While investing in today’s market might seem risky, there are actually a number of low-risk investment options that you have to help you acquire some returns on your finances. Now is as good of a time as ever to invest your money in low-risk opportunities because the stock market is still slightly unstable in the recession. Here is an overview of your main safety investment options.
While there is always some risk in any type of investment, there are four types that tend to have more stable rates and returns than investing in up-and-down things like the stock market. However, if you choose to put your money into a less risky option, you tend to also receive lower returns than with stock. These four safer options are CDs, bonds, savings accounts, and money-market mutual funds.
First, you may choose to put your money in CDs. No, these are not audio music CDs, but certificates of deposit. With a certificate of deposit, you basically buy into your bank. You purchase a CD for however much money you want to invest, and you have to decide with your banking officers what the lifetime of the CD will be. Basically, you purchase a CD for whatever interest rate a bank is offering, then you get paid the interest during the life of the CD. When the lifespan is up, the bank will give you the payout of your original deposit. Keep in mind, though, that should you want or need to break your investment and get your money back early, you might have to pay some of that amount back to the bank.
Second, bonds are a pretty reliable option for accruing interest. Bonds are kind of like CDs, except you give the money to a government, municipality, or any other entity that is offering bonds for sale. You put your money into the entity, and get an I.O.U., or bond, in return. During the lifetime of the bond, you will receive your interest payments, and when the bond matures, you are repayed the principle. Normally, bonds have a fixed interest rate, and they can be traded just like stocks.
Next, you can put your money in just a plain bank savings account. Bank savings accounts normally offer interest on your money, although it is usually not a high amount. However, this offers a place for your money that is more accessible than bonds or CDs while still accruing interest. You can have even more control over this if you choose to have an online savings account.
Lastly, money market mutual funds are more steady than traditional mutual funds because the latter are invested in the stock market. Money market funds are are instead invested in cash assets, which typically grow at about 5% per year. Because these are involved in the money market, they are at less risk than the stock market.
Investing is a good idea if you want your money to make money. For more information on investing strategies, check out the Business Directory today.