Do you want to grow your money? The most effective way to accomplish this is by investing it. This is where you purchase some investment options which increase in value over time and grow your personal net worth. These investments are professionally known as assets. There are many types of assets which you can invest in today. Examples of these are bonds, stocks and commodities. The world of investing is highly exciting and presents the opportunity to make substantial returns. Investors such as Warren Buffet and Ray Dalio have made billions by investing. Two features of investments are risk and return. Every smart investor seeks to balance them and grow their money. Here are 10 investment strategies that offer very low risk and very high returns.
Invest in preferred stocks
One of the most common investment options is stocks. Also known as equities, they are essentially shares of a company which are traded in a stock market. There are many types of stocks and one of the most interesting is preferred stocks. These ones are actually hybrid stocks which normally operate in a similar way to bonds. These stocks normally trade a few dollars higher or lower than their buying price throughout. They normally cost approximately $25 each. Moreover, they actually give a return that is 2% higher than that which is offered by treasuries or Certificates of Deposit (CDs). The dividends of preferred stock are paid out every month or every quarter. They have very low risk of liquidity and can be sold at any time you want with no penalties. As such, their relatively high rate of return and low risk qualify them as good options for the cautious investor.
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Put your money in utility stocks
These are stocks in utilities such as gas, water and electricity. They have a stable price throughout. In addition to that, they normally pay out dividends which are 2% to 3% above other investment options such as treasury bonds. In addition to that, utility stocks are noncyclical. This means that they do not expand or contract according to the performance of the economy. You also get voting rights when you invest in these type of stocks. As such, they are stable, have a high return and offer low risk. Thus, they should be part of your strategic portfolio.
This is another investment option which is ideal for those who want high returns at low risk. Fixed annuities are an investment option that provides you with high yield while protecting your principal. You can invest any amount of money in your fixed annuities and then leave it to grow with deferred tax until you retire. They provide you with a yield that is 1% more than you would get from Certificates of Deposit (CD) and treasury bonds. When you invest in these options, they are backed by the financial strength of the insurance companies which offer them as well as guaranty funds issued by the state. As such, they can give you a good return and low risk too.
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Brokered Certificates of Deposit (CDs)
This is a type of investment option that is designed for investors who do not want to lose any of their principal while investing. Most brokerage firms will sell you Brokered CDs. They are issued using a similar process to that of bonds. In addition to that, they are traded in a secondary market. Brokered CDs can give you a rate of return that is much higher than that which is provided by regular ones. Once you buy them, it is advisable to hold them until they mature for you to enjoy this benefit. If you sell too early, you may get less than the face value of the brokered CDs which you purchased.
Income mutual funds and Unit Investment Trusts (UITs)
These are investment options that give you high returns at a very low rate of risk. These instruments have a number of advantages over other investment options. Firstly, when you invest in a UIT or an income mutual fund, you are able to invest in various instruments such as mortgages, bonds, senior secured loans as well as preferred stock all in one convenient package. These investment options provide you with a unique opportunity to perform diversified investing which boosts your returns and reduces your level of risk.
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Invest in dividend paying stocks
This is a type of stock which normally pays higher than regular stock yet has much less risk. This is because they are stocks of strong companies with good reputations that are already established. Moreover, these companies normally have a dependable history of paying out their dividends on time. When you invest in dividend paying stocks, not only do you get great gains, you also get to take part in capital gains. These are over and above the payouts which you get from your dividends. As such, they are a high yield type of investment. If you want to invest in instruments which will give you high returns yet have low risk, dividend paying stocks are your best bet.
Peer to Peer Lending
Today, you can invest in an instrument that is known as Peer to Peer Lending (P2P). This form of lending has become really popular today. This is where borrowers can go online, visit a lending platform, borrow and get loans anonymously. These loans are backed by specific investors. As an investor, you can invest by buying these loans and getting a return when they are lent with an interest to the borrowers. Investing in P2P lending can give you an annual return of upto 10%. Moreover, this investment option is designed to minimize your investment risk by dividing the loan which you buy into small, manageable slivers which are known as notes. These notes are of very low value such as $25 each. As such, you can divide your investment into many notes and spread your risk across your overall investment.
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Get some Treasury Inflation Protected Securities (TIPS)
This is a very low risk yet high return investment instrument. The Treasury Inflation Protected Securities (TIPS) are a type of bond which is issued by Treasury. There are two types of this bond. The first one is known as the fixed interest bond. This one is protected from inflation but its rate of return is fixed at 0.35% per annum for the length of the bond. The other option is the inflation matching bond whose value grows with the level of inflation over the life of your bond. If the inflation increases by 3% during the lifespan of this bond, it automatically grows at the same rate and this value reflects once you cash it out after it has matured.
Whenever the local state administration needs to raise some money, they issue a municipal bond. Commonly known as munis, these bonds offer you a percentage interest after they mature. They are also very low risk because they are backed by the government. To further make them an attractive investment municipal bonds are exempt from federal income tax. As such, you are able to generate some money and save it from taxes at the same time.
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This is a highly secure type of bond. It is issued by and also backed by the federal government. There is zero chance of default on this bond. As such, it is 100% stable and has a 3.5% rate of return when you invest in it. To enjoy this return, you need to hold your savings bond until it matures over a period of two decades. It is one of the safest low risk, high return investment instruments which you can get today.
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The Important Take Away
Smart investors know to put their money in assets which have low rates of risk and high returns. This is one of the ways to ensure that you score a high profit on your investments and that they remain viable for the longest time possible. The ones indicated above are definitely great examples of such investments. If you invest in them you can be sure of a stable portfolio that will give you steady, attractive returns.