Tuesday, October 8, 2019

Best Low Risk Investments for High Return

What is an investment?

An investment – or investing – is a long way from putting your cash in a bank account where it sits to earn interest. An investment is a gamble: instead of the security of guaranteed returns, you're taking a risk with your money. The hope is that you make a lot more than you put in (a juicy profit), but there's the possibility you end up with less (a nasty loss).

You can invest in almost anything, from the most mainstream popular targets...
Government bonds (gilts)
... to the rather more exotic, such as...
Vintage cars
Fledgling technology firms
Art, eg, paintings, sculptures

For most, investing means putting money in the stock market

This guide is first and foremost about investing in stock markets – it's most people's first experience of investing. And putting your cash into these markets is exactly what it says on the tin: you buy shares in one or more companies with the aim of making a profit.
And although there are different ways to do it, such as funds, the principle of investing remains the same: you're taking a gamble with your money as there's no guarantee you'll get it all back. In the worst case scenario, you could lose it all.

Why invest? Investing can provide you with another source of income, help fund your retirement or even get you out of a financial jam in the future. Above all, investing helps you grow your wealth — allowing your financial goals to be met and increasing your purchasing power over time.

Is investing right for me?

It doesn't matter if you're about to buy your first share or pick a stock market fund for the first time, always ask yourself WHY you're looking to invest.
Over the long run, historically stocks and shares have outperformed money in savings accounts.
But that's no guarantee they'll do so in future. It's all about your personal circumstances. For example, you might be one of the many who have despaired at the rotten rates on offer in savings accounts and are prepared to take a risk in the hunt for bigger returns.
Or you may have drawn up a well-researched plan to save £10,000 over the next decade to help pay for your children's school fees. In both these cases, it's a clear green light to go and invest.

Be careful if somebody offers you advice

if a friend has suggested a share tip in the pub, or a family member or friend has suggested you "bung a few quid" into a hot share or fund that is currently – in industry jargon – "shooting the lights out", it's probably best to think twice unless you've money to spare that you can afford to lose.
However, if you're struggling to keep up with credit card payments, say, or have taken on an expensive remortgage and have little savings, it's time to step back and think again.
This might sound like basic housekeeping, but the lure of quick gains in the stock market can prevent many people from seeing how dire their overall financial situation might be.

ALWAYS remember the five golden rules of investing:
  1. The greater return you want, the more risk you'll usually have to accept.
  2. Don't put all your eggs in one basket. Try to diversify as much as you can to lower your risk exposure, ie, invest in different companies, industries and regions.
  3. If you're saving over the short term, it's wise not to take too much of a risk. It's recommended you invest for at least five years. If you can't, it's often best to steer clear of investing and leave your money in a savings account.
  4. Review your portfolio. A share might be a dud or you might not be willing to take as many risks as you did before. If you don't review your portfolio regularly, you could end up with a share account which loses money.
  5. Don't panic. Investments can go down as well as up. Don't be tempted to sell or buy shares just because everyone else is.


The first lesson in investing is simple, find the perfect balance between risk and reward. The smart investors know how to mitigate risk factors and find the right types of investing opportunities that yield the best returns. They’re out there, you just have to look for them.
Luckily, we’ve done some of that searching for you and have five of the best investments that bring low risk and high reward. Talk to an investment consultant before you sink any amount of money into a financial venture, but we think you’ll be pleased with the results you can attain under these circumstances.

1. Certificates of Deposit

There may be no lower risk for investment than a certificate of deposit (CD). Available at any bank or credit union and through your broker, CD’s offer you a fixed interest rate for the duration of time in which you commit any amount of capital into the investment. You can choose how long you wish to put your money into a CD and the longer you invest, the more of a return you can see on your money. But you have to keep the money in there until maturity as early withdrawal comes with a penalty. Once it does mature, you are guaranteed all of your initial capital back in addition to the interest earned.

2. Money Market Fund

Shrewd investment planning might include putting some money into a money market fund. Another investing opportunity that all but guarantees you’ll get back every dime you put in, these funds bring in a pretty good return while protecting the net asset value of your money, keeping it to a minimum of $1 per share. Rarely will it ever fall below that price.

3. Life Insurance

Only certain forms of life insurance will accrue interest. Term life insurance is not one of them, it only pays out in the event of your demise. However, whole and universal life insurance gain additional value beyond your investment which can be borrowed against and doesn’t come with any tax penalties, either.

4. Cash Back Credit Cards

Every bank and financial institution has them, cards that offer you bonuses and rewards in the form of points, credits, or actual cash payments based on how much you spend every month. It’s not quite investing in the typical sense, but you do see a return on the money that you put out, in this case it’s spent on the things you might be buying anyways.

5. Municipal Bonds

These state government-issued borrowing instruments are a great choice for investors who want to know their money is coming back to them in full while paying as little as possible in the way of taxes. Municipal bonds are exempt from federal income tax laws as well as many state mandates, and the money you’re putting out is a loan to a borrower that has very little risk of default. Every state is different in terms of the tax laws, so be sure to talk to a professional in wealth management in San Francisco before you invest in these bonds.

If you’re looking to grow your wealth, you can opt for lower-risk investments that pay a modest return or you can take on more risk and aim for a higher return. Below are a range of investments with varying levels of risk and potential return.

Here are the best investments in 2019:
  1. Certificates of deposit
  2. Money market accounts
  3. Treasury securities
  4. Government bond funds
  5. Municipal bond funds
  6. Short-term corporate bond funds
  7. Dividend-paying stocks
  8. High-yield savings account
  9. Growth stocks
  10. Growth stock funds
  11. S&P 500 index fund
  12. REITs
  13. Rental housing
  14. Nasdaq 100 index fund
  15. Industry-specific index fund


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