5 Low-Risk Investments We Should All Be Making

Last Updated on May 20, 2021 by MoneyVisual

Investing might seem like a gamble sometimes. You place your hard-earned money into something that may or may not result in a proper return on investment (ROI). It’s a thrill if you achieve success and fear if it’s all lost.

Yet, people still invest. A Gallup poll revealed that over 50% of Americans own stock. However, not all of it is in high-risk investments. Many people put their money into low-risk properties. Though it takes longer, they’re able to generate sizable profits over time.

If you’re interested in going this route, here are 5 low-risk investments everyone should make.

Savings Bonds

Savings bonds still remain one of the safest investments to turn toward. This is especially true for an individual making their first dive into the market. Not only is it low-risk but it’s also low-maintenance.

Like other investments, savings bonds are not meant for instant economic gratification. They are seen as long-term properties. Furthermore, once their maturity period ends, the owner is guaranteed to receive an ROI that’s equal to the amount they initially paid. In other words, a $100 savings bond is worth at least $100 once it matures.

Money Market Funds

Courses that allow you to learn how to invest will most likely mention money market funds as a low-risk investment. Organizations like The Minority Mindset recommend this because this stake in the financial market can be tailored to the individual. The result is a fund that features a mix of stocks and Treasury bills.

Another reason why brokers recommend this account is the ability to add additional funds at any point in time. As some of these work similarly to bank accounts, investors can remove money from them when needed. No matter the type of transaction, a money market fund continues to grow over time.

High-Yield Savings Account

A high-yield savings account is different than the standard deposit type. Where the latter is a basic repository for funds, the high-yield version pays a higher interest rate. This is an important consideration when rates are low.

This took place during the 2010s and early 2020s. The combination of the Great Recession, federal policies, and the coronavirus pandemic kept interest rates at historic lows. The good news is the percentage in high-yield savings accounts increases when the Federal Reserve Board decides to raise them.

Certificates of Deposit

Certificates of Deposit (CDs) are both low-risk and loss-proof. They maintain their value while areas like the stock market tumble. The reason for this: CD accounts are protected by the Federal Deposit Insurance Corporation (FDIC). Should a financial institution fail, the money invested in a CD is protected by the government.

However, there’s a caveat. The money invested must remain in the account through the agreed-upon term. If it’s taken out of the CD ahead of time then everything guaranteed by the financial institution or government is voided. Thus, investors want to shop around for the best rates and agreeable term limits.

Dividend-Paying Stocks

There are two reasons to purchase dividend-paying stocks instead of higher-risk options. First, their growth is steadier with less risk of buyouts. Second, this type of stock regularly pays dividends. Normally, this is on a quarterly basis.

Since investors look to those results to perform other transactions, a dividend-paying stock is at a lower risk to fail. Those who purchase these items want the business to succeed. Thus, they help in any way possible to help the stock. Though these types of stocks may falter over time, the stability of the company that issues them has been deemed strong enough that recovery is certain.

There are five examples of low-risk investments everyone should make. While there are more, this quintet has the strength to gain an increase in value over the years. Once they mature, the investor could have a sizable amount of funds to live off of during their retirement.

However, this can’t be done if you’re someone who wants to see immediate advancement. The maximum results of low-risk investments come from patience. Though they shouldn’t be forgotten, little worry should be put on monies given to savings bonds, high-yield savings accounts, and CDs. Letting them simmer over time is the best way to get the most out of them.