Safer Modes of Investment

Managing one’s money seems like an uphill task. There are many questions which constantly clog your brain such as what are the risks involved, how can you ensure you get the best possible returns and the extent to which one can hedge their savings

Before going for safe investment, first make a note of the entire investment target and the risk involved. Let’s have a look at some of the safe investments types.

Index Funds

It is wiser to invest in the Index in totality than to invest your money in specific stocks as it not only about high returns but the safety of the investment. It is a perfect combination of safety with returns as it is a collection of low beta and high dividend paying stock.

ETF

If the dispersion potential of the returns is comparatively narrow or if the possible advanced knowledge about the stock is unlikely to enhance the gains ETF or the Exchange Traded Fund is a better bet.

Unit Investment Trusts

These are never heavily advertised financial products and their holdings range from stocks to bonds where one gets consistent income or significant capital gain. These are not flexible and remains fixed for the entire tenure of investment. The tax advantage is another big positive for the Unit Investment Trust.

Certificates of Deposits

CDs come with a FDIC Insurance cover have higher yields compared to treasuries. The net insurance cover for every individual account holder is $250,000 and any amount greater than that is to be spread out as CDs from different banks.

Bonds

The best and the safest option are bonds with a maturity date of less than three years.

US Treasury

The US Treasury Bill is one of the favorite among bonds as they are reliable, safe and a complete savings scheme. The returns generated are a benchmark for safety in the investment world.

Registered Investment Advisory

This is one of the simplest approaches for investors who are not very confident about managing their money effectively as this would result in effective return generation along with relative safety. An amount of money if given to a trained investment professional and the firm handles it in their absence.

 

Dividend Reinvestment Plan

It is an auto investment tool that converts the dividend checks into single-dividend paying company in every quarter automatically. Commission is saved on every equity market investment and also gives you the option to buy fractional shares below the current market price.

Life Cycle Funds

This is a dynamic mode of investment for investors who would prefer a single holding over the long period as the risk profile gradually changes and becomes less risky over time.

Gold

The exclusive yellow metal has always been generating positive returns and an hallmark of safety. It works as a perfect hedge against inflation and an effective tool to cut out the equity market volatility.

Real Estate

Though a relatively safe investment bet, the rate of return depends on the judgment, sense of timing and the nose of identifying the right kind of property. The return outlook also depends on the tax implication and liquidity requirement

Variable Annuity

This is not only a safe investment option but also reinvest the cash in stock and bonds of your choice such that the net income gets a boost by employing various means of investment.

Individual Retirement Account

This is considered to be the cornerstone of any retirement-specific investment portfolio as it reduces capital gains tax as well as future tax implications

Thus, one needs to carefully monitor the various channels of investment to work out the best possible solution and channelize their money in the right direction.

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