurance that pays out the policy holder once a certain amount of premium has been paid to it. In addition, the amount contributed to the policy can also be used as a cash value that can be borrowed by the policy holder. In the event of death of the policy holder, the accrued value is transferred to his or her heirs, tax-free. Whole life, universal life, and variable life are all types of cash value life insurance. 

Municipal Bonds

Municipal bonds, also known as munis, are a debt security issued by a state or locality to finance its investment projects, such as schools, bridges, hospitals, and highways. The issuer of the bond receives cash from investors, like you, to fund its projects and gives it back on the agreed period of time. Municipal bonds carry interest, which is paid either in a fixed or variable rate, depending on the agreement. What makes this bond a better deal is aside from the higher interest rate, you also yield tax-free earnings. 

Preferred Stock

Preferred stock is a type of stock issued by corporations that has both equity (stock) and a debt (bond) instrument. Preferred stockholders have a larger distribution portion to company’s assets and earnings compared to common stockholders. If you want to own a share in a company, while getting dividends, then buy a preferred stock. 

Dividend Paying Stocks

Dividends are a distribution of portion of a company’s earnings to its stockholders. When you buy a share from a corporation, you are entitled to receive a dividend. If you’re looking for a way to increase your investment but worried where to put your money, then dividend paying stocks are a great choice. They are usually considered safe, especially if you choose to buy stocks from solid companies. 

Peer to Peer Lending

In P2P, instead of buying shares from a company or paying a financial institution, you lend your money to someone in the hope of gaining income. This type of investment can be a little risky, especially if don’t screen the person or company well. But with thorough screening, you can guarantee higher return value.

The truth is every type of investment is risky. But if you’re too worried that you might lose all your money in the end, then consider the medium to low risk investments mentioned above.

Michelle Mitch is a blogger who really likes to write about crocktock.com to get more information and updated.

Investing Your Money - Understanding Your Options in the Current Economic Climate

If you have a nest egg that you'd like to keep safe and see grow then you might be forgiven for thinking that your only option is to put that money in a savings account and let the bank grow it for you. While this is fine for smaller amounts of money though, for real investing it is one of the worst and least profitable options available to you. When you invest money with a bank, they will invest the money for you in stocks, shares and properties but they will only give you a tiny fraction of the interest they make meaning that your money could be growing much faster if you had made those same investments yourself. In the current economic climate too, with the banks struggling more and more, those interest rates go down considerably meaning you can end up tying your cash up for years on end and getting less than 1% APR for your troubles.

The benefit of savings accounts for most of us is the simplicity they offer and the security. In theory you should just have to put away your money and then forget about it while it grows and there should be no chance of a bad investment causing you to lose that cash. Unfortunately though with the current climate that's no longer even true and there's no guarantee that a bank isn't going to go bankrupt losing you some or all of that investment. If you are going to stick to savings accounts then - even for smaller amounts of cash - you should divide your money across several banks to protect it.


Better yet though you should look into some of the other options you have for protecting your money. Here we will look at what the best options are for really growing and protecting your money

The Best Protection

If you really want to keep your money safe then an overseas account can be preferable in a number of ways. One of the best forms of overseas account for keeping your money safe is a Swiss Annuity which you pay into in a large lump sum up-front in order to get subsequent smaller payments over the years. This works well to save your money as it will be with a Swiss bank (meaning the economic crisis isn't so much of a factor) and because there won't be a pot of your money sitting somewhere. This is also a form of 'asset protection' meaning that even if you were to go absolutely bankrupt your money would be safe.

Investing Yourself

Another option is to invest your money directly yourself and there are a number of different ways you can do this. For security and peace of mind for instance you can invest in gold, precious materials, wine or paintings which will be generally impervious to fluctuations in the market and the economy. Investing in property is also relatively safe, though it requires a big upfront expense and can be a hassle if you plan to rent it out or just maintain it.

Alternatively you can invest in stocks and shares yourself or with a self-managed super fund (which basically sees you teaming up with other investors). This can yield high rewards but is very high risk - so if you're going to go that route it's wise to use a financial advisor who can talk you through the best decisions.

Author Byline:

John Lowrie resorts to blogging to share his thoughts and opinions with his readers. He works for Payday Angels and likes to keep himself updated with the latest developments in the field of personal finance management. His Twitter ID is j_lowrie.