Protecting Your Investment: Investing With Minimal Risks

Ivan Dimitrijevic By Ivan Dimitrijevic, 20th Mar 2017 | Follow this author | RSS Feed | Short URL http://nut.bz/2w9jvays/
Posted in Wikinut>Business>Investment

There are a variety of options to consider when it comes to protecting your investment.

Intro

The trick with investments is that they always come with a risk. The difference is in the profit you gain or lose in return. The value of your investment is influenced by the market and business conditions. However, the level of risk fluctuates and depends highly on the level of investment.

Low-risk investments are the safest choice, but the reward is lower as well. On the other hand, although every investment brings profit, the biggest issue is how to invest with minimal risk. There are a variety of options to consider when it comes to protecting your investment.

Stocks & Bonds

The common question people get confused about is – what is the difference between stocks and bonds? Stocks represent an ownership interest in a corporation, while bonds are a long-term debt which a business agrees to pay off in rates at a specific date. Stocks pay out in dividends to an owner, but only if a company declares it. Both the stocks and bonds are issued by corporations to be traded on the exchange.

Bonds – When it comes to choosing one over the other, bonds present a minimal risk to undertake. Buying bonds are lending money to the issuer. In return, you get an interest rate that pays off monthly and it’s a long-term security.

Stocks – A little bit of a riskier option, but with a higher percentage of dividend rates. Preferred stocks are similar to bonds, but still traded as stocks. Though you can always keep the risk at a minimum and grow in profit. As the name implies, they are stocks with a preference, which means stocks with a higher value. Dividends are more predictable, and in the case of corporate problems, stockholders with preferred stocks will be paid first.

You need a broker to process your buy and sell orders. Always work with a regulated broker and be sure to and think about the protection of your funds, because every regulatory jurisdiction has its own compensation funds in the event your broker goes bankrupt.

Treasury Bills & Notes

Treasury bills and notes are obligations of the U.S. government, so they are very safe. Treasury bills come in different deadlines up to a year and they are an excellent example of a short-term cautious investment.

Treasury notes can be bought at TreasuryDirect, directly from the government. When you make a purchase of a note, at a price set by the auction, every six months you get a payment in the percentage of the face value. The percentage is the coupon rate for a note the government pays out at, and it never fails to deliver profit.

Annuities

Annuities are a low-risk investment with high return profit when working with a financial adviser. It includes a contract made through an insurance company. This process assures payment in return for a determined rate. Rates can be fixed or variable, depending on the annuity and performance on the stock market. Following the common rule, the higher return rate, the higher the risk it involves. Nevertheless, they are quite safe and a great tool to increase the money you’ve invested.

Savings Account

Opening a savings account is the best way to protect your cash and get something back for it. A savings account means that you are putting money aside in a safe place and getting a small amount of interest in return. Banks and credit unions use the money you’ve invested and, as a reward, they pay you a rate you agreed upon.

As the savings are insured through the Federal Deposit Insurance Corporation (FDIC), even if a bank goes out of business, your money will remain safe. Nonetheless, when you open this type of account, you can use this money as you please.

Term savings means you give the money to a bank, which they loan to other people for an interest rate and use the portion of it to pay you back for the service. For every passing month, you get an interest rate and grow in savings until the ending period. When the agreement period ends, you can extend the contract or take the money.

Investments are always a good choice for increasing your savings, however, one should be well-informed about the possible risks every action involves. Listed above are some of the safest investments with minimal risks and maximal advantages.
Still, if you don’t have the time to deal with legal requirements and safety advisers, the best choice is to put your money in a bank for safekeeping, and get an interest rate that will increase the value of the savings slowly over time.

Tags

Investment, Investment Opportunities, Investment Strategy, Investment Tips

Meet the author

author avatar Ivan Dimitrijevic
Ivan Dimitrijevic is a seasoned blogger and SEO consultant with years of experience. His set of skills includes Social Media Marketing, SEO and blogging on a wide variety of topics.

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